The Case for Conditional Cash Transfers in the People's Republic of China

Publication | March 2012

Since the start of economic reforms more than three decades ago, income inequality has deteriorated sharply in the People's Republic of China (PRC). The growing gap poses a major challenge to the government's inclusive and balanced development strategy. If not addressed, inequality will hinder the PRC's future growth by undermining consumption, constraining development in poorer regions, and generating social tensions.

Successful international experiences suggest that conditional cash transfers are an effective and fiscally sustainable tool for long-term poverty reduction. Its potential implementation in the PRC appears particularly relevant in light of the recent upward revision of the official poverty line, which has increased the poverty headcount from 28 to 128 million people. By reviewing successful international practices, this policy note aims to provide relevant recommendations.