II.Policy Guarantee for the Aid-the-Poor Program

The poverty of China's rural areas is a problem that arose over long years in the past. Impoverished regions in China are characterized mainly by a large area and population sunk in poverty. Based on its understanding of the basic national conditions, especially the reality of the poverty-stricken areas and people, the Chinese Government has formulated a policy for development-oriented poverty alleviation that conforms to the reality in China. It sets mainly solving the problem of food and clothing of the rural poor as its basic objective and central task in this regard, starting from the most urgent problems, acting according to its capability, giving priority to key areas, and advancing step by step.

Defining the Standard of Poverty in Conformity with the National Conditions

China is a developing country with a large population, a meager heritage and an underdeveloped economy, especially in the rural areas. In terms of the poverty-stricken areas in China, the underdevelopment is mainly reflected in the following: First, weak infrastructure. In the western region, where most of these areas are located, although the territory is over two-thirds of the nation's total, the proportions of railways, highways and civil aviation facilities are relatively low. Second, a rapidly growing population, and the low level of education, public health and other basic social services. In contrast to the backward economy, the poverty-stricken areas are usually noted for their rapidly growing populations. Due to the poor conditions for running schools and backward education facilities, a great number of school-age children are unable to go to school or obliged to discontinue their studies, and the illiteracy rate of the young and middle-aged is high. These areas are also characterized by a very low level of health care work. Third, poor agricultural production conditions, low revenue, and seriously inadequate public input. In 1986, the per-capita motive power of agricultural machinery in the counties on the state's priority poverty relief list accounted for only 50 percent of the national average. In 1993, the per-capita revenue in these counties was 60 yuan, only about 30 percent of the national average.

In accordance with the above-mentioned actual conditions, it is necessary to fix a realistic standard of poverty for China's help-the-poor work. The earliest standard was calculated by the relevant government departments in 1986, on the basis of the investigations of the consumption expenditures of 67,000 rural households, i.e., the standard of 206 yuan in per-capita net income in rural areas in 1985. It was equivalent to 300 yuan in 1990 and 625 yuan in 2000.

China's standard of poverty is the standard of the lowest expense to maintain one's basic subsistence. It can guarantee the basic living needs of the rural poor in China and, therefore, is an objective standard and also one that conforms to the reality in China.

Defining the Key Poverty-stricken Counties to Be Aided by the State

To use poverty relief funds in a unified way, and effectively aid the poor and needy, the Chinese Government has formulated the standard of the key poverty-stricken counties to be aided by the state, and identified a number of such counties.

The Chinese Government defined the standard of the key poverty-stricken counties to be aided for the first time in 1986: the counties with a net yearly income of less than 150 yuan per peasant in 1985. Subsequently, the standard had been readjusted in keeping with the economic development, especially the constant improvement of the economic conditions of the poverty-stricken areas. The readjusted standard in 1994 was less than 400 yuan in per-capita net income in 1992. So all those counties originally on the priority list where the per-capita net income had exceeded 700 yuan in 1992 were taken off the list. (According to a typical calculation at the time, the problem of food and clothing of over 90 percent of the poverty-stricken people in the counties with the per-capita net income of more than 700 yuan had been basically solved.) According to this standard, 592 counties in 27 provinces, autonomous regions, and municipalities directly under the Central Government were listed as the key poverty-stricken counties to be aided in the Seven-Year Priority Poverty Alleviation Program, covering over 72 percent of the rural poor across the country. The series of policies and measures for development-oriented poverty relief work adopted by the Central Government in subsequent years were mainly centered on solving the problem of food and clothing of the people in the counties on the state priority list.

The state has driven forward the solution of poverty in the rural poverty-stricken areas across the country through concentrated and effective aid to the impoverished counties. The state has explicitly demanded that all aid-the-poor funds must be used in the poverty-stricken counties. In 1996, the Central Government further set the minimum proportion of supportive poverty relief funds (30-50 percent) for the provinces, autonomous regions and municipalities to guarantee the local supportive funds to be used in the key counties.

Putting the Stress on the Poverty-stricken Areas in the Central and Western Regions

It is an important strategic measure to favor the central and western regions in China's development-oriented assistance to the poverty-stricken. The regional features of China's economic development are very outstanding. The eastern coastal areas take the lead in economic development, taking full advantage of their own strengths. But the central and western regions are relatively backward. Therefore, China's rural poor are mostly concentrated in the central and western regions, especially in the western region, living in scattered areas in deserts, hills, mountains and plateaus. These regions are characterized by the largest number of poor people, and the deepest degree and most complicated structure of poverty. Of the 592 poverty-stricken counties named by the Chinese Government on its priority poverty relief list in 1994, 82 percent are situated in the central and western regions.

The Chinese Government started to readjust the regional structure of the allocation of the state poverty relief funds in 1994: adjusting the relief credit funds of the Central Government in the coastal economically developed provinces to favor the worst provinces and autonomous regions in the central and western regions, and earmarking the new relief funds from the central budget only for poor areas in those provinces and regions. Keeping the overall situation in mind, the state has formulated preferential policies to actively promote a horizontal union between the eastern and western regions, and the aid-the-poor cooperation between similar departments of different institutions.

Over the past year, China has started to carry out the strategy of large-scale development of the western region to accelerate its development and narrow the gap in development between regions. The state has arranged preferential construction projects of infrastructural facilities, ecological environment and resource development in the western region, steadily increasing its investments and its financial transfer payments to the western region. All these have contributed a great deal to promoting the development of the western region and the solution of the food and clothing problem of the poverty-stricken there.

Increasing Capital Input for Poverty Reduction

Over the past 20 years, with the augmentation of the state financial resources, the special aid-the-poor funds arranged by the Chinese Government have constantly increased. In 2000, such funds totaled 24.8 billion yuan, or 31 times as much as in 1980. The accumulative total of such funds have reached over 168 billion yuan, of which more than 80 billion yuan was from financial funds (including over 39 billion yuan of work-relief funds), and 88 billion yuan from credit funds. Local governments have also increased the aid-the-poor funds according to the proportion of supportive funds set by the Central Government (30-50 percent since 1996).

The special aid-the-poor funds of the Chinese Government mainly include two categories: financial and credit funds. The former includes funds to support the development of the underdeveloped areas, the new financial aid-the-poor funds, and work-relief funds. To tighten the control of the aid-the-poor funds and improve their utilization benefits, the State Council formulated the unified Measures on the Management of the State Poverty Relief Funds in 1997, explicitly providing for the objects and conditions of the aid, with special emphasis on the requirement that these funds should be used complementarily according to the overall objectives and requirements of the Seven-Year Priority Poverty Alleviation Program, so as to form a concerted effort enabling the funds to generate overall benefits. The aid-the-poor funds from various channels should be mainly put into the following fields: The financial funds are to be mainly used in the construction of basic farmland, small irrigation works and country roads, providing drinking water for people and livestock, technical training and the popularization of practical agrotechniques; the credit funds are to be used in assisting the poverty-stricken households in crop cultivation and aquiculture and poultry raising projects to increase their incomes of the same year. At the same time, the special relief departments at all levels are required to strengthen the inspection and supervision of the management and use of the funds. Auditing departments are required to strictly audit the use of the funds and promptly deal with and problem once found. These measures have played a key role in improving the utilization benefits of the aid-the-poor funds and in realizing the objective of basically solving the problem of food and clothing of the poor according to the required schedule.

Formulating Preferential Policies to Support the Development of the Poverty-stricken Areas and Peasant Households

China's preferential policies for the development-oriented assistance to the poverty-stricken cover two aspects-helping the poor households to solve the problem of food and clothing, and supporting the economic development of the poor areas.

The preferential policies for helping the development of the poverty-stricken peasant households include: Waiving the mandatory state grain procurement quotas of households whose problem of food and clothing has not been solved; appropriately prolonging the utilization time limit of aid-the-poor loans and softening the terms of mortgage and guarantee, according to the actual situation; and reducing or remitting agricultural taxes and taxes on special farm produce according to the relevant provisions of the regulations on agricultural taxation.

The preferential policies to support the economic development of the poverty-stricken areas include: Gradually strengthening the financial transfer payments to poverty-stricken areas by the Central Government, and establishing a secondary transfer payment system by the relevant provinces, autonomous regions and municipalities to offer financial support to those areas; remitting income tax for three years for new enterprises in the poverty-stricken counties and enterprises established there by people from the developed areas; and, according to the principle of "he who benefits bears the expense," duly raising the standards of the construction and maintenance funds in the reservoir regions and earmarking these funds specially for solving the problem of food and clothing of the reservoir regions' relocated people.

Carrying Out the Responsibility System for Poverty Relief Work

To effectively implement the development-oriented aid-the-poor work, the Chinese Government established a Leading Group of the State Council for the Economic Development of Poverty-stricken Areas in June 1986 (renamed Leading Group of the State Council for Development-oriented Poverty Relief in 1993), to be responsible for the organization, direction, coordination, supervision and examination of the work in this regard. The governments of some provinces, autonomous regions, municipalities, prefectures (cities) and counties have also established corresponding organizations in charge of the local poverty reduction drive.

China practices the level-by-level responsibility system, with the provincial authority as the main player, in its administrative leadership of the poverty reduction work. The provinces, autonomous regions and municipalities, especially provinces and autonomous regions with large numbers of poverty-stricken areas, have put development-oriented poverty relief high on their agendas, and formulated concrete local implementation plans in line with the state's poverty relief program. The principal leaders of the provinces, autonomous regions and municipalities are required to personally supervise the work and assume overall responsibility. The Central Government issues the relief funds in one lump sum to the provinces, autonomous regions and municipalities at the beginning of every year, and accords the "four assignations" (of funds, powers, tasks and responsibilities) to the provinces, (autonomous regions and municipalities). All the funds assigned to the provinces are to be arranged and used by the people's government at the provincial level, which shall organize the relevant departments to plan and implement the development projects.

Strengthening the Building of the Primary Organizations

The rural primary organizations in China have an important role to play in mobilizing and organizing the people to participate in the development-oriented poverty reduction work aimed at reshaping their own destiny. The Chinese Government has stressed improving the rural organizations at the village level in its poverty reduction drive, in order to enhance the degree of self-organization of the peasant households and guide them to bear an active part in the drive. In the past year, the Chinese Government has vigorously carried out the direct election system of villagers' committees in rural areas, so that people who are really supported by the masses and are able to lead them to shake off poverty can be elected as village cadres according to the principle of openness, fairness and justice. At the same time, a policy has been strictly carried out, whereby village affairs, such as revenue and expenditure, the distribution and use of the poverty relief funds, and the conclusion and alteration of contracts are left open to the villagers for their examination and supervision.