China’s achievements in poverty reduction

In 1978 in China, nearly 250 million citizens lived under the official poverty line, and the poverty rate was 30.7%, which by 2018 fell to 0.6%. The purpose of the paper is to review the history of China’s poverty reduction strategy. The statistical data, covering the period from the beginning of the economic reforms to 2018/2019, show the process that took place in reducing poverty in China. Although the main goal of the reforms undertaken by Deng Xiaoping was to improve living conditions in China, no targeted policy was applied in the initial period. From the mid-1980s onwards the systematic and targeted actions but also successive modification and adjustment of the implemented programs allowed to continue the fight against poverty, especially in rural areas. Despite the obvious success, China still faces major challenges. It is necessary to lead a more precise orientation of poverty relief policies, but also through the coordination of the antipoverty strategy and confronting it with practices.


Introduction
In 1978 the Chinese government implemented radical changes that covered, among others, the economic, political and ideological system. The premise for these initiatives was to resolve the poor living conditions of society, as well as to give political credibility to the Chinese Communist Party. The reform of the system and an open door policy was to take this process into reality. The reforms implemented by Deng Xiaoping shifted the Chinese authorities' interest from the class struggle to creating a modern economy. As a result of the reforms, implemented more through gradual transformations than revolutionary changes, there has been an unprecedented improvement in China's growth performance. No other country in the world's economic history has maintained such high growth over such a long period of time. One of the undeniable successes was the enormous progress in reducing poverty and improving the well-being of Chinese society.
The purpose of this paper is to review the history of China's poverty reduction strategy. The paper explains the actions taken by the authorities to bring Chinese citizens out of poverty and indicates some of the challenges for implementing a poverty alleviation policy. The statistical data presented in the first part of the paper reflect the process that took place in terms of poverty reduction. The second part explains the strategies of the Chinese authorities that allowed to achieve such tangible results.

The change in China's standard of living
Since the beginning of the economic reforms in China, the number of people living in poverty has significantly decreased. According to the World Bank (Figure 1), in 1990 over 66% of the Chinese population, i.e. 751.8 million lived below international poverty lines, i.e. on less than $ 1.90 a day. This number dropped to 7.2 million, i.e. 0.5% of the population by 2016. In 1990 just over 98% of the population (1115.9 million) lived on less than $ 5.50 a day, and in 2016 this was around 23.9% of the population, while 90% lived on less than $ 3.2 in 1990; in 2016 this was only 5.4%.  This trend is also confirmed by the data published by the National Bureau of Statistics of China (NBSC 1 ). In 1978 China's population was 962.5 million, of which around 82% (i.e. 790.1 million) lived in rural areas, and urban dwellers accounted for less than 18% of the population (172.4 million); China was an economy based on agriculture. In 1978 over 250 million rural residents lived under official poverty line, and the poverty rate was 30.7%. Assuming constant prices from 2010, 97.5% of the agricultural population lived in poverty, i.e. around 770 million people (Table 1). Source: National Bureau…, 2019). By 2019 the rural population living in poverty had fallen to 5.51 million, and the incidence of poverty was 0.6%.
Since the initiation of socio-economic reforms, living conditions in China have changed drastically.

Uninterrupted high economic growth and poverty reduction
The high dynamics of economic growth played a huge role in reducing poverty in China (Angang, Linlin, & Zhixiao, 2005). This is the longest-lasting growth in the world's economic history, which has remained above global growth since the beginning of the reforms (Figure 3). China's dynamic economic growth translated into a spectacular increase in income. Empirical evidence and the anti-poverty effect of economic growth and development have been widely discussed in literature (Angang et al., 2005;Huang, Zhang, & Rozelle, 2008;Pei, 2018;Ravallion & Chen, 2007;Rozelle, Zhang, & Huang, 2000;Sapkota, Wang, & Wu, 2017), among others. Between 1978 and 2018, GDP per capita in current US$ increased from $ 156.4 to around $ 9771. At the same time a significant reduction in poverty was recorded ( Figure 4).
According to NBSC data, the average annual GDP per capita growth rate in the period 1978-2018 was 8.4% (Table 2). GDP per capita increased from 385 yuan to 64,644 yuan, and per capita disposable income of households increased from 171 yuan to 28,228 yuan.
Given the GDP per capita dynamics, it is not surprising that out of China's vast population (1.39 billion in 2018) a significant part managed to get out of poverty.  Estimates show that China is a country whose achievements in poverty reduction are unprecedented (Angang et al., 2005).
Research results (Huang et al., 2008;Zhang, Huang, & Rozelle, 2003) prove that economic growth was a necessary but not sufficient condition to reduce poverty. While the phenomenon of extreme poverty has fallen sharply, this happened at different times. In the 1980s, despite the lack of policies aimed at reducing poverty, its reduction was almost spectacular (Angang et al., 2005;Ravallion & Chen, 2007).

The national strategies implemented by the Chinese authorities
In the 1950s the Chinese government sought to build an equal and uniform society by nationalising private property. The authorities, hostile to the market and capitalism, eliminated private enterprises and most market activities. The so-called folk communes based on the centralised management system and an egalitarian distribution system were created in rural areas (Chan, Ngok, & Phillips, 2008, p. 50 et seq.). The collective system, however, turned out to be ineffective, and low productivity meant a low standard of living.
The purpose of the economic reforms undertaken by the Chinese Communist Party was to strengthen the credibility of the political party and to improve social welfare. The reforms took place in the context of the difficult reality of a backward and poor economy, which had to feed a quarter of the world's population. Although Den Xiaoping's basic postulate was to reduce poverty and improve the well-being of the Chinese people, initially there was no policy aimed at this goal.
The first stage of the fight against poverty in the period 1978-1985 was mainly associated with national reforms in the main sector of the Chinese economy, i.e. agriculture. The agricultural reform covered, among others, the introduction of the so-called Household Responsibility System, which allowed to lease land to farmers. The tenants, after the implementation of the imposed production quotas, could sell their surpluses on the open market (Guo, Zhou, & Liu, 2019). The introduction of higher buying-in prices for agricultural products and price manipulation also became an element of agricultural production protection, as a result of which the prices of agricultural products grew faster than the prices of industrial products. These institutional reforms promoted poverty alleviation (Zhou, Guo, Liu, Wua, & Li, 2018, p. 54). Changes in agriculture and in the rural areas became the driving force behind poverty reduction (Montalvo & Ravallion, 2010).
Initiated reforms ensured dynamic production growth of 7.9% per annum in 1978-1984(Chan et al., 2008Chow, 2002). The increase in agricultural production meant an increase in the income of farms, which significantly reduced the problems of malnutrition and poverty (Rozelle et al., 2000). Angang, Linlin, Zhixiao (2005, p. 60) estimated that in the period of 1978-1985, annual poverty reduction was 17.9%. According to Ravallion and Chen (2007, p. 38), the reforms undertaken in this first period, in particular the de-collectivisation of agriculture and the transfer of responsibility to households, halved the national poverty rate. The number of people in poverty dropped from 250 million to 125 million (Sapkota et al., 2017).
From the second half of the 1980s, the Chinese government's activities became more targeted and focused on the poorest regions where the poverty rate in rural areas was very high. This stage was development-oriented poverty relief drive (Guo et al., 2019). The Leading Group for Poverty Reduction and Development (LGPRD), established in 1986 at the State Council, coordinated the fight against poverty through offices established at provincial, prefectural, and county levels in poor areas. There were three channels of financing the fight against poverty: the subsidised loan programme, the food for work programme (FFW programme) and the government budgetary grants (Sapkota et al., 2017). The subsidised loan programme guaranteed loans to households as well as industrial and agricultural enterprises, and was financed through state-owned banks, which facilitated its later expansion. The 'food for work' programme was aimed at reallocating the surplus of labour in agriculture to the development of transport, rail and water and sewage infrastructure in the poorest rural areas. The government budgetary grants program for the development of poor areas was to support investments, with particular emphasis on the development of technology, education and healthcare.
By 1993 the number of people living in rural poverty fell to 75 million, and the poverty rate was 8.2%.
In 1994, The 8-7 National Poverty Reduction Plan began the next stage in the fight against poverty undertaken by the Chinese authorities. This systemic and largescale programme aimed at improving natural conditions, expanding infrastructure and increasing the standard of living of Chinese society. Institutions at all levels of state administration became involved in poverty reduction efforts, which focused on the 592 poorest counties. The specific tasks concerned providing access to roads, electricity and drinking water for the poorest households, increasing per capita net income of households, supporting poor farms in improving land, increasing production in the agricultural sector, supporting employment outside farms, supporting primary education and improving health conditions. The three funds implemented in the previous period were maintained. Empirical studies showed that the level of fund allocation was strongly correlated with the level of poverty, which meant that the poorer counties received higher subsidies (Meng, 2013). As a result of the actions taken, the number of people living in poverty dropped to 32 million, and the poverty rate was 3.5% by 2000.
In 2001 the China Rural Poverty Reduction and Development Programme for 2001-2010 opened up another period of combating poverty. The most important change compared to previous programmes referred to the change of targeting the county poverty to that of village poverty. While in earlier programs, 592 poorest counties were targeted for assistance, under the new programme 150,000 of the poorest villages (more precisely: 148,131) not only from the poorest counties but also those outside them, were indicated. In these areas, covering about 80% of the total poor population (Guo et al., 2019), favourable solutions were introduced in the field of agricultural tax reforms as well as the distribution of funds for infrastructure development and support for social development, with a particular focus on the accumulation of human capital. The most important initiatives were the following (Sapkota et al., 2017): • an integrated participatory rural development plan, under which the residents themselves defined the projects to be financed, but the preparation and implementation of the budgets were left to experts and local government officials; • employee training and migration -new policy initiatives enabled young workers to migrate to cities to find work; local authorities organised training courses and workshops, as well as sponsored labour migration service centres, while vocational schools helped to train migrants; • a system of low-interest loans, thanks to which the Agricultural Bank of China and its local branches, through subsidising loans, steered industrial development, especially in the field of agribusiness in poor counties. These initiatives focused on investing in infrastructure, supporting agricultural and non-agricultural production, as well as supporting the accumulation of human capital by undertaking initiatives for education, healthcare and culture.
In 2007 a new social security system for rural areas came into force, which guaranteed a minimum income, a rural cooperative healthcare system and a rural pension insurance system. These activities enabled the development of local communities and led to an improvement in the well-being of many households in the poorest regions, bringing another million of Chinese citizens out of poverty.
In 2011 a new poverty reduction programme was introduced for the period of 2011-2020. Setting the new national poverty line at 2,300 yuan (in 2010 prices) resulted in a change in the estimate of the number of people remaining in poverty, which increased to 166 million in 2010.
The 'precision poverty alleviation' strategy, or targeted poverty alleviation, proposed by President Xi Jinping in 2013, precisely targeted and focused on clearly defined entities, namely poor households. The strategy's goal was to wipe out poverty completely by 2020 and to eliminate economic and social disparities between the regions, in which 14 poorest regions, 832 counties and 128 thousand villages were indicated as the beneficiaries of government assistance. The tool for implementing the strategy became the 13th Five-Year Poverty Reduction Plan adopted in 2015 for the 2016-2020, whose key slogans, i.e. innovation-based development, sustainable development, green development, open development and development for all, were to guide the further social and economic development of China. The overall goal of the plan was: 1) to build a moderately prosperous society by 2021 (on the 100th anniversary of the Communist Party of China); 2) to make China by 2049 (on the 100th anniversary of the People's Republic of China) a modern socialist country, rich, strong, democratic, with a high level of culture and a harmonious society.
For the first time, poverty alleviation was indicated as one of the goals of the Chinese five-year plan (Guo et al., 2019;Zhou et al., 2018, p. 54). To achieve the goal of lifting ten million people out of poverty every year, five key actions were formulated. The first is to support poor households through the development of agriculture and industry, as well as assistance in employment outside agriculture, especially in the areas related to technology, capital and marketing. The second action concerns the reallocation of ten million poor villagers living in remote areas in difficult natural conditions to more friendly areas for the sake of sustainable development . The next action is aimed at increasing household income and reducing poverty through the implementation of the so-called ecological compensation policies, which aims at subsidising agricultural activities undertaken for the benefit of sustainable development and ecosystem restoration. Another element of the strategy is the reduction of household poverty by supporting education, limiting the phenomenon of the intergenerational transmission of poverty, developing pre-school education, and providing free meals to all primary and junior high school students in poor counties or allowances for students from poor families. Support for poor households in the field of social security is also being undertaken, among others, through subsidies for minimum benefits, a reform of rural health care, facilitating access to basic health services, as well as pension insurance schemes (Sapkota et al., 2017;Zhou et al., 2018, p. 56).
The actions taken as part of the 'precision poverty alleviation' strategy resulted in a drastic reduction of the poverty level to 43.3 million in 2016 (Sapkota et al., 2017, p. 5) and to 5.51 million in 2019 (NBSC data). The national policies implemented by the Chinese authorities to eradicate poverty are summarized in the table below (Table  3). Progress in industrialization, accelerating the urbanization process and further reforms in rural areas have contributed to the gradual reduction of poverty .

China's challenges in poverty reduction
Poverty in China was and still is essentially of an agricultural nature, which is why most of the measures taken to reduce this phenomenon focused on underdeveloped agricultural areas. In the first few years since the initiation of economic reforms in China, agrarian reforms and lower tax burdens for farmers significantly reduced the level of poverty. In light of the empirical research, rural economic growth generated, among others, as a result of agricultural reforms undertaken in the late 1970s and the early 1980s, had a greater impact on reducing national poverty than urban economic growth (Chow, 2002;Ravallion & Chen, 2007). In the process of poverty reduction it was important to target direct actions towards income growth, support of human capital, as well as the feedback effect that occurred between economic growth and programmes implemented by the Chinese authorities. The implemented programs contributed to economic growth, and economic growth was conducive to reducing poverty (Zhang et al., 2003).
Accelerated urbanisation in China also played a significant role in reducing poverty. The proportion of people living in rural areas fell from 82.1% to 40.42% in the period under review, and those living in urban areas increased from 17.9% to 59.8%, yet this urbanisation had also another dimension.
Since the beginning of the reforms, the number of people employed in cities has been growing rapidly, and this phenomenon intensified at the beginning of the 21st century (Liu & Xiu, 2016). This was accompanied by a decline in employment in agriculture. Between 1978 and 2018, the share of urban employed persons increased from 23.6% to 55.9%, while the share of rural employed persons fell from 76.3% to 44.03%. The rapid urbanisation was influenced by the policy of the Chinese authorities, which since the 1980s has enabled a gradual transfer of labour from rural areas to non-agricultural industries, as well as the recruitment of employees from rural areas to enterprises. The increase in exports of industrial production played an important role in the transfer of labour to cities (Angang et al., 2005, p. 5 etc.). Rapidly developing regions, especially Guangdong, Shandong, Jiangsu, Fujian and Zhejiang Sheng attract agricultural labour force surpluses (Ravallion & Chen, 2007, p. 7).
As a result of the reforms and targeted government programmes, significant progress has been made in improving the parameters relevant to capital accumulation, such as increasing income, raising the standard of living, increasing life expectancy, increasing the level of education, and extending the average length of school education, decreasing the illiteracy rate, improving health conditions and improving medical care (Angang et al., 2005).
Despite many years of experience in anti-poverty policy, as well as the many successes of the Chinese authorities, the implementation of appropriate policy is a challenge.
Poverty reducing government programmes were implemented primarily in poor areas of the country, but many poor areas were omitted from various government programmes. There are still areas with high poverty rates.
The phenomenon of poverty still mainly affects agricultural areas, hard-to-reach regions, with poorly developed social and transport infrastructure, with uneven access to public services, low levels of healthcare and education, as well as regions with serious ecological problems Zhou et al., 2018, p. 55). The rural population is struggling with the problem of population ageing, a large percentage of disabled people, declining birth rate, low level of education, as well as housing problems (Zhou et al., 2018, p. 55;Liu & Xu, 2016). The scale of the phenomenon is intensified by the rural exodus to urban areas.
The effectiveness of actions is limited by problems with identifying the entities that aid should be provided to, the spheres of the aid, relevant projects and their distribution, proposing and implementing aiding measures, appropriate targeting and use of funds, as well as insufficient funds for poverty eradication (Guo et al., 2019). The strategy of targeted poverty alleviation implemented since 2013 is facing challenges arising, among others, from the land system, household registration system and ecological environment protection policies (Liu, Feng, Wang, & Qiu, 2020;Liu & Xiu, 2016). The barriers also include problems related to the methods of the measurement and identification of multidimensional poverty, the implementation of relevant measures, the resettlement of Chinese citizens, land supply, as well as the capital and the labour market (Li, Su, & Liu, 2016;Liu & Xiu, 2016;Zhou et al., 2018).
Although public expenditure has contributed to reducing poverty in China, it has not reduced inequality or social exclusion (Ravallion & Chen, 2007). Even if the Chinese authorities' goal is achieved and by 2020 extreme poverty in China is completely eliminated, the increasing inequalities in the distribution of welfare become a problem. The benefits of modernising the Chinese economy have not been distributed evenly among the citizens, and China is currently one of the most polarised societies. The Gini coefficient increased from 0.288 in 1981 to 0.357 in 2000and 0.468 in 2018(National Bureau..., 2019Ravallion & Chen, 2007, p. 20). This value is higher than the commonly accepted level of 0.4. Economic and social inequalities dividing society, the development disparities between rich and poor provinces as well as rural and urban areas are deepening (Ravallion & Chen, 2007).
An important reason for the growing income inequality in China is the change in the structure of the Chinese economy. From the beginning of the reforms, the share of the primary sector in generating GDP fell from 27.7% to 7.2% in 2018, while the tertiary (service) sector increased from 24.6% to 52.2%. As a consequence, the employment structure changed from labour-intensive in agriculture to capital-intensive in the industrial and services sectors. Between 1978 and 2018, employment in the primary industry fell from 70.5% to 26.1%, and it increased from 12.2% to 46.3% in the tertiary industry.
The data (Table 2) show strong disparities between the living standards of urban and rural residents. The annual disposable income of urban households is over 2.5 times higher than the income of rural residents, and these disparities are widening. The migration of the labour force from rural areas helps to reduce poverty nationwide, but increases inequalities, especially urban inequalities. Migrants coming from poorer agricultural areas due to the lower level of education, lower skills and competences or lower financial capital, are less likely to find a job in general or a better paid job, compared to migrants from richer rural areas.
There are also sharp disparities between individual regions (Angang et al., 2005). Chinese citizens living in eastern regions have a much higher disposable income than those in Central and Western China (Figure 7).
In the face of the slowdown of the Chinese growth rate in recent years, there is a risk that some of the population will return to poverty. A further reduction of poverty is an increasingly difficult task and the phenomenon of relative poverty is still common (Li et al., 2016;Liu et al., 2020;Liu & Xiu, 2016;Zhang et al., 2003).

Conclusion
In the 1970s the rural poor population in China was the largest in the world. Since the initiation of economic reforms in 1978, the level of poverty in Chinese society has dramatically decreased.
An important element of this process was the initiation of pro-market reforms undertaken by Deng Xiaoping which allowed for the high dynamics of economic growth. Initially there was no policy directly focusing on the problem of poverty, but the rapid and sustainable economic growth accompanied by socio-economic development resulted in reduction of poverty. As a result, the benefits were accrued by both the poor and the rich segments of the Chinese society.
In the next stages, the Chinese authorities put a lot of effort into the development of targeted policies to reduce poverty. The impressive effects of poverty alleviation were possible thanks to a long-term and consistent state policy which successively modified the implemented flagship anti-poverty programmes. The government implemented a variety of targeted initiatives within a specific strategy. They included the wide range of actions from those targeted on rural areas, through action focused on the poorest regions, counties and villages, to the operations concentrated on the poorest households. The change from a relief-oriented strategy to a developmentoriented poverty alleviation strategy allowed for an improvement in the effectiveness of the implemented actions.
The specific Chinese strategy has allowed millions of Chinese people to be lifted out of poverty, but the process of poverty alleviation, despite apparent successes, is still facing serious challenges. The phenomenon of poverty in China is still mainly a rural phenomenon and primarily concerns agricultural areas. The population in rural areas is facing enormous social, economic, and ecological problems.
It is necessary to focus actions and provide direct support to people living in poverty through the more precise orientation of poverty relief policies. Actions aimed at a further reduction of poverty or prevention from a return to poverty require not only the implementation of appropriate policy aimed at the most vulnerable entities and areas, but also the coordination of the antipoverty strategy, its diversity, confronting it with existing practices and changing conditions, as well as the continuous adaptation to new socio-economic problems and phenomena.