China’s “Miracle of Poverty Reduction”: From an Extremely Poor Country to a Moderately Prosperous Society in All Respects

Abstract

The process of China comprehensively building a well-off society is one where the phenomenon of poverty is continuously reduced, and the people become increasingly prosperous. Poverty alleviation, comprehensive well-being, and common prosperity are interconnected and internally consistent, yet each has its own emphasis and differences. Poverty alleviation is an important part of and the bottom-line task for comprehensive well-being. Only by winning the battle against poverty can the “quality” of a comprehensive well-off society be ensured. Comprehensive well-being is an important foundation for achieving common prosperity. Only by realizing comprehensive well-being can a solid foundation be laid for achieving common prosperity. Common prosperity is the ultimate goal of poverty alleviation and comprehensive well-being. Only by promoting common prosperity can the achievements of poverty alleviation and comprehensive well-being be truly consolidated, further highlighting the superiority of the socialist system with Chinese characteristics.

The process of China comprehensively building a well-off society is one where the phenomenon of poverty is continuously reduced, and the people become increasingly prosperous. Poverty alleviation, comprehensive well-being, and common prosperity are interconnected and internally consistent, yet each has its own emphasis and differences. Poverty alleviation is an important part of and the bottom-line task for comprehensive well-being. Only by winning the battle against poverty can the “quality” of a comprehensive well-off society be ensured. Comprehensive well-being is an important foundation for achieving common prosperity. Only by realizing comprehensive well-being can a solid foundation be laid for achieving common prosperity. Common prosperity is the ultimate goal of poverty alleviation and comprehensive well-being. Only by promoting common prosperity can the achievements of poverty alleviation and comprehensive well-being be truly consolidated, further highlighting the superiority of the socialist system with Chinese characteristics.

This chapter views China's “poverty reduction miracle” as a perspective to sort through the historical process of eliminating absolute poverty. It analyzes the institutional support behind the “poverty reduction miracle,” thus deeply understanding how China has transformed from a major poor country to a comprehensively well-off society, and further building a society of common prosperity.

1.1 China Creates a World “Poverty Reduction Miracle”

The concept of “xiaokang” (moderate prosperity) is rooted in traditional Chinese culture. More than 2000 years ago, it was first mentioned in the “Book of Songs,” an ancient collection of Chinese poetry. The idea was to advise rulers to empathize with the hardships of the people's lives and to align with the simple wishes and earnest hopes of the people for a peaceful life. Thus, “xiaokang” embodies the profound cultural heritage of China and has been a beautiful vision deeply rooted in the hearts of the Chinese people for thousands of years. However, throughout the thousands of years of dynastic rises and falls, and the unification and division of the country, constrained by the level of productive forces and the feudal social system, the “xiaokang society” has always been a fantasy, and ordinary people have always lived in poverty, struggling for survival. Especially, when Western countries successively started industrialization and gradually moved toward modern society, China gradually became a laggard and marginalized in industrialization. After the Opium War broke out in 1840, the Chinese nation suffered unprecedented disasters, and the state was weakened and impoverished, with the people living in hardship.

More than 100 years ago, the founding of the Communist Party of China profoundly changed the course of Chinese history. It deeply altered the direction and process of the development of the Chinese nation after modern times, profoundly transformed the destiny and future of the Chinese people and the Chinese nation, and profoundly changed the trend and pattern of world development. Under the leadership of the Communist Party of China, the People's Republic of China was established, realizing national independence and people's liberation, and initiating China's industrialization and modernization. After the founding of the People's Republic of China, China went through the socialist transformation of agriculture, handicrafts, and capitalist industry and commerce, and gradually established a planned economic system. During the period of the planned economy, China embarked on industrialization with an extremely low level of economic development and human capital, and the Chinese economy entered a period of modern economic growth. Although the Chinese economy experienced significant fluctuations during this period, the average growth rate was higher than any other period in history, laying an industrial foundation for China's reform and opening up. According to data from the National Bureau of Statistics of China, from 1952 to 1978, China's average GDP growth rate reached 6.1%, and the average per capita GDP growth rate was 4%.

Despite the high growth rate during the planned economy period, the extremely low level of economic development at the beginning of the founding of the People's Republic of China determined that eradicating poverty was a daunting task. At the beginning of the reform and opening up in 1978, China was still an extremely poor country, one of the poorest in the world. According to China's national poverty line standards in 2010, the rural poverty incidence rate was 97.5%. Therefore, eradicating poverty was an important task that must be completed in China's modernization construction, and it was also linked with the concept of Chinese-style modernization. On December 6, 1979, Deng Xiaoping responded to questions from Ōhira Masayoshi regarding China's realization of the four modernizations, stating, “Our concept of the four modernizations is not like your concept of modernization, but a ‘moderately prosperous society’.” He explicitly proposed the goal of establishing a moderately prosperous society in China by the end of the twentieth century, pointing out, “What is meant by moderately prosperous, in terms of gross national product, is an average per capita income of 800 US dollars.”

Since Deng Xiaoping creatively proposed the concept of “xiaokang” (moderately prosperous) in 1979, building a moderately prosperous society has become the political commitment of the Communist Party of China in governance. Under the leadership of four generations of leaders, Deng Xiaoping, Jiang Zemin, Hu Jintao, and Xi Jinping, and through continuous efforts over 40 years, the goal of “moderately prosperous” has been realized step by step, from “moderately prosperous households” to a “moderately prosperous society,” from “overall moderate prosperity” to “comprehensive moderate prosperity,” from “comprehensive construction” to “comprehensive completion.” The goal of moderate prosperity has been continuously realized, and the dream of a moderately prosperous society has become a reality.¹

Figure 1.1 reflects the continuous decline in the proportion of the rural poor in China.² According to the current 2010 national poverty line, in 1978 nearly all (97.5%) of the rural population were poor; by 2000, 50% of China's rural population was poor, and China remained a low-income country; by 2012, 10.2% of China's rural population was still poor, representing the segment of the population that was hardest to lift out of poverty. Since the 18th National Congress of the Communist Party, with Xi Jinping at its core, the Party Central Committee has placed poverty alleviation in a prominent position in national governance, making it the bottom-line task for building a comprehensively prosperous society. Precision poverty alleviation and targeted poverty eradication have been adopted as basic strategies, organizing a people's war on poverty alleviation. By 2020, China had achieved total poverty alleviation in rural areas, eliminating absolute poverty, resolving regional poverty, and historically resolving the issue of absolute poverty that has plagued the Chinese nation for thousands of years, which has also become a key indicator and the biggest highlight in the building of a comprehensively prosperous society.

Fig. 1.1

(Unit: %)

Proportion of rural poor population in China from 1978 to 2020

Since the 18th National Congress, the income of the poor population in our country has increased significantly. The average disposable income of rural residents in poor areas increased from 6079 yuan in 2013 to 12,588 yuan in 2020, with an average annual growth of 11.6%, consistently outpacing the national rural average and 2.3 percentage points higher than the national rural rate. Especially, the work on precision poverty alleviation has been outstanding. Over 90% of the registered poor population have received support for industrial poverty alleviation and employment, with an average annual increase in per capita net income of 30.2%, steadily enhancing their ability to independently lift themselves out of poverty. Besides significant income growth, the infrastructure and public service levels in poor areas have also markedly improved. In terms of infrastructure, all eligible villages have access to paved roads, a 99% reliability rate in rural power supply, and 98% broadband coverage in poverty-stricken villages in deeply impoverished areas. In terms of basic public services, every poor village has a health clinic and village doctor, and the conditions of 108,000 weak compulsory education schools have been improved. Overall, the production and living conditions of people in poor areas have significantly improved, with “two no worries” (about food and clothing) notably enhanced, and “three guarantees” (in education, healthcare, and housing) generally resolved.³

From the perspective of international poverty reduction, China's achievements in poverty alleviation can be described as a “poverty reduction miracle.” As shown in Fig. 1.2, according to World Bank statistics and based on the global absolute poverty standard of living on less than $1.90 per day (2011 purchasing power parity), China's poverty incidence in 1990 was 72.0%, higher than the global average of 37.8%, and even higher than the poverty incidence in Sub-Saharan Africa (53.3%). At that time, China's poor population accounted for 40.8% of the global poor population, far exceeding the proportion of China's population in the world population (21.4%). Therefore, despite over a decade of reform and opening up, China was still a major poor country in the world, and poverty was a widespread phenomenon in China. However, by 2019, China's poverty incidence had decreased to 0.1% according to this standard, accounting for only 0.2% of the global poor population, and China had essentially eliminated absolute poverty, while the average poverty incidence outside China was 10.2%.

Fig. 1.2

(Unit: %) (Data Source Official website of the World Bank)

Proportion of the population living on less than $1.90 per day

It is important to note that the World Bank also provides two other poverty line standards, namely living on $3.20 per day (lower-middle poverty line) and $5.50 per day (upper-middle poverty line). Based on these two poverty line standards, China's achievements in poverty reduction are still remarkable. According to the $3.20 per day standard (see Fig. 1.3), China's poverty incidence in 1990 was as high as 92.7%, far exceeding the global average of 56.3%, but this figure has continuously declined, dropping to 3% in 2019, much lower than the global average of 23.5%. Similarly, based on the $5.50 per day standard (see Fig. 1.4), China's poverty incidence also declined from significantly higher than the global average to significantly lower.

Fig. 1.3

(Unit: %) (Data Source Official website of the World Bank)

Proportion of the population living on less than $3.20 per day

Fig. 1.4

(Unit: %) (Data Source Official website of the World Bank)

Proportion of the population living on less than $5.50 per day

In this sense, China had eliminated poverty at a relatively high level by 2020. In the 15 years of implementing the United Nations Millennium Development Goals (1990–2015), China achieved a fundamental transformation from a poor country to a moderately prosperous country, making an outstanding contribution to the global cause of poverty reduction. In September 2015, on the 70th anniversary of the United Nations, former World Bank President Jim Yong Kim highly praised China's poverty reduction achievements, saying, “Over the past 25 years, China has played the greatest role in eliminating extreme poverty in human history. China is the most experienced country in the world in poverty eradication.” China's “poverty reduction miracle” not only made the greatest contribution to the global poverty reduction cause but also proved to the world that poverty is not insurmountable. It enhanced the confidence of developing countries in overcoming poverty and provided experiences for many developing countries in advancing their poverty reduction efforts. United Nations Secretary-General António Guterres believes that the strategy of precision poverty alleviation is the only way to help the poor and achieve the ambitious goals set in the 2030 Sustainable Development Agenda. China's experience can provide useful lessons for other developing countries. China's poverty reduction experience has been included in the United Nations General Assembly's “Elimination of Rural Poverty to Implement the 2030 Agenda for Sustainable Development,” contributing Chinese wisdom to promoting global poverty reduction. In the future, China will also promote international poverty reduction cooperation based on the concept of building a community with a shared future for humanity, demonstrating the responsibility of a major country, and contributing to the advancement of the United Nations Sustainable Development Goals.

1.2 The Historical Process of China’s Creation of the “Poverty Reduction Miracle”

2019 Nobel laureate in Economics, Abhijit Banerjee, and Esther Duflo conducted a 15-year-long in-depth study on the poor populations in 18 countries and regions across five continents, showing that the main causes of poverty include unstable social situations, harsh natural environments, backward education levels, and the absence of social assistance mechanisms. This conclusion is also applicable to the poverty experienced throughout China's history. To understand the great significance of China's poverty reduction, one must start from the 200-year development history of modern China.

According to the research of economic historian Angus Maddison, in 1820, China was not only the country with the largest population (accounting for 36.6% of the world) but also the country with the highest total GDP in the world (accounting for 33.3%), with a per capita income level roughly equivalent to the world average. However, after the main Western countries rapidly entered the industrialization phase, China experienced a century of development stagnation and decline. A fundamental reason for China's backwardness and suffering in modern times was the lack of a strong and modern-aware state leadership, which is an important reason why China could not effectively respond to the world industrial revolution and why it could not initiate industrialization and modernization. It was not until 1949, with the establishment of the People's Republic of China, that the Communist Party of China ended the turbulent social situation that had persisted since 1940 and began independent industrialization and socialist construction. For the “poverty reduction miracle” in China, the leadership of the Communist Party of China is the fundamental reason behind all poverty reduction systems. This chapter will sort out China's poverty reduction practice from three aspects: the industrial and human capital foundation created during the socialist construction period, the rapid economic and social development since the reform and opening up, and the continuous improvement of the national poverty alleviation system, seeking the systemic explanation behind China's creation of the “poverty reduction miracle.”

1.2.1 The Socialist Construction Period Laid the Foundation for the Creation of the Poverty Reduction Miracle

The economic and social development during the socialist construction period laid the industrial and human capital foundation for the creation of the poverty reduction miracle after the reform and opening up. It was only after the establishment of the People's Republic of China that China truly entered the period of modern economic growth. However, more than 100 years of poverty and weakness in modern China meant that the country began socialist construction under extremely backward conditions, and the development situation at the beginning of the new China can be summarized as “poor and blank.” Therefore, how to promote economic development and win national independence through industrialization, as well as how to improve national quality through the development of science, education, culture, and health, became urgent needs for national development. This was also a long-term historical task after the establishment of new China. During this period, China did not implement a national strategy specifically for poverty reduction, because poverty was an extremely common phenomenon in this development period. The basic national conditions of China at that time also determined that reducing poverty was not an overnight task; its existence was not a short-term phenomenon, and reducing and eliminating poverty would inevitably go through several development stages. In fact, until the beginning of the reform and opening up in 1978, China was still a major poor country. According to the national poverty line standard of 2010, the rural poverty incidence rate in China in 1978 was 97.5%, and the rural poor population reached 770 million.

Although China still faced severe poverty issues at the beginning of the reform and opening up, compared to previous historical stages, the country achieved economic development during the planned economy period that surpassed previous historical levels, and the living conditions of the people were significantly improved. An important manifestation of this was the significant increase in average life expectancy and education levels. China's average life expectancy rose from 35 years in 1950 to 65.9 years in 1978. Internationally, in 1978, China's life expectancy was even slightly higher than that of Mexico, although Mexico's per capita income level in 1977 was six times that of China. During this period, the achievements in the health sector were largely a result of the development of China's public health undertakings. For example, after the establishment of the People's Republic of China, under the leadership of the Communist Party of China, governments at all levels mobilized the masses to carry out continuous, nationwide patriotic health campaigns, significantly reducing the prevalence of infectious diseases; despite extremely low levels of economic development, a primary public health system was established, providing the people with basic, accessible, and affordable medical and health services and protection, becoming an important factor in increasing life expectancy. The World Bank highly praised China's health development achievements in its “1993 World Development Report,” stating, “By the late 1970s, health insurance in China covered almost all urban populations and 85% of the rural population, a feat unparalleled in other low-income countries.”

In terms of educational development, China's adult literacy rate increased significantly, and primary education was basically universal, with the average years of education rising from 1 year to 4.6 years. According to data from the World Bank's “1983 World Development Report” and “1984 World Development Report,” China's adult literacy rate had reached 69% in 1980, and the enrollment rate in secondary education reached 44% in 1981, both significantly higher than most low-income countries and also at the forefront compared to lower-middle-income countries at the time. The significant achievements in education and health laid the human capital foundation for further advancing industrialization and urbanization after the reform and opening up, and for opening up to the outside world and integrating into the global economy, which also became the human capital foundation for China's significant achievements in poverty alleviation.

1.2.2 Sustained High Economic Growth After the Reform and Opening Up Promotes Large-Scale Poverty Reduction

Economic development is a necessary condition and the fundamental driving force for poverty reduction. The Eleventh Central Committee of the Communist Party of China made a historic decision to shift the focus of the Party's work to economic construction and implement reform and opening up. This was a great turning point of profound significance in the history of the Party since the founding of the People's Republic of China, marking the beginning of a new period of reform and opening up and socialist modernization construction in China, and opening up the path of socialism with Chinese characteristics, gradually exploring a way out of poverty. Rapid economic and social development after the reform and opening up became the main driving force for large-scale and significant poverty reduction. On the one hand, economic development laid the material foundation for social progress, promoting the development of science, education, culture, and health, and in turn laid the human capital foundation for economic development. On the other hand, economic development creates employment opportunities, which play a key role in lifting the poor out of poverty. Since the reform and opening up, under the leadership of the Communist Party of China, China has firmly advanced reform and opening up, continuously established and improved the socialist market economic system, adopted an economic development path suited to China's national conditions, advanced industrialization and urbanization, created economic opportunities for all people, and drove down the poverty incidence rate. From 1979 to 2022, over more than 40 years, China's GDP grew at an average rate of 9.0%, and the per capita GDP growth rate reached 8.1%. The sustained high-speed growth of the economy led to a continuous increase in the per capita income levels of urban and rural households, thereby continuously reducing poverty.

China's ability to maintain high-speed growth for over 40 years objectively proves that it chose the correct path of reform and opening up. After the Third Plenary Session of the Eleventh Central Committee of the Party, China clarified the development strategy centered on economic construction, gradually reformed the highly centralized planned economic system, and gradually established and improved the socialist market economic system. In practice, China initiated economic reforms from the rural areas, implemented the household responsibility system, vigorously developed township enterprises, advanced state-owned enterprise reform, actively developed individual, private, and foreign-funded economies of various ownerships, gradually releasing the potential of China's economic development, forming a virtuous interaction between economic growth and urbanization. From the perspective of opening up to the outside world, China started from establishing special economic zones, opening coastal port cities, establishing economic development zones, to joining the World Trade Organization (WTO) in 2001, actively participating in various regional economic organizations, establishing free trade zones across the country, actively promoting free trade, China's participation in the world economy became increasingly diversified, and its breadth and depth in the global economy continuously increased, gradually transforming from a country marginalized in the process of economic globalization to an important center node in the world economic system. In 1978, China's total import and export volume accounted for only 0.8% of the world's share, rising to 10.4% by 2012, and further to 12.3% by 2022. China became the world's largest exporter of goods in 2009 and the world's largest trading nation in goods in 2013. In the international trade system, China has transformed from a learner and adapter of international trade rules to an active participant in the formulation of rules.

With the continuous deepening of reform and opening up, China has also constantly adjusted its population management policies and employment systems, promoting the development of various types of non-public sector economies. This has been an important manifestation of expanding economic freedom and has created employment demand for the transfer of surplus rural labor and urbanization development. Particularly, the development of the non-public sector economy has created massive employment opportunities for a large number of urban and rural laborers, providing momentum for the shift of labor from the agricultural sector to the non-agricultural sector. At the beginning of the reform and opening up, about 70% of China's labor force was employed in the agricultural sector. By 1992, this proportion had dropped to 58.5%, in 2002 it fell to 50.0%, and by 2022 it had decreased to 24.1%. The labor force that moved out of rural areas also drove urbanization development. China's urbanization rate rose from 17.92% in 1978 to 65.22% in 2022, increasing by an average of 1 percentage point each year. The urban population grew from 172 million in 1978 to 921 million in 2022, a net increase of 749 million, equivalent to 2.2 times the current population of the United States and six times the current population of Japan.

The development of urbanization absorbed a large amount of labor transferred from rural areas, and the scale of China's migrant population also steadily increased. According to data from China's population censuses, in 1982, the migrant population was only 6.7 million, accounting for 0.6% of the national population. By 2020, this number had increased to 375.82 million, accounting for 26.0% of the national population. At the same time, the scale of the rural poor population continuously and significantly decreased from 770 million in 1978, achieving the elimination of all poverty by 2020. Since the reform and opening up, the massive transfer of labor from the agricultural sector to the non-agricultural sector and the migration of rural populations to urban areas have become the driving forces of China's economic growth, reshaping China's economic geography, and also being the most important direct cause of the large-scale reduction in the number of poor people. Looking at the income level of China's migrant workers, in 2020, the average monthly income of migrant workers was 4072 yuan, a level equivalent to 12 times the national poverty line of China in 2020 (4000 yuan). Therefore, with China's gradual transition to a socialist market economic system, sustained high growth and the employment creation and labor transfer brought about by this growth have become important pillars in the large-scale reduction of poverty in China.

1.2.3 National Poverty Reduction Strategy and Actions as Key Pillars of China’s Poverty Reduction Miracle

Since the reform and opening up, poverty alleviation has been one of the major tasks of China's socialist modernization. The Chinese government has prioritized poverty alleviation as a key area of national development, continuously advancing the implementation of poverty reduction strategies and policy innovation through a strong national poverty alleviation strategy as a guarantee mechanism. The national poverty alleviation system has been continuously improved, forming a mature institutionalized poverty alleviation system with Chinese characteristics, which is another major pillar of China's “poverty reduction miracle.” Looking at China's national poverty alleviation system, it has gone through four main stages since the reform and opening up: 1978–1985, 1986–2000, 2001–2012, and 2012–2020 (see Fig. 1.5).

Fig. 1.5

Changes in the total number and proportion of rural poor population in China from 1978 to 2020

1.2.3.1 Version 1.0 of China's Poverty Alleviation System: 1978–1985

At the beginning of the reform and opening up, solving the problem of food shortage remained an important task for development, and the rural economic reform represented by the household responsibility system resolved the issue of food and clothing. China's grain output increased from 304.77 million tons in 1978 to 407.31 million tons in 1984, and the national per capita grain increased from 316.6 kg to 390.3 kg. This period saw the fastest growth in grain production since the founding of new China. Apart from the incentive effect brought about by the implementation of the household responsibility system, the Chinese government implemented major policy measures such as significantly raising grain procurement prices during this period, greatly motivating the enthusiasm of the vast number of farmers, releasing the agricultural production potential accumulated in agricultural infrastructure, technology, and inputs, and reversing the long-term severe shortage of grain in China. With the promotion of the household responsibility system in rural areas and the increase in agricultural labor productivity, new changes occurred in the rural economy. Various types of township enterprises also entered a period of vigorous development, becoming an important pillar for promoting rural economic development. The rapid development of township enterprises also became an important channel for increasing farmers’ incomes, with the number of employees in township enterprises rising from 28.27 million in 1978 to 69.79 million in 1985.

The early rural economic reforms achieved great success, laying the foundation for the next step of China's economic reforms and significantly improving the consumption levels of urban and rural residents. From 1979 to 1985, the per capita consumption level of rural residents increased from 158 to 357 yuan, and that of urban residents from 434 to 802 yuan. During this period, China's rural poverty incidence rate decreased from 97.5% to 78.3% in 1985, a decline of nearly 20 percentage points, an average decrease of 2.7 percentage points per year. It should be noted that at this stage, the country had not yet implemented a specific, nationwide national poverty alleviation policy, and the focus of national poverty alleviation was on poverty-stricken areas in the Western region.

The poverty alleviation work during this stage mainly relied on economic development and low-level social assistance, aiming to eliminate hunger. During this period, the state established special poverty alleviation funds and provided poverty alleviation loans to support the transformation of impoverished and backward conditions in revolutionary base areas, ethnic minority areas, and remote areas. For example, in 1983, the State Council established the “Three Western” Agricultural Construction Leading Group to address poverty in the “Three Western” regions,⁴ launching a comprehensive regional poverty alleviation development project for 47 counties in the area, aiming to change their backward infrastructure, harsh ecological environment, and poor living conditions. These policy practices in poverty alleviation development laid the groundwork for China to embark on organized, planned, and large-scale developmental poverty alleviation, which is an important experience in China's achievement of large-scale poverty reduction.

1.2.3.2 Version 2.0 of China's Poverty Alleviation System: 1986–2000

This stage marked the beginning of national-level institutionalized poverty alleviation development. In 1986, China established the State Council Leading Group on Economic Development in Poor Areas, which was renamed at the end of 1993 to the Office of the State Council Leading Group on Poverty Alleviation and Development (commonly known as the “State Council Poverty Alleviation Office”). As a deliberation and coordination body of the State Council, the State Council Leading Group on Poverty Alleviation and Development is usually chaired by a Vice Premier or State Councilor of the State Council, with members including various ministries, mass organizations, and central enterprises. Corresponding to the State Council Poverty Alleviation Office, local governments at various levels also set up corresponding poverty alleviation offices. These offices play an important role in formulating poverty alleviation policies, coordinating poverty alleviation development work, and evaluating poverty alleviation development, and are crucial in advancing the overall poverty alleviation cause. In 1986, the State Council Poverty Alleviation Office began to systematically promote poverty alleviation work, identifying poor counties, poverty standards, and the poor population, taking poor counties as the target of poverty alleviation work, and continuously improving the overall ability of society to participate in poverty alleviation. From 1986 to 1993, 331 counties were identified as national-level poor counties, with solving the issue of food and clothing as the main goal of poverty alleviation work. Various special poverty alleviation loans, work-for-relief programs, and financial development funds were arranged to actively create employment opportunities for the population in poor areas, improve infrastructure construction in poor areas, and strengthen the development of science, education, culture, and health in poor areas. By the end of 1993, according to the 1978 poverty line standard, the rural poor population in China decreased from 131 million in 1986 to about 80 million.

As the poverty alleviation work advanced, the distribution of China's poor population showed clear geographical characteristics, especially concentrated in areas with harsh ecological conditions, weak infrastructure, and lagging social development. Therefore, in 1994, China proposed the “Eight-Seven Poverty Alleviation Plan,” aiming to focus human, material, and financial resources, actively mobilize social forces, and basically solve the issue of food and clothing for the poor population by the end of 2000, transitioning from relief-oriented poverty alleviation to development-oriented poverty alleviation. The goal of this plan was to fundamentally solve the issue of food and clothing for the 80 million rural poor population at the time within about seven years (from 1994 to 2000). In terms of the poverty alleviation mechanism, in addition to the original poverty alleviation mechanism, the plan also strengthened targeted poverty alleviation by party and government agencies and east–west collaboration in poverty alleviation, encouraging all of society to participate in poverty alleviation. In terms of the identification of poor counties, the plan readjusted the national poor county standards, identifying 592 national-level poor counties, covering 72.6% of the poor population. In terms of the implementation of poverty alleviation work, in addition to focusing on the livelihood issues of the poor population, it also paid attention to their living environment, education, medical health, and development capabilities, focusing on solving the root causes of poverty.

By the end of 2000, the national “Eight-Seven” poverty alleviation campaign had made significant progress in poverty alleviation development. According to the 1978 poverty line standard, the rural poor population in China decreased from 70 million in 1994 to 32.09 million in 2000, and the rural poverty incidence rate dropped to 3.5%. The production and living conditions of farmers in poverty-stricken areas were significantly improved. By the end of 2000, the percentage of administrative villages in poor areas with access to electricity, roads, postal services, and telephones reached 95.5%, 89%, 69%, and 67.7%, respectively. It is important to note that the “Eight-Seven” poverty alleviation campaign made a significant contribution to the United Nations’ Millennium Development Goals in advancing poverty reduction. According to the absolute poverty standard of the World Bank (living on 2.15 international dollars per day per person at 2017 purchasing power parity), China reduced its poverty population by 165 million from 1993 to 1999, while the total reduction in the world's poor population was 147 million. This indicates that during this period, the number of poor people in countries other than China actually increased.

1.2.3.3 Version 3.0 of China's Poverty Alleviation System: 2001–2012

Entering the twenty-first century, China's economic and social development entered a new era. China's accession to the World Trade Organization in 2001 promoted the country's deeper integration into the international division of labor, establishing its status as a global manufacturing center. As China's level of economic opening to the outside world continued to increase, the country's industrialization and urbanization entered a new phase, creating favorable conditions for job creation and poverty reduction. From the perspective of national poverty alleviation strategy, this period initiated a comprehensive poverty reduction strategy for the new century, with national poverty alleviation actions becoming more systematic, diversified, and precise, and the poverty alleviation standards significantly raised.⁵ By the year 2000, China's poverty alleviation efforts were halfway through, with people's overall living conditions reaching a moderately well-off level and basically solving the food and clothing problem for the entire population. However, as pointed out in the report of the 16th National Congress of the Communist Party of China, “The well-off society we have achieved is still at a low level, incomplete, and highly imbalanced.”

According to the national poverty line standard of 2010, China's rural poverty incidence rate in 2000 was 49.8%, meaning that half of the rural population was still in absolute poverty at the turn of the century, and China's poverty alleviation work was still a long way off. Therefore, in 2002, the 16th National Congress of the Communist Party of China proposed “to concentrate efforts in the first two decades of this century to comprehensively build a higher-level well-off society benefiting over a billion people.” Further, the 17th National Congress of the Communist Party of China in 2007 made a comprehensive deployment for achieving the grand goal of comprehensively building a well-off society, proposing a higher requirement of “doubling the per capita gross domestic product of 2020 compared to 2000.” The report of the 18th National Congress of the Communist Party of China in 2012 officially proposed the goal of comprehensively building a well-off society. Since the 18th National Congress, the Party Central Committee has made poverty alleviation a bottom-line task and a signature indicator for comprehensively building a well-off society. Thus, eliminating poverty became a key goal in measuring the construction of a well-off society.

It should be noted that during this stage, the state promoted poverty alleviation more actively. One important measure was continuously raising the poverty line standard. For example, the 2010 standard set in 2011 was 2300 yuan, a significant increase from the 2008 standard (1067 yuan) and higher than the international poverty line standard of the World Bank.

After 2000, China's rural social security system was gradually established and continuously improved, promoting equalization of public services between urban and rural areas. This played a positive role in improving agricultural production, rural social development, and increasing farmers’ income and living standards, and became an important pillar in reducing poverty. Firstly, in 2003, China began implementing the New Rural Cooperative Medical System in rural areas, which played a significant role in ensuring that farmers received basic health services and in alleviating poverty caused by illness. By 2008, over 90% of rural residents in China participated in the New Rural Cooperative Medical System, achieving full coverage in rural areas.

Secondly, China began implementing rural tax and fee reforms in 2003 and completely abolished the agricultural tax in 2006, while continuously increasing direct subsidies for agricultural production. For a long time, the agricultural sector served as a source of funds for the development of China's industrial sector. With the complete abolition of the agricultural tax, agriculture and rural areas truly became a subsidized sector of the national economy, forming a new mechanism of “industry nourishing agriculture, and cities nourishing rural areas,” and establishing a development mechanism of “industry promoting agriculture’ and ‘cities leading rural areas.”

Third, in 2007, China comprehensively established a minimum living standard guarantee system in rural areas, incorporating all eligible rural poor into the coverage and implementing a safety net for some of the extremely poor.

Fourth, in 2009, China began implementing a new rural social pension insurance system, establishing a rural pension insurance system, and gradually merging it with the urban residents’ social pension insurance, forming a unified urban and rural residents’ social pension insurance, becoming one of the important pillars of China's social security system.

In terms of advancing poverty alleviation, in 2001, the State Council formulated the “Outline for China's Rural Poverty Alleviation and Development (2001–2010)” based on summarizing past poverty alleviation experiences and current poverty characteristics. This was a 10-year national poverty alleviation action outline, indicating that poverty alleviation is a medium- and long-term strategy for national development. The outline identified 592 key counties for national poverty alleviation and development work, and in light of the increasingly dispersed distribution of the poor population in villages rather than concentrated in poor counties in the central and Western regions, it explicitly required that specific measures for poverty alleviation and development be implemented in poor villages, establishing 148,000 key villages nationwide, covering 76% of the national poor population.

In terms of working mechanisms, the outline established a rural low-income poverty standard, strengthened the participation of poor households in poverty alleviation work, completed the filing and registration of 106 million poor people, and achieved informational dynamic management of the poor population. In terms of work priorities, focusing on the weak links in the production and living conditions of poor villages, through mobilizing the masses, strengthening departmental coordination, and intensifying cadre assistance, comprehensive village advancement in poor villages was enhanced; actively supporting and encouraging the transfer of labor force training in poor areas, strengthening skill training for the poor population to promote non-agricultural employment and increase income; actively advancing industrial poverty alleviation, supporting and cultivating leading enterprises to drive agricultural structural adjustment in poor areas, and encouraging farmers to develop characteristic agricultural industries; vigorously promoting the development of social undertakings in poor areas, implementing the “National Compulsory Education Project for Poor Areas,” implementing the new rural cooperative medical system and medical assistance system for the poor, and actively improving public health services in rural areas of poor regions.

In 2011, the Central Committee of the Communist Party of China and the State Council issued the second 10-year rural poverty alleviation and development outline—the “Outline for China's Rural Poverty Alleviation and Development (2011–2020)”. This outline explicitly proposed to accelerate the development of impoverished areas, promote common prosperity, and achieve the goal of comprehensively building a well-off society by 2020. The overall objective is: by 2020, to stably ensure that the targets of poverty alleviation do not worry about food and clothing, and guarantee their compulsory education, basic medical care, and housing. The outline also proposed that the per capita net income of farmers in impoverished areas should increase at a rate higher than the national average, and the key indicators in the main areas of basic public services should be close to the national average, reversing the trend of widening development gaps. Based on the overall objectives, the outline set development goals for 2020 in 10 areas including basic farmland and agricultural water conservancy, characteristic advantage industries, drinking water safety, transportation, rural dilapidated house renovation, education, medical health, public culture, population and family planning, forestry and ecology, and made clear provisions in terms of poverty alleviation focus, mechanisms, and safeguard measures.

Overall, according to the national poverty line standard of 2010, the rural poverty incidence rate from 2000 to 2012 decreased from 49.8% to 10.2%, an average annual reduction of 3.3 percentage points, higher than the reduction rate of poverty incidence from 1978 to 2000 (an average annual decrease of 2.2 percentage points). During this period, the average annual reduction in the number of poor people reached more than 30 million, significantly higher than the period from 1978 to 2000 (an average annual decrease of 14 million). Therefore, the period from 2000 to 2012 was still characterized as a period of large-scale poverty reduction, making a significant contribution to China's goal of moving from “overall achieving a moderately well-off level” at the beginning of the century to “comprehensively building a well-off society.” According to the international poverty line of 1.9 international dollars per day, China's poverty incidence rate had dropped to 6.5% by 2012, significantly lower than the world average (12.9%). In 2012, the World Bank classified China as an upper-middle-income country for the first time in its national income group division (based on the per capita GDP of 2010). Therefore, we can consider that by 2012, China had successfully crossed the “poverty trap.”

1.2.3.4 Version 4.0 of China's Poverty Alleviation System: 2013–2020

By 2012, China's poverty incidence rate had reached a relatively low level, and it was no longer possible to continue reducing it at a rate exceeding 2% per year. Therefore, from the perspective of eliminating absolute poverty, China's poverty alleviation efforts entered a critical and concluding phase. This meant that the remaining poor population under the condition of a lower poverty incidence rate often consisted of those more challenging to help. Due to China's large population base, there were still 98.99 million rural poor at the end of 2012. This significant number of absolute poor still determined that poverty alleviation work during this period was a daunting task, becoming a developmental mission of the Party Central Committee after the 18th National Congress. General Secretary Xi Jinping also placed high importance on poverty alleviation work.

At the end of 2012, during his visit to the impoverished and revolutionary area of Fuping County in Hebei Province on the eve of New Year's Day, Xi Jinping explicitly stated that the most arduous and heavy task in building a comprehensively well-off society lies in rural areas. Without the well-being of rural areas, especially impoverished areas, there can be no comprehensive well-off society. In November 2013, during his inspection tour in Xiangxi, Hunan, Xi Jinping for the first time made important directives of “seeking truth from facts, adapting measures to local conditions, classifying guidance, and precise poverty alleviation,” proposing the idea of “precise poverty alleviation” for the first time. This idea established the ideological foundation for promoting innovation in the system and mechanism of poverty alleviation, opening up version 4.0 of China's poverty alleviation system, prominently characterized by the poverty alleviation strategy with “precise poverty alleviation” as the main approach. The poverty alleviation system during this period focused on the multi-dimensional poverty reduction goal of “two assurances and three guarantees” as the core indicator, paying more attention to the quality of poverty alleviation and achieving sustainable poverty alleviation. In practice, developmental poverty alleviation was combined with social security poverty alleviation, making the elimination of all poor people an important goal for comprehensively building a well-off society.

Based on the idea of precise poverty alleviation, the poverty alleviation work during this stage strengthened the responsibility of local governments at all levels, forming a poverty alleviation work mechanism under the leadership of the Party, with extensive participation from governments at all levels and coordinated management by “five-level secretaries” (provincial, city, county, township, village). The 22 provinces, autonomous regions, and municipalities in central and Western China signed responsibility agreements for poverty alleviation with the central government. Governments at all levels mobilized the whole society, adopting various methods to form a comprehensive poverty alleviation work pattern. According to the work content of the Central Poverty Alleviation Office, poverty alleviation work included 16 tasks, forming a comprehensive poverty alleviation work mechanism through the synergy of various policy measures. This stage of poverty alleviation work also placed high importance on the quality of poverty alleviation, implementing strict assessment and inspection mechanisms to ensure the standardization of the process for poor counties and villages to exit poverty, the accuracy of standards, and the authenticity of results. In terms of mobilizing social forces to participate in poverty alleviation, continuous innovation in social poverty alleviation models was made, widely promoting replicable, scalable, and sustainable successful experiences. For example, China's e-commerce enterprises have covered 590 poor counties nationwide, becoming an important driving force for industrial development in poor areas and one of the new models of precise poverty alleviation.

In terms of the poverty alleviation work mechanism, at the end of November 2015, the Central Poverty Alleviation and Development Work Conference issued the “Decision of the CPC Central Committee and the State Council on Winning the Battle Against Poverty,” establishing a work mechanism of “central coordination, provincial overall responsibility, and city-county implementation.” In implementing precise poverty alleviation, the precise poverty alleviation work mechanism was continuously improved, focusing on the key link of accurate identification and registration. The “six precisions” requirements were emphasized, including precise support targets, precise project arrangements, precise use of funds, precise measures to households, precise assignment of personnel by village, and precise poverty alleviation results. Measures were tailored according to the types of poverty, implementing the “five batches” approach of precise poverty alleviation, which includes “developing production to alleviate poverty,” ‘relocation for poverty alleviation,” “ecological compensation to alleviate poverty,” “developing education to alleviate poverty,” and “social security safety net.” All social forces were mobilized to build a comprehensive poverty alleviation development strategy.

In advancing “precise poverty alleviation,” special emphasis was placed on tackling poverty in specific types of areas. Among them, poverty alleviation in deeply impoverished areas, including the “three regions and three states,” was a key task, solving poverty through the relocation of 9.6 million registered poor. Without the implementation of “precise poverty alleviation,” achieving poverty alleviation goals in deeply impoverished areas would have been a very lengthy process. By the end of 2020, all 832 national-level poor counties identified by the State Council Poverty Alleviation Office had been lifted out of poverty, achieving the basic completion of the poverty alleviation task.

Apart from developmental poverty alleviation, social security safety nets have also been an important pillar of the poverty alleviation system since the 18th National Congress. Social security safety nets primarily targeted those who could not escape poverty due to factors such as old age, illness, or disability. To address poverty among these populations, in 2015, General Secretary Xi Jinping made a major deployment to implement the “five batches” project at the Central Poverty Alleviation and Development Work Conference, with social security safety nets being one of the projects. In 2020, the Ministry of Civil Affairs and the State Council Poverty Alleviation Office specifically issued an action plan for poverty alleviation through social assistance, ensuring “no household or individual is left behind.” In 2020, the number of people receiving rural minimum living standard guarantees in China was 36.21 million, essentially achieving living security for all rural poor.

Currently, China has established the world's largest social security system, which is also an important institutional guarantee for all Chinese citizens to be free from absolute poverty. In 2022, China's basic medical insurance covered 1.346 billion people, and basic pension insurance covered 1.053 billion people. Compared to the overall situation of social protection development worldwide, China's achievements in the field of social security are undoubtedly remarkable. According to the “2020–22 World Social Protection Report” published by the International Labour Organization, only 47% of the global population is effectively covered by at least one social protection benefit, while 4.1 billion people (53% of the population) are unable to receive income security from their country's social protection system.

Overall, since the 18th National Congress, the Chinese government has made the elimination of absolute poverty a bottom-line task and a signature indicator for comprehensively building a well-off society. It has organized and implemented an unprecedented poverty alleviation campaign in human history, with the largest scale, the greatest intensity, and the most beneficiaries, completing the arduous task of eliminating absolute poverty. The income level of the poor has significantly increased, and the basic production and living conditions in poor areas have been noticeably improved.

1.3 Decoding the Institutional Factors Behind China’s “Poverty Reduction Miracle”

The World Bank's “World Development Report 2000/2001” suggests that those in poverty exhibit three dynamic characteristics: first, a lack of opportunities to participate in economic activities; second, a lack of voice in significant decisions affecting their destiny; and third, vulnerability to economic and other shocks such as disease, food crises, economic downturns, etc. Therefore, poverty is not solely a problem of low income but is also reflected in many aspects such as development opportunities and social equality. Consequently, poverty often manifests as a kind of “syndrome.” For the poor, falling into poverty is often due to their inability to overcome objective circumstances beyond their control, such as a lack of development opportunities locally and a shortage of public services. Fundamentally, for countries or regions mired in long-term poverty, poverty is also a reflection of a lack of development governance capacity. For example, Sub-Saharan African countries had a poverty incidence of 55.7% in 1990, which remained high at 40.2% in 2018. Moreover, even for high-income and developed countries, eradicating poverty is not an easy task. For instance, according to the international poverty line of 2.15 international dollars per day (2017 purchasing power parity), countries like Japan, Greece, Italy, and Spain had poverty incidence rates of 0.7–0.9% in 2020. In contrast, China's poverty incidence rate had dropped to 0.1% by 2020, significantly better than countries at similar stages of economic development, such as Brazil (2.8% in 2020), and even better than the United States (0.2% in 2020). Therefore, eradicating poverty reflects not only a country's governance philosophy but also its governance capacity. From an institutional analysis perspective, the institutional reasons for China's poverty reduction miracle can be summarized in the following main aspects.

Firstly, the leadership of the Communist Party of China (CPC) is the fundamental political guarantee for China's creation of the poverty reduction miracle. This is mainly based on two reasons: One, the ideological line of ‘emancipating the mind and seeking truth from facts’ has become the basic follow-through for the CPC's governance since the reform and opening-up; Two, the governance philosophy of ‘putting people at the center’ has always been regarded by the CPC as the fundamental starting point for pioneering the path of socialist development. Since the implementation of reform and opening-up in 1978, the CPC established the basic line of focusing on economic construction, continuously advancing reform and opening-up, and improving the socialist market-economy system, achieving over 40 years of sustained high-speed economic growth, transforming China from a poor country into a moderately well-off one. Especially during times of international turbulence, the leadership of the CPC ensured that China neither reverted to the old path of closure and rigidity nor took the wrong path of changing flags. Compared to the transformation of former Soviet and Eastern European socialist countries after the 1990s, we can see that adhering to the socialist path is the fundamental guarantee for China's poverty reduction miracle, and the leadership of the CPC is the political foundation for adhering to this path.

Secondly, the leadership of the CPC ensured the strategic and continuous nature of the national poverty alleviation action plan. Strategically, the national poverty reduction strategy has been progressing in tandem with over forty years of development since reform and opening-up, serving as an important development goal of the primary stage of socialism and a key standard for comprehensively building a moderately well-off society. In terms of continuity, China's poverty alleviation policies have been continuously adjusted, and the target population for poverty alleviation has been continuously ‘precisified.’ For instance, the ‘Eight-Seven Poverty Alleviation Plan’ focused on poor counties, the ‘Outline for China's Rural Poverty Alleviation and Development (2001–2010)’ focused on poor villages, and ‘precise poverty alleviation’ focused on poor households, continuously advancing the cause of poverty alleviation.

Third, the leadership of the CPC is the political guarantee for the continued advancement of China's poverty alleviation efforts. Under the leadership of the CPC Central Committee, rural poverty alleviation and development implemented a work mechanism of central coordination, provincial overall responsibility, and city-county implementation. It fully mobilized all social forces to participate in poverty alleviation, forming a comprehensive, full-coverage, and all-round poverty alleviation system. Gradually, a national poverty alleviation policy system with Chinese characteristics was formed, with three main pillars: economic development as the basic driving force, comprehensive poverty alleviation policies as a combined force, and social security as the safety net. China's poverty alleviation system also fully reflects the advantages of the socialist system. Since 1996, China established the counterpart support policy, which has played a significant role in the economic and social development of impoverished areas over the past 20 years.

Fourth, the leadership of the CPC is the organizational guarantee for the continued advancement of China's poverty alleviation efforts. During the poverty alleviation period, the country dispatched a total of 255,000 village work teams and selected more than 2.9 million cadres from county-level and above party and government organs and state-owned enterprises and institutions to serve as first secretaries or village cadres in poor and weak villages, ensuring that grassroots party organizations played a combat fortress role in poverty alleviation. The leadership of the CPC also ensured high-quality poverty alleviation. For example, at the end of 2019, the State Council Leading Group on Poverty Alleviation and Development organized a comprehensive investigation of over 93 million people who had been lifted out of poverty, conducted item-by-item rectifications, and implemented targeted preventive measures for nearly 2 million people at risk of returning to poverty and nearly 3 million at risk of falling into poverty, promptly including them in assistance.

1.4 From the “Poverty Reduction Miracle” to Building a Society of Common Prosperity

Achieving common prosperity has always been a consistent goal of the Communist Party of China (CPC). At its founding, the CPC led the land revolution and implemented the principle of “the tiller has his land.” After the establishment of the People's Republic of China, under the leadership of the CPC, China carried out land reform, abolished the feudal land system, and established the socialist basic system. After the reform and opening up, Deng Xiaoping proposed that “poverty is not socialism, and socialism aims to eliminate poverty.” Following the 18th National Congress of the CPC, General Secretary Xi Jinping asserted that “not a single poor area or individual should be left behind.” In summary, the CPC has consistently made the people's aspirations for a better life its goal, and in this process, eliminating poverty has been an important milestone.

In his speech at the celebration of the 100th anniversary of the founding of the CPC, General Secretary Xi Jinping solemnly declared to the world that, through the continuous efforts of the entire Party and people of all ethnic groups across the country, China had achieved its first centenary goal and comprehensively built a moderately well-off society across the land of China. The comprehensive establishment of a moderately well-off society has elevated China's economic strength, technological strength, and overall national power to a new level. China's GDP exceeded 100 trillion yuan, and the per capita GDP surpassed 10,000 US dollars. China has built the world's largest social security system, historically eradicated absolute poverty, and created a “poverty reduction miracle” in human history. The comprehensive establishment of a moderately well-off society has created conditions for solving the problems of unbalanced and inadequate development and promoting common prosperity. In the journey to achieve the second centenary goal, steadfastly advancing common prosperity will be the core task of fully building a modern socialist country and realizing the great rejuvenation of the Chinese nation. As China steps into the center of the world stage, building a society of common prosperity for all people is also China's major contribution to setting a new paradigm for world development, creating a new pattern, and shaping a new form of human civilization.