Catalog

Until the mid-1990s, poverty in the PRC was a largely rural phenomenon. The Government’s antipoverty policies almost exclusively targeted the rural poor, who eked out their livings on small plots through long hours of backbreaking labor.

Relatively speaking, the people living in cities were well off. They had secure jobs in state-owned enterprises (SOEs), with the work unit providing housing, food, health care, old-age pensions, and education for their children.

The PRC’s move to a market economy has improved the living conditions of its citizens, achieving its millennium goal of halving poverty from the 1990 level. But success has come at a cost.

The urban economic environment was transformed in the mid-1990s when SOEs began shedding redundant labor and stopping the provision of cradle-to-grave social security for employees. Unemployment and urban poverty rose.

A recently completed ADB-financed study, undertaken in partnership with the Development Research Center (DRC) of the State Council, is the most comprehensive study available on urban poverty.

“While rural poverty has been studied since the early 1980s, urban poverty has not received much attention. In this regard the study has filled a crucial gap.The Government attaches central importance to the alleviation of urban poverty,” said Chen Xiwen, DRC Vice-President, at an ADB-financed workshop in Beijing in October 2001.

The study provides an overview of urban poverty, its causes, suggested poverty reduction policies, and statistical analysis for determining poverty lines and identifying the incidence of urban poverty.

It also addressed the financing of antipoverty policies, particularly the problems of cities caught in the vicious spiral of an eroding fiscal base and rising unemployment.

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For the first time in the PRC, the study used international best practice to estimate urban poverty lines for each province.

Based on the 1998 national urban household sample survey data, poverty lines were calculated for all 31 provinces and 35 major cities.

Compared with the national average, the coastal provinces generally had higher poverty lines and the interior provinces lower.

A national urban poverty line of 2,310 yuan per year per person was estimated based on a weighted average of the provincial poverty lines. In 1998, the urban poor were estimated to number 37.1 million, equivalent to an urban poverty incidence of 11.9%.

However, incidence varies across provinces with urban poverty high to severe in Henan, Shaanxi, Ningxia, and Tibet, and low in Beijing, Jiangsu, Zhejiang, and Guangdong.

Permanent urban residents have new neighbors: millions of people from rural areas have moved to the cities in search of better lives. Because they are not officially recognized as urban residents, they do not have access to government-supplied housing, social benefits, or health coverage.

Migrants usually work in low-paying—sometimes dangerous—jobs and have little job security. The poverty rate among migrants in 31 cities is about 50% more than that of permanent urban residents.

The Government is reducing restrictions on rural residents moving to the cities. For an urban poverty reduction strategy to be successful, it should also address the needs of migrants who fall into poverty.

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Millions of jobs need to be created to win the fight against urban poverty. A dynamic private sector will be the engine for future economic growth and job generation.

For the private sector to develop efficiently, an environment needs to be created that protects the rights of private investors and allows the private sector to flourish. ADB is working with the Government to help create an enabling environment for the private sector.

Successfully addressing urban poverty will require progress in transferring the responsibility for social security provision from work units to city governments, implementing the city-based health insurance schemes, consolidating and extending the urban poverty relief schemes, funding pensions, and strengthening cities’ financial positions.

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