Declining poverty, rising inequality

In three decades of rapid economic growth, China has lifted hundreds of millions of people out of poverty. The World Bank says the number living in extreme poverty fell from 64% of the population in 1978 to 4% – or 53 million people – in 2007. China calculates poverty differently and, by its yardstick, 15 million rural residents remain in absolute poverty.

“Wherever you draw the poverty line, China gets the gold medal for poverty reduction,” writes David Dollar, the World Bank’s Country Director for China.

At the same time, the unprecedented alleviation of poverty has been accompanied by an increase in inequality. The income gap between rural and urban China has widened, along with health and educational inequalities. Regional disparities persist, and pockets of deep poverty remain, especially in remote areas on the country’s geographic margins.

Since economic reforms began in 1978, more than one-tenth of China’s 1.3 billion people have joined the largest rural-to-urban migration in history. The farmers moving to cities in search of a better life are particularly vulnerable if they lack rights to permanent residency in the new location under the country’s household registration system.`

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