IN the last two decades a lot of changes took place in China's poverty reduction. A drastic decrease in the size of poverty-stricken population in this emerging Asian country has drawn the attention of the world community. China's poverty incidence was reduced to 2.5 per cent by 2005. With some positive achievement in poverty alleviation, Bangladesh reduced the incidence of its poverty from 58.8 per cent in 1991 to 40 per cent in 2005. China achieved a much greater success. During the last one and a half decades the average rate of poverty reduction in Bangladesh stood at 1.34 per cent per year.
"Initiate the process of examination of social protection policies in various countries and their financial implication and modes of financing" states the sixth policy matrix of Poverty Reduction Strategy Paper (PRSP), a policy agenda of Bangladesh
China made major policy shifts in the recent decades to address its poor rate of rural poverty reduction and bad living condition of farmers in the mid 1980. China initiated a well-planned and well-organised massive campaign by establishing institutions specialising on poverty reduction and encouraging all social sectors to participate in aiding the poor under a Seven-Year Priority Poverty Alleviation Programme (1993-2000).
In contrast, Bangladesh pursued a growth-led poverty reduction strategy. It stressed export-led growth through import substitution to achieve the goal. Recently, PRSP formulation reflected another pro-poor growth policy shift.
The Chinese government took Development-oriented Poverty Reduction Programme for Rural China for the first decade of the 21st century, (2001-2010), to boost its agricultural and rural economy by promoting agriculture-based industry. It initiated, in the rural areas, development of manpower that was later employed in the urban areas.
In comparison, Bangladesh in this century (since 2003) formulated PRSP and a Three Year Rolling Investment Plan. Though there is no specific programme for poverty reduction in Bangladesh, its programmes for health, nutrition, population, primary education development and some other social safety-net programmes would directly help the poor to get out of poverty.
In the late 1970s when China adopted market economy, its per capita GDP grew at an average rate of above 8.0 per cent. China later shifted its focus to economic development through industrialisation in 1984. The government's investment in agriculture declined consistently and all facilities, such as loans, were made available to the industrial sector. Poor infrastructure and natural disasters in 1985 and 1986 caused huge losses to agricultural production. Due to liberalisation, the prices of chemical fertilisers, pesticides and diesel oil climbed up enormously, which in turn increased grain production cost. The Chinese government reduced the procurement prices of food grains and cotton in 1985. As a result, per capita income in rural areas experienced negative growth during 1986-1993. Furthermore, the closure of cooperative medical services resulted in the deterioration of farmers' health. Economic, social and cultural gap started to widen between the impoverished rural regions and the urban centres.
To face the challenge, China in 1986 established State Council-led Group of Poverty Alleviation and Development (an organisation specialised in poverty). Its responsibilities include: (1) research and framing of draft policies, (2) ensuring coordination between the efforts of society and the government, (3) selection of poor counties (districts) (4) statistical monitoring, (5) formulating plans for the poverty alleviation funds and projects (6) organising advocacy and publicity for poverty reduction programme, (7) carrying out of international exchanges and cooperation on poverty alleviation, (8) training the officials from impoverished regions, and (9) undertaking other entrusted tasks.
There is no such organisation in Bangladesh comprehensively responsible for poverty alleviation. Rather, different ministries and divisions execute a variety of safety-net programmes. A small "Poverty Monitoring and Analysis Wing" in the General Economics Division under Planning Commission is mainly responsible for assessing the macro impact of the programmes.
China earmarked three different poverty alleviation funds for the impoverished counties: poverty alleviation loan; work relief fund and financial development fund. Coordinated by the central government, the poverty alleviation loans were offered by different financial institutions to poor groups for production activities. Since 1989, loans were indirectly provided to the economic entities rather than directly to the rural households because the loan recovery rate was lower than the expected figure. In Bangladesh some specialised banks and financial institutions, providing loans for agricultural production, also experienced a very low recovery rate.
China utilises the work relief fund to construct roads, irrigation system, farming projects and other infrastructure in poor regions, using surplus, unemployed or hidden-unemployed labourers in such areas to improve their short-term earnings and long term development capacity. This multi-year plan is managed and carried out by National Development and Reform Commission (Planning Commission). Exchange grains, fabrics, and daily useable industrial products are the special features of the programme.
The financial development fund is mainly used for supporting production-oriented project preparation, development of small-scale infrastructure facilities, improvement of basic education, cultural and hygiene sectors, promotion of science and for technology, and training and industrial development.
China's preferential policies for the poor provides special support to the disadvantaged to minimise the impact of income difference in the wake of imbalanced regional development and the impoverished introduced by its spectacular economic growth.
Like China, Bangladesh should have preferential policies for the concentrated poverty in its northwestern region. The PRSP recommended preferential treatment for the 'monga'-affected areas and the indigenous people there.
China's state council-lead group set a standard of "absolute poverty line" to measure poverty. The council first identifies the poverty-stricken counties using '631 index' method to focus on a township or village. Every village displays a list of the poor needing the support. The council maintains a file for each poor person to bring him or her out of poverty providing different supports. The challenge before Bangladesh is to identify each individual poor person in every village or locality to address poverty for good results.
To accelerate poverty reduction, China launched a 'Seven-Year Priority Poverty Alleviation Programme' in 1994 to mobilise talent, materials, funds and people to solve the problem of food and clothing by 2000. This poverty alleviation programme, first ever in Chinese history, defined the objectives of poverty alleviation and the measures to address it with a clear timeframe for poverty eradication. On completion of the programme, China solved its food and clothing problem of the rural poor. Though the indicative cost is high, Bangladesh can formulate such a programme in the future, focusing only on poverty alleviation.
In the past, China used to provide mainly relief-oriented support to the impoverished areas, which played a positive role in poverty reduction but failed to ensure sustainable development. That is why China started paying special attention to ensure better living environment, education, healthcare, and develop the capacity of impoverished households to permanently lift them out of poverty. This approach is relevant for Bangladesh, still searching for sustained poverty reduction.
To establish an all inclusive 'xiaokang' society, where people can enjoy a fairly comfortable life, China formulated a "Development Oriented Poverty Reduction Programme for Rural China (2001-2010)". Its objectives include: 1) refining the existing lists of the targeted poor, 2) ensuring efficient management of the poverty reduction funds, 3) involving all circles of society to take part in the poverty reduction programmes, 4) development of social undertakings by increasing investment in the compulsory education and advanced health service in poverty-stricken rural areas, and 5) expanding the scope of international cooperation.
The programme addresses three issues to emphasise key points of work: A) village-based development-- to pursue poor households to take part in project design, implementation, management and problem resolution activities according to the needs of livelihood and production of farmers. B) Promotion of labour transfer by training to meet the massive demand for labour in manufacturing industry. Under it, the poor in the villages are trained for employment in urban areas and C) industrialised poverty reduction that aims to raise farmers' income by supporting leading enterprises in undeveloped areas.
The number of the absolute poor in China decreased to 23.65 million in 2005 from 32 million in 2000. A total of 8.35 million people were lifted out of poverty in five years, or 5.87 per cent per year. The number of the low-income poor has decreased steadily. During 2002-2005 per capita net income of the rural population in some major villages grew at an average annual rate of 9.1 per cent. Positive changes in infrastructure ensured access to roads, power supply, telephone communication, television connection in key counties and villages. China sharply brought down the drop-out rate of school children and the proportion of illiteracy or semi-literacy in the labour force. The participation of impoverished people with development process has been increased.
To replicate China's success story in poverty alleviation, Bangladesh can learn more to follow its programmes. By implementing its development-oriented programmes, Bangladesh can create more trained people in the urban areas rather than increasing the number of beggars. It will help increase the productivity of urban workforce and augment income of the villagers.
The writer, an official in the Economics Relations Division under the Finance Ministry, can be reached at Email: arifeconomic@yahoo.com
