Poverty in China

Poverty in China has been a complex and millennia-long concern for the large Asian nation. For much of its history, China’s social structure was divided along class lines, with kings and wealthy nobles at the top, and impoverished peasant farmers and laborers at the bottom. With the Communist Revolution in the mid-twentieth century, the class structure was theoretically abolished, but implementing communist polices led to years of extreme poverty, famine, and starvation. China turned its economy around in the late 1970s by adopting market reforms that made it one of the world’s largest economies.

By every measure, poverty in China has decreased substantially since that time and into the first decades of the twenty-first century. According to the Chinese government, its targeted measures have reduced the poverty rate from 88 percent in 1981 to 0.6 percent in 2019. In comparison, the US Census Bureau reported the United States had an 11.4 percent poverty rate in 2020. In early 2021, the Chinese government announced that poverty had been eliminated in rural areas. However, China’s metrics have been questioned, as critics argue that the nation has set an artificially low standard for defining poverty, making it an easy hurdle to clear. Using standards set by the World Bank, about 17 percent of China’s population lived in poverty in 2021.

Background

The oldest-known Chinese dynasty began its rule in 1600 BCE, but archaeologists theorize an earlier dynasty known as the Xia may have existed before that. From 476 BCE to 221 BCE, China went through an extended period of civil war and political instability. The region was divided into warring states that battled for control. Ultimately, one warlord—Qin Shi Huang—defeated the other kingdoms and united the nation into an empire under his rule.

The Qin dynasty was not only the first imperial dynasty, but it was also one of the most impactful. The name China itself comes from the word Qin (Ch-in). Under Qin Shi Huang, the nation achieved scientific, technological, and cultural advancements. However, the Qin reign was short-lived. Qin Shi Huang was a cruel and oppressive tyrant who mistreated his people. He used the nation’s peasants and farmers as indentured servants, forcing them to work on countless projects for the empire. Qin Shi Huang died in 210 BCE—when his son was killed in 206 BCE, the Qin dynasty came to an end.

Ancient Chinese society was stratified along wealth and class lines that shifted over the course of the centuries. Typically, Chinese society was divided into tiers with the king or emperor at the top, followed by wealthy nobles and scholars. On the bottom rungs of the social ladder, merchants, artisans, peasant farmers, and laborers jockeyed for position. The order of this hierarchy changed during some periods, but it was usually very difficult to advance upwards without first acquiring large amounts of wealth.

Poverty among the lower classes was common throughout the nation’s long history. At times, China’s peasant farmers revolted against the harsh conditions they were forced to endure, but most often, they were powerless to change their situations. In the early second century CE, a monk named Zhang Daoling organized a religious movement against the Han dynasty, the ruling family that succeeded the Qin. Daoling’s movement was an effort to fight the corruption and extreme poverty that were rampant under the Han.

The lives of China’s peasant farmers were often made even worse by the occurrence of natural and ecological disasters. The Ming dynasty—which ruled China from 1368 to 1644—was brought down in part by a series of natural disasters and famine that prompted numerous peasant uprisings. In the late 1870s, a large famine in northern China killed between 9 million and 13 million people. In 1907, flooding in northern China led to severe crop failures that left as many as 25 million people dead.

Imperial rule in China endured from the start of the Qin dynasty in 221 BCE to the fall of the Qing dynasty in 1912, when the last emperor abdicated his throne. Afterwards, China was rocked by nearly four decades of civil war that led to sporadic food shortages and left many people in the grips of extreme poverty. The conflicts flared intermittently until the communist forces of Mao Zedong seized control in 1949, and Mao declared the existence of a new People’s Republic of China. Mao wanted to create a communist utopia and quickly transform China from a farming economy into a major industrial power. In the process, he hoped to increase the nation’s prosperity and reduce poverty among the rural poor.

In 1958, Mao instituted what he called the Great Leap Forward. As part of his plans, the nation’s farms were collectivized, and industrialization, such as steel production, was ramped up. Farmers whose families had worked their own land for generations were forced to work on agricultural collectives controlled by the state. Others were removed from farm work and moved to industrial production, where many had no experience.

The mismanaged policies of the Great Leap Forward soon led to a severe drop in crop production and a catastrophic collapse of the Chinese economy. Widespread poverty and extreme famine produced mass starvation across the country. Estimates place the number of dead at between 30 million and 45 million people before Mao halted his policies in 1961. It was the deadliest famine and the largest non-wartime cause of mass death in human history.

Overview

In 1978, after the death of Mao Zedong, new Chinese premier Deng Xiaoping sought to undo Mao’s missteps and reshape China’s economy by keeping its communist framework while introducing some Western-style market reforms. Deng continued his reforms into the 1980s and 1990s, and the economy responded by posting decades of sustained economic growth. From 1978 to 2020, China’s economy grew at a double-digit rate sixteen times, topping out at 15.2 percent in 1984. By 2010, China had become the second-largest economy in the world—trailing only the United States—and was projected to surpass the US around 2030.

At the beginning of Deng’s economic reforms, poverty among China’s rural communities was still extremely high. Using standards established by the World Bank—a poverty line of $1.90 earned per day based on 2011 prices—the nation’s poverty level in 1981 was at 88 percent. At the time, China had just become the first nation to pass the one billion mark in population, meaning more than 880 million people were estimated to have lived in poverty.

Over the next few decades, the booming Chinese economy improved living conditions for many citizens. According to the World Bank, the nation’s annual per capita income—calculated in 2020 US dollars—rose from $197 in 1981, to $1,053 in 2001, to $4,550 in 2010. In 2012, Xi Jinping became head of China’s Communist Party, and announced a program to eradicate poverty in the nation within eight years. The government allocated more than 1.6 trillion yuan (US$248 billion) in nationwide initiatives. Local communist officials visited each household in the nation’s poorest regions to gauge what was needed to raise that household above a pre-set level. The government provided aid that ranged from monetary loans to farm animals.

Many of China’s poorest provinces are in its rural western and southwestern regions, with more than half of that nation’s poorest residents located in those areas in the late 2010s. In 2017, the nation’s poorest province was Xinjiang, a northwestern province with a poverty rate of 9.9 percent. Gansu, Guizhou, Tibet, and Yunnan provinces also had poverty rates greater than 7 percent. The average poverty rate in the western and southeastern provinces in 2017 was 5.6 percent. In contrast, China’s Jiangsu Province, on the eastern seaboard, announced that only seventeen people out of its more than 80 million residents lived below the poverty line in 2019. Although poverty was more prevalent in western China, its eastern provinces were not immune. For example, in Lulong county in the Hebei Province, impoverished villagers have been stealing bricks from the iconic Great Wall of China to build homes. The problem became severe enough that the government imposed substantial fines on anyone caught removing bricks from the wall.

By 2000, the percentage of people living below the poverty line had fallen to slightly less than 50 percent—49.8 percent—which translated to approximately 631 million people. A decade later, China’s poverty rate had dropped to 17.2 percent. In 2013, the Chinese government listed nearly one-third of its counties as “poverty-stricken.” By 2019, it claimed that only fifty-two out of its 1,355 counties remained on the poverty lists. In 2020, the Chinese government reported that less than 1 percent of its population lived in extreme poverty.

In February 2020, President Xi announced that his anti-poverty initiative had been successful, with more than 100 million people no longer considered living below the poverty level and extreme poverty virtually eliminated across the nation. Xi’s claims came under fire from international observers who noted he offered few specifics and cited the Chinese government’s penchant for changing what it considers to be the poverty level over the years.

As laudable as Chinese efforts to eradicate poverty had been, a criticism was that the Chinese government had manipulated numbers and definitions to make its achievement more impressive than it actually was. For example, previously, Chinese officials had considered the poverty line to include those making less than 4,000 yuan a year—the equivalent of $657 US dollars. In 2019, China redefined its poverty level at an annual income of 2,300 yuan, or US$356. Thus, by simply redefining what the country considered poverty, the Chinese government could claim fewer people were officially impoverished. At the time of Xi’s announcement, the Chinese government considered the poverty level to be the equivalent of $2.30 a day based on 2011 purchasing power—above the World Bank’s mark of $1.90 a day. China claimed that only 0.6 percent of its population earned below the $2.30-a-day threshold in 2020. Considering China’s 2020 population was about 1.4 billion, that would equate to 8 million people.

However, the World Bank’s $1.90 standard applies to developing nations where the average per capita income is less than US$1,000 a year. For wealthier nations, the World Bank recommends a higher threshold to determine the poverty level. In nations with an annual per capita income between $1,000 and $4,000, the World Bank sets a rate of $3.20 a day. Nations such as India, which had a 2011 poverty rate of 22 percent, fall under this category. For these nations, the bank recommends a $5.50-per-day income standard to set its poverty level.

Using this figure, 24 percent of China’s population was still below the poverty line in 2016. This rate was higher than that of other upper-middle-income nations, where the rate was 22 percent in 2016 and had dropped to 16.1 percent in 2019. In addition, as of 2019, close to 40 percent of the nation—about 600 million people—lived on the US equivalent of $155 a month, or about $1,860 a year. Still, China’s poverty eradication program can be termed a success. Using the $5.50-per-day standard, almost every person in China would have lived below the poverty line in 1990.

In February 2021, Chinese President Xi Jinping announced that extreme poverty had been eradicated in China and that a final 100 million people had been pulled from the ranks of the extremely impoverished. Nonetheless, while many critics acknowledged that China had done remarkably in reducing poverty, its official statistics were often criticized as cosmetic.  

By the mid-2020s, as China had previously turned to capitalism to pull its country out of extreme poverty, it likewise experienced negative side effects inherent to free-market enterprise. One side effect was income inequality. A report by Stanford University indicated that the top 0.1 percent of China’s wage earners saw their income increase by 12 percent annually in the thirty years from 1988-2018. In the same period, the bottom 5 percent of China’s wage earners experienced a rise in income of less than 5 percent annually. In 2024, China had an annual per capita income of $13,300, placing it in the upper-middle income range of the World Bank scale.

In the mid-2020s, China began to experience a more mature economy that could not continue growing at astonishing rates. China had begun its rise to economic prowess from a low level of economic development. In a sense, its rise mirrored that of the former Soviet Union, which had had a sharp spurt of economic development following World War II, when the country had been devastated. The Soviet economy would later become stagnant. The Chinese economy underperformed in 2023 due to the lingering effects of the COVID-19 pandemic and supply chain disruptions. Analysts continued to assess whether China would re-ignite its former pace of development or had entered a new phase of traditional business cycles of both growth and retraction.

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