China’s poverty line is not as stingy as commentators think

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China’s poverty line is not as stingy as commentators think
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Many commentators say that China’s victory against poverty was hollow, achieved not by lifting people up but by watering the definition of poverty down

2017 China’s government has described fighting poverty as one of three “tough” or “critical” battles . Despite the covid-19 pandemic, it still seems confident of victory this year. In March Xi Jinping, the president, pointed out that the number of rural poor fell to 5.51m in 2019. That is only 0.4% of China’s vast population. Regional overall poverty, he said, had been basically eradicated.

This scepticism, though, is dogged by two misunderstandings. The first is the conviction that China’s rural-poverty line must be ridiculously stingy, lower than the global standard of $1.90 a day. The second is the belief, inspired by Mr Li’s imprecise remarks, that 600m Chinese live on 1,000 yuan a month or less. Neither claim is true.

Natural, but wrong. A fair comparison must first note that China and the World Bank drew their poverty lines with different years in mind. China’s line is based on the prices prevailing in 2010; the World Bank’s, on prices in 2011. China updates its line every year to reflect the inflation faced by the rural poor. In 2011 the threshold was 2,536 yuan, or 6.95 yuan a day.

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