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China's Growth and Poverty Reduction: Recent Trends Between 1990 and 1999

24 Pages Posted: 26 Sep 2001  

Shaohua Chen

World Bank; World Bank - Development Research Group (DECRG)

Yan Wang

Peking University; World Bank - Economic Policy and Poverty Reduction

Date Written: July 18, 2001

Abstract

During the 1990s, China's poverty declined significantly across a wide range of poverty lines. China's poor have benefited much less from economic growth than the rich. Education is positively and significantly related to growth and poverty reduction - but the regional disparities of education are widening. Education must be more equitably distributed if China is to attack poverty and inequality.

Chen and Wang investigate recent trends in poverty and inequality in China, decomposing data on poverty reduction to see who has benefited most from China's economic growth. They find that, by several measures, poverty declined significantly in the 1990s, across a wide range of poverty lines, except that a slight slowdown in China's export and economic growth in 1997-99 might have hurt the poor. There was a slight increase in the poverty headcount between 1997 and 1999, using lower poverty lines, and a worsening of the poverty gap index. Average per capita consumption declined for farmers, especially those living in poor regions such as Gans, Heilongjiang, Shanxi, and Xinjiang. It is unclear whether this decline was attributable to Asia's economic crisis.

Economic growth contributed significantly to poverty reduction, but rising inequality worsened both rural and urban income distributions - except during the Asian crisis when the distribution remained relatively stable.

The poor benefited far less than the rich from economic growth. Income growth reached or exceeded the average growth rate only for the richest 20 percent of the population.

Chen and Wang then examine the relationship between human capital, growth, and poverty. They find that the accumulation of human capital had slowed and that there is a huge regional disparity in human capital stock. And the distribution of education is becoming increasingly skewed. China must address this problem if it is to succeed in attacking poverty and inequality.

This paper - a joint product of Poverty, Development Research Group, and the Economic Policy and Poverty Reduction Division, World Bank Institute - was presented at a WBI-PIDS seminar, "Strengthening Poverty Data Collection and Analysis," Manila, April 30-May 4, 2001. The authors may be contacted at schen@worldbank.org or ywang2@worldbank.org.

JEL Classification: D31, O15, O53

Suggested Citation

Chen, Shaohua and Wang, Yan, China's Growth and Poverty Reduction: Recent Trends Between 1990 and 1999 (July 18, 2001). World Bank Policy Research Working Paper No. 2651. Available at SSRN: https://ssrn.com/abstract=285259

Shaohua Chen

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Yan Wang (Contact Author)

Peking University ( email )

Center for New Structural Economics
National Schoold of Development
Beijing, 100872
China

World Bank - Economic Policy and Poverty Reduction ( email )

1818 H Street, NW
Room J3-061
Washington, DC 20433
United States
202-473-3219 (Phone)
202-676-9810 (Fax)

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