Although its record and experience in poverty reduction already offers lessons for other developing countries, targeting and effectiveness need further improvement and China still wants international aid to broaden its own poverty alleviation efforts, senior officials told a conference on International Cooperation on China’s Poverty Alleviation and Development, convened in Beijing on December 7.

Deputy Director General of the Ministry of Finance’s International Department, Liang Ziqian (梁子谦), said that as of June 30, 2005, China had borrowed a cumulative total of USD 39.1 billion from the World Bank, USD 15 billion from the Asian Development Bank, and USD 476 million from the International Fund for Agricultural Development. China, he said, valued not only the finance but also the “knowledge cooperation” involved in these projects. The central government, he added, was prepared in future to channel more budgetary support to underdeveloped areas of the country and to social development, and would try to combine government funding with World Bank loans in some pilot projects.

Liang also implied that greater social protections and investments are necessary to underpin macroeconomic growth. “To maintain a healthy rate of economic growth in future China will need to stimulate consumption and make great efforts to raise the consumption rate,” he said, adding that “Key measures to achieve this will include deepening reforms in finance, social insurance, health, education and other fields.” The government, he said, will be guided by the “scientific development concept” in promoting equity and addressing regional and rural-urban disparities.

Remaining poor are hardest to reach

Duan Yingbi (段应碧), Deputy Director of both the State Council Western Development Office and the Economics Committee of the China People’s Political Consultative Conference, said that more than 20 million Chinese people are still living in absolute poverty, mainly in remote communities and mountainous areas that lack basic infrastructure. It is increasingly difficult and expensive to reduce this residual poverty, said Duan: “Where in the past we spent 300 yuan to relieve a poor person of poverty, now we need to spend 5,000.” It was therefore necessary, he suggested, “to utilise social forces and foreign capital as well as increasing government inputs”. At the same time he felt that new ways were needed to target and deliver assistance, including “how to mobilise participation by poor people and how to strengthen management of foreign capital.”

Speaking, he said, in a personal rather than an official capacity, Duan also suggested that it was important to do more for the urban poor and for the scattered population of rural poor living in ‘non-key’ villages and cities. They need education, health and skills training, he said, and therefore “it is imperative to explore expansion” of poverty alleviation efforts.

Wu Zhong (吴忠), Director General of the Foreign Capital Project Management Centre of the State Council’s Leading Group for Poverty Alleviation and Development, said that assistance from international financial institutions, bilateral donors and international NGOs had been an important source of theoretical and practical innovation for China, bringing new concepts and management mechanisms. Now, China itself is passing on some its acquired experience in this field through an International Poverty Alleviation Centre that offers training and exchange opportunities to other developing countries. This, he said, amounted to “poverty alleviation diplomacy.” However, he added that “China is a still a developing country, facing many difficulties and challenges, and needing assistance and support from international society.”

The Foreign Capital Project Management Centre was established in 1995 under the State Council Leading Group of Poverty Alleviation and Development and has implemented poverty reduction projects with cumulative international loan and grant funding of USD 800 million.

New poverty reduction efforts

A Foreign Capital Poverty Reduction Review and Outlook document distributed at the conference assesses the Centre’s ten year’s experience of cooperation, culminating in the present “community-driven development approach,” featuring village-level planning and “village based development.” The document notes that “a series of problems in this stage require immediate solutions.” Problems include targeting, management and effective use of resources, and “how to ensure communities’ and poor households’ ownership of project resources and participation in decision making, planning, monitoring and appraisal.”

The Review and Outlook also notes the decline in soft loans to China, but suggests that this financing mechanism will “undoubtedly” be replaced by blending of aid grants with commercial loans and by budgetary allocations from the Chinese government.

As an indication of new directions in poverty alleviation, the document cites a Poor Rural Community Development Project financed with a USD 100 million World Bank loan on commercial terms, a USD 32.5 million grant from the British government to soften the loan, and a Chinese government counterpart contribution of USD 43 million. Launched in October 2005 in 18 officially designated ‘key poverty counties’ of Guangxi, Yunnan and Sichuan, the project aims to benefit 1.4 million people, two thirds of them from ethnic minorities. The Review and Outlook describes the project as having “new characteristics,” including being more “integrated” and “participatory” than previous efforts, and being more strictly targeted to the poorest and most remote communities.

Also planned is a USD 6 million “community-driven development” project to be implemented in 60 villages in Sichuan, Guangxi, Shanxi and Inner Mongolia in 2006-2008. Jointly financed by the World Bank and Government of China, this is billed as a sustained, experimental effort to create robust mechanisms for community ownership and control over project resources.

The Review and Outlook further proposes, in less specific terms, working in small cities in mid-western regions to enhance public services and improve the climate for industrial and market growth, so that they can better accommodate rural migrant workers. Work of this kind is described as “a new key area in future foreign capital poverty alleviation.” The document states that migrant workers’ average monthly income is only 58% that of urban workers, making urban medical care, education and other services unaffordable for them, and that only 28% of migrants have received any form of vocational training.

Also flagged by the Review and Outlook are the needs “to enhance HIV/AIDS sensitivity in comprehensive poverty alleviation and development” and to better integrate environment protection and poverty reduction initiatives.

NGOs are the future

The Review and Outlook also recognises the contribution of international NGOs to poverty reduction in China, and room was made at the conference for speeches by representatives of Oxfam Hong Kong and World Vision.

The published document includes a commitment “to explore and experiment with effective methods for NGOs’ participation in poverty alleviation.”

“In the long run,” it continues, “The ideal model for poverty alleviation is that the government will provide funds for poverty alleviation while the allocation and management of the funds will be largely up to farmers’ own organisations and specialised non-government organisations . . . the Chinese government has already started to explore competitive ways to use poverty alleviation resources, and to make more NGOs the operators of government-funded poverty alleviation projects. At the same time, we will find and select some credible international NGOs, with poverty alleviation as their purpose, to conduct cooperation in this area.”

Report by Nick Young, December 9, 2005