COMMENTARY (COMM): China, today, has one of the fastest growing economies in the world.

But with 1.3 billion people, it also has the largest population on Earth. Hundreds of millions of Chinese live far from the coastal regions generating this new wealth. Hunger, sickness, ignorance, and an early death are too often the fate of those left isolated and impoverished.

The first of the UN’s Millennium Development Goals – to eradicate extreme hunger and poverty – is designed to address their needs.

LU FEI JIE, Director, State Council Leading Group on Poverty: In 1978 the number of poor in China was 250 million; at the end of last year it was 28.2 million. The percentage of people in poverty went from 30 per cent to less than 3 per cent of the rural population.

COMM: The Chinese Government defines poverty as an individual surviving on less than 66 U.S. cents per day.

The World Bank defines absolute poverty as surviving on one U.S. dollar a day – so by their standards, there are many more Chinese living in poverty than the government acknowledges.

But whichever measure is used, China’s recent progress is remarkable.

JAMES WOLFENSOHN, President, World Bank: When you look at the achievement of China in bringing the level of livelihood of three to four hundred million people out of poverty to give them a better chance of life, you have to say this is an accomplishment of historic proportions.

Dr. LI BING QIN, London School of Economics: I think it is a story of two sides, and it is of course – obviously, it is a good story. But – behind the good news there is a problem. And you have to look at China is the fastest growing economy in the world – then they are… a lot of people become very rich, very fast. At the same time, the poor people are falling behind. And China has now become the country with the fastest growing inequality in the world.

COMM: In this programme, Life looks at how China succeeded in freeing so many people from poverty - and whether it can now use the lessons learned to help poor communities throughout the rest of the country.

In 1978, China introduced a bold, new policy. Known as ‘Reform the Economy and Open to the Outside World’ – it began a process that has transformed China - and the lives of ordinary Chinese.

One of the first and most important changes was called the “Household Responsibility System”.

This ended centralized agricultural planning and returned land used for communal farms back to individual families.

Freeing the productive capacity of hundreds of millions became the single largest factor in helping China’s rural poor escape poverty.

Nong Chou Xiao Zu - a part of Si Ye Village in China’s Southwest Guangxi Zhuang Autonomous Region - is pretty far off the beaten track.

Cut off from markets and technology, the people here always lived below the international, dollar-a-day poverty line.

At 88, Wei Yun Xing is the oldest person in the village.

WEI YUN XING: Our dream was to have enough to eat, enough to wear, to have electricity, a telephone and a two storey house.

COMM: “The Southwest Poverty Reduction Project”– initiated by the Chinese Government with support from the World Bank – has provided basic infrastructure development like roads and electricity, allowing new information technologies to link the people with the wider world.

Innovative water management systems have freed the villagers from the daily grind of fetching water.

Improved seed and animal stocks have helped increase income. And the project has provided better health care and education.

The farmers of Nong Chou have never had it so good.

But productivity’s just one part of the equation. The farmers of Nong Chou must also get their produce to market.

Eleven kilometres away, Three Rocks – or “San Shi” in Chinese - is the nearest market town.

To link Nong Chou with Three Rocks, the authorities built a road in the late 1990s. Making it easier for the people to get to town is stimulating the flow of products, information and ideas.”

Major policies like ‘Reform the Economy and Open to the Outside World’ and the “Household responsibility system” have given China’s rural farmers the freedom and incentive to improve their own lot.

Specific programmes like ‘The Southwest Poverty Alleviation Project’, aim to give them the means.

China’s farmers have done a lot. But there’s still a long way to go.

And where they are going – is to work!

Around a hundred million Chinese from the countryside are now finding work in China’s wealthier cities - and sending the money back to their home towns.

The increasing trend towards Da Gong – or ‘Labour Mobility’ – has become a vital part in projects like “The Southwest Poverty Alleviation Project.” It facilitates the flow of labour to the cities - and capital to rural areas.

Policies like these have been crucial to creating an institutional framework for poverty alleviation – though there’s always a question whether such a framework can be implemented at the local level.

Dr LI BING QIN, London School of Economics: People think China is a central planned economy – but actually, it’s a very big country, and central government do not always have very direct control of all the specific aspects of the local activities. So, how to co-ordinate between the central government and the local government… Also, at the same time, how to co-ordinate between different departments of the government, and how to handle the different interest groups.

COMM: Getting this balance right can allow individual initiative and innovation to flourish.

Nowhere else in China is this better illustrated than in Wenzhou, in China’s coastal Zhejiang Province, where 97 per cent of the economy is privately held.

Leading enterprises that help bridge the gap between agriculture and industry can qualify for special government subsidies – if they process agricultural commodities, engage rural labour in industry, and enlarge markets for rural produce.

Called “Long Tou”, or Dragon Heads, they are often run by entrepreneurs with roots in China’s peasant villages.

Su Zhong Jie is a dragon head. He remembered the woven grass mats, which the farmers used for drying their grain and slept on, on hot and humid summer nights.

By adapting these into high quality beach accessories for the international resort set, Mr. Su has created a business with sales last year of over eight million U.S. dollars.

SU ZHONG JIE: We are using our quality to win over the market and grow, and the reaction of our clients and customers have told us that our product looks good and is reliable.

Dr LI BING QIN: When China has these entrepreneurs who become rich very quickly, it has a positive effect, and people – they offer inspiration for the rest of society to let them see that there is opportunity, real opportunity to become rich, by themselves.

But at the same time, because there’s no well-developed framework for income redistribution, they contribute significantly to the inequality – income and social inequality in China. As a result they contribute to the social instability.

COMM: One enterprise that’s sharing its success with local communities is Mei Fu Roast Duck of Wenzhou. It contracts farmers to produce ducks and other rural produce, directly and indirectly employing thousands of Chinese farmers and helping to raise the standards of production and distribution of rural products.

Inspired by the dragon heads, hundreds of millions of Chinese are dreaming of a better future.

GIRL: - I want to be a teacher when I grow up…

BOY: -I want to be a doctor…

COMM: In an historic demographic shift, the majority of China’s population will soon live in cities.

But what if these cities begin to consume as much as those in the industrialised countries?

China’s population is so large that with no curbs on migration, its urban infrastructure could easily be overwhelmed. Although there is much greater freedom now, to move to the city still requires a residence permit.

To encourage a more orderly migration the Chinese government has drawn up a plan for voluntary resettlement. Known as “Come down from the Mountain”, it allows farmers who want to make the transition to move to development areas like ‘Shan Men’.

The Shan Men development area – a sleepy sort of town, half way between the farm and factory – is one of 590 similar sites around Wenzhou, which rural migrants can choose from.

The ‘Come down from the Mountain’ policy allows those who can’t survive on marginal land to move closer to an urban existence, taking substantial pressure off fragile land better suited to forests than farming.

But the development areas are just the first step on a long journey, because hundreds of millions of people are projected to ‘Come Down From the Mountain.”

PART TWO

COMM: The promise of prosperity held out by cities like this - Wenzhou in eastern China – attracts thousands of Chinese farmers ‘down from the mountain’ – though some, an often forgotten minority, don’t get residence permits.

Urban life is tantalizing - but to many seems unreachable.

The farmers’ answer was to create ‘Long Gang’ - the first city built by and for farmers.

But China will have to build hundreds of new cities over the next 20 years to absorb rural labour migration…

Dr LI BING QIN: These people move to urban areas – they do not enjoy residential… proper urban residence – and do not have a work permit. And they do not enjoy many benefits that are available to urban residents.

Working in urban areas is not always a story of success… quite often they live in very poor conditions, and have no social protection.

COMM: Foreign Direct Investment – particularly, the setting up of ‘special economic zones’ – is one solution, offering opportunities for new, rural migrants.

One of the most rapidly growing areas is the ancient city of Suzhou.

The special economic zones here provide more jobs and aspire to international standards of workmanship.

Technology transfers like this – coupled with the income from export manufacture – aim to enable China’s rapid movement from an agrarian to industrialized urban society, and have led to a burgeoning domestic market – one that will soon be the largest in the world.

But for millions of Chinese, participating in this growing market remains a distant dream.

LU FEI JIE, State Council Leading Group on Poverty Reduction: Poor areas often have the worst natural conditions. In Chinese we say that they are the “hardest bones left”. Such areas are behind in social development and it is very hard to make improvements.

COMM: To tackle the really hard parts … China has decided to “GO WEST’…

China’s ‘Western Development Effort’ is a vast programme designed to transfer technology and capital from the more developed regions to the interior.

One area targeted is China’s Loess Plateau. The Plateau - an area the size of France stretching over parts of seven different provinces - was once a huge forest. Historic annals tell of rushing rivers and wild animals.

Here along the Yellow River is the cradle of Chinese civilization.

Loess is a powdery sedimentary soil, dangerously vulnerable to erosion. It’s so fine that it is easily absorbed into water. Thousands of years of human impact and lack of conservation measures have removed the trees and grasses – with catastrophic results.

Here, China has embarked on arguably the largest development project on earth. The goal – to rehabilitate the ecosystem of the Loess Plateau.

The Chinese Government, with World Bank loans, has spent a decade and 150 million dollars to begin the rehabilitation in nine tributary watersheds of the Yellow River.

Terracing vast tracks of land considered wasteland for generations is opening up new opportunities for Chinese farmers. And farmers who have the land use rights are more likely to maintain the terraces.

Measures like these are transforming the landscape in the areas served by the project – and helping the people free themselves from poverty.

GUO HAI WANG, Farmer, Inner Mongolia: It was really unimaginable. I didn’t dare to dream about it. Before my house was made of clay. Now I have a brick house. These two decades have seen an incredible change.

COMM: Ten years after the first terraces were built there is visible and measurable improvement. Warping dams, designed to fill up with silt, have made flat fields in the ravines. New warping dams higher up continue this till entire gullies are covered.

Now China’s Loess Plateau is providing valuable evidence that it may be possible to restore large scale damaged ecosystems. For China, with 22 per cent of the world’s population and only 7 per cent of the world’s arable land, the implications for poverty reduction of providing more fertile land are enormous.

Geographic barriers are coming down. And the Chinese are also trying to educate their way out of poverty.

In Guangxi, they are still hitting the books at 10 in the evening. In Inner Mongolia, computer classes are opening the world to children in remote villages.

And in Shanxi, the high school has proudly posted copies of the acceptance letters from Universities to its last year’s graduates – though with jobs being cut back in old state-controlled industries, they may yet face unemployment…

Dr LI BING QIN: Many young people graduated from the universities, as well as high schools and educations… they have no working experience, and when they get out of the school, they have to face up to unemployment straight away…

…According to World Bank statistics, there is only one per cent of urban population who are unemployed and was trapped in poverty. But it is already one of the fastest growing causes of poverty in China.

COMM: The Chinese have introduced a new concept - the “Socialist Market Economy” - which they believe can provide a framework for eradicating poverty, without relying on welfare and state subsidies.

LU FEI JIE, Director General, State Council Leading Group on Poverty China’s poverty alleviation programme is not a relief programme. We do not just supply money. We focus on helping people to improve their capabilities to develop the areas by themselves. To improve their basic living and work conditions. That way they can walk out of poverty forever.

JAMES WOLFENSOHN, President of the World Bank: I think the Chinese have developed their own knowledge and experience from which we can all learn. I think now is the time to say to our Chinese friends, let’s sit down and compare the Chinese experience with the experience of other countries, with the experience the Bank has had, and see if we can pull out of this collective experience lessons that can be used in addressing the question of scale.

COMM: The Chinese are continuing to scale up their efforts to end poverty – trying to turn the best local practices into national policies. But now they face a new problem. As in so many other countries, the gap between the rich and the poor is widening.

Dr LI BING QIN: I think the key lesson is when you try to build up the economy that emphasises on fast growing – it is important to deal with the people who are left behind, and to make sure that the inequality is not growing so fast as to be out of control and cause social instability.

COMM: The big question now is – can China bridge the growing gap between those who have benefited from its amazing economic growth, and those who have not?

END

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