A detailed report from the World Bank, called Towards a More Inclusive and Sustainable Development has been raising interest in some quarters. Among many features of the report, it notes that China’s policies have enabled the “extreme poverty rate, based on the international purchasing power parity (PPP) US$1.90 per day poverty line, to fall from 88.3 percent in 1981 to 1.9 percent in 2013. This implies that China’s success enabled more than 850 million people to escape poverty.” Over the last four decades, 7 out of 10 people who moved out of poverty were Chinese. The report does not hesitate to point out that this is “unprecedented in scope and scale.” This figure is up from the 600-700 million mentioned earlier, which has already been called one of the greatest human rights achievements in world history. The aim in China – in line with the target of a “moderately prosperous society” by 2020 – is to enable the remaining 25 million to escape poverty.
Add to this the systematic growth of welfare and social protection, with the result that the Gini coefficient has been falling since 2008:
China has made remarkable progress in putting in place the core elements of a social protection system. Since the 1990s, China has introduced an array of social protection programs at a speed that is unprecedented internationally. Among other reforms, these include pension and health insurance programs for urban and rural populations; unemployment, sickness, workplace injury, and maternity insurance for urban formal sector workers; and the dibao program, a means-tested national social assistance scheme that now covers around 60 million people. This is a feat that took decades to achieve in OECD countries, and one that many middle-income countries have not realized.
A key component here is the CPC, or in World Bank speak, “China’s unique governance system”:
China has built well-functioning institutions, in unique and context-tailored forms, through a long process of institutional evolution. China’s cadre management system is a good example. Drawing on a long legacy of high state capacity, China has refined its cadre management system to shape the core of a high-performing bureaucracy by integrating features of party loyalty with professionalization of the civil service in a unique way. This has been critical to unlocking growth, promoting results through competition among local governments and anticorruption policies designed to prevent abuse of office. The cadre management system has built strong upward accountability and has provided incentives through promotion and rewards to bureaucrats and local officials in return for their attainment of growth and job creation targets. This system differs significantly from the typical Western governance model and has allowed China to find a unique way of “discovering” growth-enhancing policies through local experiments.
Much more in the report, but it errs in calling this a “market-based system,” assuming that it is a capitalist market economy. Of course, it is not, for China has developed a socialist market economy, which the report actually outlines in some detail. The report also outlines the challenges ahead, of which the government is acutely aware.
Incidentally, it is worth noting that the EU now recognises that China is a socialist market economy, although the EU errs in understanding this system in terms of government “intervention” in the market.