- 1 - China ' s Growth and Poverty Reduction : Recent Trends between 1990 and 1999

This paper investigates the recent trends in poverty and inequality since the 1990s, and decomposes poverty reduction to see who has benefited most from China’s economic growth. We find that first, by several measures poverty has declined significantly across a wide range of poverty lines during the 1990s, except for a slight increase in 1997-99 for lower poverty lines. Second, economic growth contributed significantly to poverty reduction, while a rising inequality increased poverty. Third, the poor benefited far less than the rich from economic growth, and it was only the richest 20 percent of the population whose income growth could reach or exceed the average growth rate. Finally, we examine the relationship between human capital, growth and poverty, and find that there is a huge regional disparity in human capital stock, and the distribution of education is becoming increasingly skewed. This problem should be addressed if China is to succeed in its efforts to attack poverty and inequality. JEL Classification Code : D31, O15, O53 ____________ * Information Officer and Senior Economist, The World Bank. The paper was presented at a WBIPIDS Seminar on “Strengthening Poverty Data Collection and Analysis” held in Manila, Philippines, April 30-May 4, 2001. We thank Ishac Diwan for encouragement, Tamar Manuelyan Atinc, Deepak Bhattasali, Shahidur Khandker, Alan Piazza, Martin Ravallion, Yudong Yao for comments and input, and Prem Sangraula for research assistance. The views expressed here are entirely the authors’ and should not be attributed to the World Bank. Comments should be sent to [email protected] and [email protected]