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The left cannot ignore China's achievement in poverty reduction

Source: UN Human Development Report, 2007/2008.

By Reihana Mohideen

October 15, 2010 -- China’s achievements in reducing poverty have been outstanding. From 1978 – when the restructuring of the Chinese economy began – to 2007 the incidence of rural poverty dropped from 30.7% in 1978 to 1.6% in 2007. The biggest drop took place between 1978 and 1984 when the number of rural poor almost halved, from 250 million in 1978 to 125 million in 1985. During this period the per capita net income of farmers grew at an annual rate 16.5%. Urban poverty, measured by an international standard poverty line of US$1 per day, reduced from 31.5% in 1990 to 10.4% in 2005. No other Third World country has achieved so much and made such a significant contribution to reducing global poverty, as China has, over this period.

Between 1978 and 2007 per capita income has increased significantly. Inflation adjusted per-capita disposable income of urban residents grew at the average annual rate of 7.2% for urban residents and at 7.1% for rural residents. While the gap between the rural and urban areas still continues (and has even increased across some development indicators), the fact remains that virtually the entire population has been able to greatly increase its consumption of food, clothing and shelter. According to the United Nations “China now has largely eliminated absolute poverty and is meeting the food and clothing needs of its 1.3 billion people”.

And despite the significant gaps between rural and urban areas, between richer and poor regions, migrant and other workers and the increasing class divisions, there is a degree of equalisation of income growth which even has many capitalist commentators bewildered. Higher household incomes has allowed for improvements in nutrition, clothing and housing.

Examples include a significant reduction in undernourishment: in 1981 some 30% of China’s population was undernourished and this dropped to 12% by 1997; between 1990 and 2005 the prevalence of underweight children fell from 19.1% to 6.9% and stunting in children under the age of five fell from 33.4% to 10.5%. The greatest reduction in child malnutrition took place in rural China. The country’s under-five child mortality rates dropped steadily from 40 per 1000 live births in 2000 to 18.1 in 2007 – far lower than Third World averages.  Maternal mortality (that directly impacts on child mortality) dropped from 53 per 100,000 live births in 2000 to 36.6 in 2007 – well below Third World averages of 440 per 100,000 live births. China’s average life expectancy was 71.4 years in 2000, higher than averages for third world countries.

These are significant gains for Third World countries today and especially so given the sheer numbers of women and children that it involves given the size of China’s population. This is partly related to a massive increase in healthcare spending – total per capita spending on healthcare from all sources – government, private households social -- increased by 1300 per cent from 1978 to 2006. While the effective privatisation of healthcare resulted in a massive shift in the responsibility of healthcare spending on to private households, nevertheless, even government spending increased by nearly 700%, to 7.9 times the 1978 levels, an average annual increase of 7.7%.

There are major inequalities that continue to widen in China as a result of the restructuring of the economy along capitalist lines. The state which was previously responsible for almost 100% of health expenditure now only contributes around 18% of total expenditure (compared to over 70% in Western Europe) and large sections of the population especially in rural areas could not afford healthcare. In an attempt to address these inequalities in 2009 the government announced major healthcare reforms, including the provision of basic health insurance cover for 90% of the population.

Class differences are widening along with income gaps. In 2006 the per capita disposable income of the richest 10% of families was 9 times more than the poorest 10%. The urban-rural income gap continues to widen – 2.8 to 1 in 2000 to 3.3 to 1 in 2007. The per capital GDP in Shanghai was 65,347 yuan in 2007 compared to Guizhou at 6,835 yuan in the west. While Shanghai and Beijing have attained levels of development closer to the industrialised countries such as Portugal, poorer provinces like Guizhou are comparable to Botswana and Namibia.

Gender gaps are widening in sex ratio at birth, with the number of new born male children and numbers of female children widening over time, with no sign of declining (these trends will be analysed in future articles). Nevertheless, the fact remains that the country has made major strides in reducing poverty, on a human scale that no other Third World country has achieved, and which is perhaps historically unprecedented.

Despite the restructuring of the education sector which resulted in individuals taking primary responsibility for education costs, China has made remarkable progress in its education indicators, partly due to subsequent measures to partially reverse the earlier restructuring policy. Between 1994 and 2001 less than 2% of resources came from national government, with town and township governments responsible for nearly four fifth of China’s compulsory education costs.

Because local government revenues barely covered staff salaries the financial burden fell on the people who had to start paying fees, resulting in increasing drop-out rates of poor students, especially in the rural areas and poorer provinces. In a partial policy reversal the central government exempted rural students in western China (where dropout rates were high) from tuition and miscellaneous fees, and by 2007 the government had decided to waive fees for rural compulsory education throughout the country, and provide free textbooks and boarding expenses. In 2008 fees were waived for urban compulsory education as well. In 2005 the annual education budget was 2.5% of a vastly expanded GDP – a 60-fold increase from 7.5 billion yuan in 1978 (around 2% of the GDP) to 453 billion yuan in 2005.

Enrollment rates have increased – 99% at primary school level and 95% at junior middle-school – and adult literacy rates rose to over 90% in 2006, higher than the global average of 78%. The average number of years of schooling received by people 15 years and over rose from 5.3 years in 1982 to 8.5 years in 2005.

The socialist movement, especially in the Asia region, must study and attempt to understand these developments. Simply placing China in the "going capitalist" basket and ignoring developments in the country is a big mistake. Undoubtedly the gains of the great Chinese revolution of 1949 has laid the basis for these developments, including land reform that broke the back of landlordism and semi-feudal relations in the countryside (unlike in the Philippines or even India today) and which laid the basis for major strides in human development, so that when capitalist restructuring was introduced the levels of health, education and life expectancy, for example, were better than for a majority of Third World countries at the time. And even today there are several Third World countries that are yet to achieve the levels of development achieved by China in 1980.

[Reihana Mohideen is the director of Transform Asia, Gender and Labor Institute. This article first appeared at Mohideen's blog, Socialist Feminist. It has been posted Links International Journal of Socialist Renewal with permission.]

Comments

Chinese economic development

I agree, a superb effort by the Chinese bureaucracy in fostering economic development. However, at great cost largely borne by the Chinese working class (as documented in books like Ching Kwan Lee's 'Against the Law: Labor protests in China's Rustbelt and Sunbelt'). The maoist welfare state was abolished and privatised. Next step: extend these economic gains by abolishing the monopoly of power held by the Communist Party (an organization now in the hands of the Chinese Bourgeoisie and Army) and introduce the universal human rights and values its citizens deserve (and stop regarding the Chinese people as idiots incapable of handling democracy).

The poverty of poverty reduction rhetoric

It takes a special kind of myopia to celebrate Chinese poverty reduction while saying nothing of its atrocious record on human rights. Unlike most of its third world counterparts, China is a totalitarian police state where people enjoy neither freedom nor democracy. Free speech doesn't exist and political dissent is tantamount to a death sentence. At what cost should the Chinese people pay for such progress?

Whose special kind of myopia?

It takes a special kind of myopia for "Democratic Socialist" not to bother to look at ALL the material Links International Journal of Socialist Renewal has published in the past on China (see http://links.org.au/taxonomy/term/53), and to claim that nothing has been said about human rights and freedom of speech there.

The article above deals with some economic facts, and in no way implies support for the suppression of workers' democracy and rights. Does "Democratic Socialist" dispute those facts?

 Please let's strive for constructive and concrete discussion, not name-calling and posturing.

Reader response vs. posturing

My comment was directed at this article, not the whole corpus of articles ever published by Links. Any celebration of China's progress should also include a caveat about its repression of its own workers, its own citizens. That's a perspective from one fairly consistant reader of Links. Hardly posturing.

china

Reihana says: "China’s achievements in reducing poverty have been outstanding. From 1978 – when the restructuring of the Chinese economy began – to 2007 the incidence of rural poverty dropped from 30.7% in 1978 to 1.6% in 2007....Urban poverty, measured by an international standard poverty line of US$1 per day, reduced from 31.5% in 1990 to 10.4% in 2005. No other Third World country has achieved so much and made such a significant contribution to reducing global poverty, as China has, over this period."

Money incomes are a very imperfect measure of living standards. Still, it is true that living standards in China have increased, as shown by the medical statistics which Reihana cites.

But China is not the only third world country that has had big increases in GDP, and a reduction in poverty. There is growing inequality amongst third world states.

In previous decades Taiwan and South Korea grew rapidly. Today China is growing rapidly, in part for similar reasons.

Minqi Li writes: "China has been the primary beneficiary of the latest round of global capital relocation. When China started the project of 'reform and openness' to deepen the incorporation into the capitalist world-economy, it had a very large rural surplus labor force....On the other hand, partly due to the success of Maoist self-reliance and industrialization, China had a comprehensive technological capability to produce a wide variety of products....As soon as China was 'opened', it started to engage in full-scale competition against the established semi-peripheral states. Because of China's low wages and other costs, China has been in a favorable position in the competition and has become the major receiver of the capital relocated out of the core states". (The rise of China and the demise of the capitalist world economy, Monthly Review Press, 2008, p. 107)

Although China's growth was based on cheap labor, this is beginning to change as Chinese workers fight for better pay and conditions. However they still have a long way to go to catch up with South Korean workers. Manufacturing wage rates in South Korea were 80.4% of US rates in 2005, whereas Chinese wages were only 4.9% of US rates. (Li Minqi, p. 108) While the gap has undoubtedly narrowed since then, the difference would still be very large.

I agree with Reihana when she says: "Undoubtedly the gains of the great Chinese revolution of 1949 has laid the basis for these developments, including land reform that broke the back of landlordism and semi-feudal relations in the countryside (unlike in the Philippines or even India today) and which laid the basis for major strides in human development, so that when capitalist restructuring was introduced the levels of health, education and life expectancy, for example, were better than for a majority of Third World countries at the time."

I would add that the strong public sector created by the revolution helped promote economic development. Even today, despite massive privatisation in the 1990s, the public sector remains fairly strong, and played an important role in bringing about the recovery after the global financial crisis.

Nevertheless, I think the main reason for China's rapid growth over the past three decades has been that many transnational corporations have selected China as their main platform for production for the world market, for the reasons that Minqi Li mentions.

Chinese model

Excellent food for thought.

One often hears in Latin America about the spectacular growth in China and the success of the Chinese example. As in other parts of the world Chinese capitalism is coming to play an ever more important role in regional economies.

China has many unique advantages that will help to keep it in the forefront of the global economy for many years to come. And with each passing day the success of the Chinese model makes it harder and harder to offer a credible, sustainable, democratic and socialist alternative to capitalism, either in the West or in countries such as Cuba and Venezuela. This is an issue the left must comes to terms with. And an issues that had huge ramifications for climate change.

Korea

"Undoubtedly the gains of the great Chinese revolution of 1949 has laid the basis for these developments, including land reform that broke the back of landlordism and semi-feudal relations in the countryside (unlike in the Philippines or even India today)"

South Korea had a similar land reform programme- it started in 1950 during the North Korean occupation of South Korea. The Stalinist regime put through popular land reforms in the areas they occupied. This involved the redistribution of land away from the old feudal pro-Japanese collaborators. Land reforms were one of the main reasons why a large number of people in the south supported North Korea during the war.

The land reforms were so popular with the people in South Korea that the Rhee government did not overturn them once they regained control of the south (doing so would have been political suicide). In fact, due to the popularity of the land reform programme, the Rhee government copied North Korea and pushed for further land reforms, since they knew that if they did not do something about land the people will revolt once more. By the end of the decade land reform in South Korea was complete and this formed the basis of South Korea's development in the subsequent decades.

China’s billionaire club expands

China’s billionaire club expands

http://chinaworker.info/en/content/news/1240/?utm_source=feedburner&utm_...

Friday, 29 October 2010.
China now has more super-rich tycoons than any other country except the United States

China confirmed itself as home to the world's second-largest number of billionaires today. Forbes Asia listed a record 128 US dollar billionaires on its latest China Rich List. On the same list released a year ago, China had 79. It is second only to the United States in this respect.

The swelling ranks of China's tycoons is a symbol of its economic rise of recent years. It is now the second largest economy and the largest exporter in the world. But rapid GDP growth of around 10% annually has created gaping divisions between rich and poor. Per-capita income for the richest 10 percent in China is 65 times higher than the bottom 10 percent of society. Only twenty countries worldwide, mostly in Africa and South America, have a more extreme wealth gap.

Topping the list of China's billionaires is Zong Qinghou, chairman of the largest drinks company Wahaha. He owns $8 billion according to Forbes. Just behind him is Robin Li, with $7.2 billion, who is chairman of Nasdaq-listed Internet search engine Baidu. Both Zong and Li are examples of Chinese capitalists who have bested foreign corporations to acquire dominant positions in the China market. Zong outmanoeuvred Danone of France to establish full control of Wahaha and its operations in China, while Baidu, owned by Li, has profited from US-owned Google's difficulties in China. Of Chinese cities, Shenzhen can boast 17 billionaires, followed by Beijing with 15 and Shanghai with 10.

State media in China pointed out that 10 percent of the 400 richest Chinese in Forbes Asia's latest list get all or part of their fortunes from China's healthcare sector - evidence of how capitalists and profiteers are squeezing the population to pay for inflated medical bills and costly drugs. Private funding occupies a greater share of China's total healthcare budget than it does in the US.

US capitalism led the new Forbes list with 403 billionaires. Behind China was Russia with 62 billionaires. In addition to China's tally, 25 people from Hong Kong were ranked as billionaires, while 18 Taiwanese entered the list. According to Forbes, the richest person in Hong Kong is Li Ka-shing with a fortune of $21 billion. The richest person in Taiwan is Terry Tai-Ming Gou, founder of sweatshop electronics giant Foxconn, with a fortune of $5.5 billion.

The close relationship between China's ruling Communist Party and the billionaires was shown graphically when president Hu Jintao was filmed shaking hands with Li Ka-shing during Shenzhen's 30th anniversary celebrations this year. Hu took part in a one-on-one meeting with Li on the sidelines of the official celebration, praising him as a key player in the development of Shenzhen's economy. Li made clear the admiration was mutual. The billionaires have benefited enormously from the policies of the past 30 years, of privatisations, sweatshops and growth of crony capitalism. One example in recent months has been the Chinese government's support to Foxconn, enabling the company at the centre of a spate of worker suicides to relocate to cheaper inland provinces from Shenzhen. Communist officials have even dragooned armies of students into working as interns on Foxconn's production lines, as reported on chinaworker.info last month.

The news that China's super-rich are now even richer can only add to the anger of workers and determination to fight the capitalists and the dictatorial regime that protects them.

Eric Toussaint on China

I notice that Eric Toussaint (of the Committee ofr the Abolition of the Third world debt), in addressing the General Assembly session of the United Nations in New York on 15 September said: “On a global level, the limited percentage decrease in the number of those living on less than $1.25 a day is the result of growth in China and India, countries which did not subscribe to the Washington Consensus.” (http://www.cadtm.org/Speech-by-Eric-Toussaint-at-the)

The subject of his speech was the dogmas imposed on poor countries by the IMF and World Bank, which will prevent the achievement of the UN’s Millennium goals.

In January 2008, he wrote specifically about the Chinese development model, saying:

“China is presented from the angle of its economic success, in terms of GDP growth and increased exports. GDP growth may well be impressive, but in fact, China has chosen a capitalist model of development, implying increased exploitation of Chinese workers, mass redundancies, privatisation of many public companies, radical reductions in State spending on education, health, social security, and unbridled productivism with total disregard for nature and public health. Over the last ten years, the percentage of wages in the GDP has fallen sharply, going from 53% in 1998 to 41% in 2005. It is true that China is a net creditor with regard to the United States but it has accumulated a colossal internal debt. Worse still, social inequalities are growing at a horrendous speed. Various studies show that while the living conditions of the poorest 10% of the population have seriously declined, the richest 10% have seen their income and wealth booming. The number of Chinese billionaires in dollars has shot up from 3 in 2004 to 106 in 2007. A severe economic slowdown in the United States may not make too much impact on the economic health of China, as it exports more to Europe than to North America. Nevertheless, it is not impossible that the contradictions of China’s domestic economy combined with an external shock such as a significant slowdown in the USA could lead to major problems. The rise of internal debt both at government level and in companies, the accumulation of unsafe debts in banking, the creation of speculative bubbles on the property market and the stock exchange are some of the factors that could lead to an economic crisis, sooner or later. Not to mention the powder-keg of glaring social inequalities. Quite apart from the risk of a crisis, it is the model adopted that deserves utmost criticism.” (http://www.cadtm.org/China-and-India-two-models)

Despite the fact that the Chinese government has so far steered its way through these minefields, I think that his statements remain accurate.

However, Reihana has performed a great service in raising the points that she has. China is emerging as a major area for socialist analysis and theoretical discernment.

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