4.1 The evolution of poverty targeting: How China used international expertise

and positive spillovers to neighboring counties with higher incomes, suggesting leaks in targeting. Wang, Li, and Ren (2004) find that the 8–7 plan implemented between 1994 and 2000 allocated more resources to poorer counties, and hence targeting aligned well with needs. In addition, the economic growth rate and household income growth of the designated poor counties were larger than the national average (Wang, Li, and Ren 2004). Meng (2013), using a regression discontinuity design, finds that the 8–7 plan resulted in an increase in rural income of approximately 38 percent for counties that were in the program between 1994 and 2000 relative to other counties. Yet, there is evidence that within poor counties, poor households may have benefited less than better-off households (Wang, Li, and Ren 2004).

Beyond their effectiveness in designated poor areas, coverage of the poor through these geographically targeted programs varied over time. The share of the poor living in poverty-stricken areas in each of the plans declined from about 75 percent in the initial year (73 percent in 1994 for the 8–7 plan, and 76 percent in 2001 for the 2001–10 outline) to 62 percent to 63 percent of the total poor by the end of the programs. To address exclusion errors, new plans (including the 2011 Outline for Development-oriented Poverty Reduction for Rural Areas) refined the list of poverty designated areas, each time going to a lower administrative level (from counties to villages). By the end of the 2000s, there was a clear need to complement area-based efforts with a household- or people-oriented approach (World Bank 2009 and box 4.1).5 The expansion of social protection policies in rural areas since the mid-2000s (covered in the next subsection) and the emergence of targeted poverty alleviation efforts after 2013 (also covered below) reflected this need.

BOX 4.1 The evolution of poverty targeting: How China used international expertise

China effectively used the global knowledge of international organizations to refine its pro-poor policies and improve data on poverty. The World Bank, Asian Development Bank, United Nations Development Programme, and many other international organizations assisted with the refinement of China’s methodology to measure and monitor poverty, analyzing its profile and evolution and introducing new concepts of poverty. The World Bank’s three poverty assessments (1992, 2001, and 2009) informed the reorientation of the government’s strategy from broad geographical targeting to a narrower focus on poor villages and households. The Asian Development Bank contributed to these efforts with its methodological tools (such as the multidimensional poverty index used for the identification of poor villagesa). A hallmark of the knowledge partnership between China and the international organizations was the close collaboration with Chinese institutions (China’s National Bureau of Statistics, the Development Research Center of the State Council, and the Chinese Academy of Social Sciences), ensuring recommendations were embedded in the ongoing national policy debate. The cooperation went beyond technical assistance on analytical issues into testing the practical applicability of recommendations through piloting of new approaches to poverty reduction in projects, which the government was able to test and evaluate, before scaling them nationwide. Examples of these pilots include the multisectoral integrated rural poverty reduction approach and participatory mechanisms for project implementation.

a. In 2000, China announced a shift in targeting of its poverty reduction strategies from counties to villages. Supporting this effort, in 2001, the Asian Development Bank provided technical assistance to identify poor villages in China and created the Participatory Poverty Assessment. In this assessment, infrastructure such as drinking water conditions for humans and animals, power supply rates, and highway coverage were used as important identification criteria for poor villages (Wang et al. 2007; Tang and Liu 2020).