Poverty in China
What explains the success and failure of local attempts to reduce poverty?
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China's thousands of local governments creates a laboratory for us to understand what works and what doesn't in the war against poverty.
Small Works: Poverty and Economic Development in Southwestern China
Donaldson, John A. 2011. Small Works: Poverty and Economic Development in Southwestern China. Ithaca NY: Cornell University Press.
Turns out, economic growth is not the only way to reduce poverty, and given ecological limits, economic growth might not be the only way.
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Guizhou is a poor backwater province, with an economy that was among China's lowest growing. Yunnan, its neighbor was more dynamic. Unexpectedly, despite its obvious disadvantages and moribund growth, Guizhou saw the faster rate of poverty reduction—by a long shot. Why?
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Imagine you're watering your plants. Do you through water all throughout your house, hoping some lands on your plants? That's an inefficient and destructive way to reduce poverty. Instead, you'd probably prefer to use a watering can, and channel water to your plants. Save water. Save your furniture. Nurture your plants.
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Guizhou did that kind of thing—for a few decades at least. The government did so by generating opportunities in which poor people can participate directly.
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Not highways, but town-and-country roads.
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Not rural tourist resorts, but backpacker establishments.
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Less focus on universities and more on vocational education.
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Artisanal mining, rather than corporate mining.
Instead of growing and hoping some of the growth would help the poor, as Yunnan did, it channeled the growth to the poor. It did so by doing the opposite of what most development experts would suggest. Not high tech, low-tech. Instead of small-scale, remain human scale.
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This "Guizhou model," which I call the micro-oriented state, joins the ranks of other anti-poverty approaches that preclude economic growth. And examples of this approach are surprisingly common.
Obstacles to Accessing Pro-Poor Microcredit Programs in China: Evidence from Penggan Village, Guizhou Province
Officials in one Guizhou county offered hundreds of villagers a chance at microcredit loans, offered at concessionary terms. In the end, only a handful of farmers took up these loans. Why?
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Poor design was not to blame. Execution and effort were not responsible either.
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To be sure, there were hidden structural landmines that made it difficult for single women, elderly and disabled farmers to gain approval. And these groups represent much of the poor.
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But the main reason for the program's unfortunate fate was that most farmers didn't apply. And they didn't apply because they had seen their neighbors try investing in small businesses, in commercial crops, in raising animals—and failing to find buyers. The county was simply too far away from major markets to make anything viable. The farmers knew that most anything they could try had already been tried—and failed.
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It would be easy to assume that the farmers were ignorant, or that they were being overly cautious. But if these same farmers chose to invest in lottery tickets, you would rightly call them foolish. And that's what the farmers knew that most others didn't—the economy that surrounded them made investing in nearly anything as risky as buying a lottery ticket.
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The lesson is that what can look like risk aversion can instead be a shrewed decision. And more than this. Microcredit should be linked to broader development policies. First create opportunities for farmers that are secure. Then offer them loans to take advantage of them.
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Tan, Deborah, Track Tan, Shao Tong Tang and John A. Donaldson. 2019. "Obstacles to Accessing Pro-Poor Microcredit Programs in China: Evidence from Penggan Village, Guizhou Province." Modern China. 42(2): 127-153.
Making Ethnic Tourism Good for the Poor
By the early 1990s, Guizhou's tourism industry was the first to be explicitly targetted to reduce poverty. And it was. All of that changed in the mid-2000's.
When Guizhou abandoned the micro-oriented approach in the mid-2000s, new tourism sites largely excluded the poor. The upshot was the Guizhou's tourism diversified: some remained small in scale, others increased in scale; some developed luxury hotels and fancy restaurants; others remained more grassroots.
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This variety allows us to compare different kinds of tourism sites, and the impact of the process of change.
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In the process, we discovered that it is difficult for tourism sites to focus on profits and become pro-poor. Unless the decision to structure the site in ways that includes the poor proceeds the focus on profit, that site will likely remain exclusive to the participation of the poor. Moreover, it is not uncommon for tourism sites that had been pro-poor
Lor, Jean Junying, Shelly Kwa and John A. Donaldson. 2019. “Making Ethnic Tourism Good for the Poor.” Annals of Tourism Research 76:140-152
Tourism, Development and Poverty Reduction in Guizhou and Yunnan
Tourism can be pro-poor. It usually isn't. And when it is, it doesn't make much contribution to GDP, the scorecard of nations.
Yunnan's tourism industry ranks in the top 10 of all of China's provinces. Moreover, its most popular tourist spots have long been in rural minority areas. Moreover, Yunnan's tourism is quite successful in generating revenue and promoting Yunnan's economy. What it hasn't accomplished is reducing poverty.By contrast, Guihzou's tourism generally ranked closer to the bottom, both in popularity and in generating revenue. Yet, the way it was distributed, a higher proportion reached poor people.
How? If you visited one of Guizhou's villages, you'd likely be "adopted" by a local family—stay in their house, eat food they cooked, have the chance to buy handicrafts they made. This kind of tourism—appealing to backpackers and those seeking an authentic experience—doesn't generate much revenue. But more of that revenues goes into the hands of the poor.
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Compare this to the more 'enclave' style tourism, based on fancy hotels and restaurants. Poor people are rarely hired, and benefit less.
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This style of tourism development prevailed in Guizhou from the early 1990s until at least 2005. Then what happened? Guizhou's government slowly abandoned the micro-oriented state model, including its approach to developing tourism. (What's the impact of tourism? that's the topic of the next one, below.)
Donaldson, John A. 2007. “Tourism, Development and Poverty Reduction in Guizhou and Yunnan.” China Quarterly 190:333-51
The State, the Market, Economic Growth and Poverty in China
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Donaldson, John A. 2007. “The State, the Market, Economic Growth and Poverty in China.” Politics and Policy 35(4):898-929