March 14, 2021

CPC Theorises Poverty Alleviation Efforts

R Arun Kumar

THIS year marks the centenary of the founding of the Communist Party of China (CPC) as well as the starting point of a new journey to build a modern socialist China. Declaration of victory over absolute poverty signals the achievement of its strategic goal of building a ‘moderately prosperous society in all respects’.

CPC is known for its long-term planning, as well as focusing on medium-term and short-term goals to achieve its strategic goals. The Programme of the CPC states that ‘China is at the primary stage of socialism’, at which it will remain ‘for a long period of time’. During this period, ‘economically and culturally backward’ country has to be led on the path of ‘socialist modernisation’. “In socialist construction we must proceed from our specific conditions and take the path to socialism with Chinese characteristics”. CPC is guided by this theoretical understanding in planning its developmental goals and strategies.

Two long-term strategic goals – termed as ‘centenary goals’ were adopted by the CPC. They are: one, to build a moderately prosperous society in all respects by 2021 to celebrate the centenary of the CPC and two, to build a modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious by 2049, celebrating the centenary of the foundation of the People's Republic of China. Dovetailing to these strategic goals are its various medium-term and short-term goals, and also its Five Year Plans. For example, the CPC central committee which met in October 2020, adopted proposals for the formulation of the 14th Five-Year Plan (2021-2025) for national economic and social development and the Long-Range Objectives through the year 2035.

One of the important lessons that China learned is that it should not purely seek growth in its gross domestic product (GDP) numbers. These numeric targets are to be accompanied by a series of goals in other fronts like innovation, employment promotion and carbon emission reduction. In recent years, China has adopted a strategy of transforming its economy from one defined by ‘high-speed growth’ to one centered on ‘high-quality development’. China has combined economic development with proactive precise poverty reduction, negating the common understanding of bourgeois political economy that emphasises on ‘trickle-down’ effects of economic growth.

CPC states that there is a ‘duality’ in the poor – they are not ‘merely recipients of poverty alleviation, but also serve as agents of poverty elimination and prosperity’. With this understanding, to help the poor enter the market, the Chinese government adopted a ‘comprehensive approach involving education and training, employment opportunities, incentives, and organisational innovation to fully tap their development potential, and help them become self-reliable independent entrepreneurs, workers, shareholders of farmers' cooperatives, community public service providers, or ‘guardians’ of ecological environment’.

CPC decided that its governance philosophy needs to change with the elimination of absolute poverty in 2020. Now it is about alleviating relative poverty, all the while ensuring that those who had come out of absolute poverty do not fall back into it. To ensure this, CPC had concretised its lessons and decided to establish a long-term apparatus for poverty management. ‘Chinese Poverty Alleviation Studies’ summarises the understanding of the country's poverty alleviation practices and provides its interpretation of ‘socialist political economy with Chinese characteristics’.

CPC theorised that its political economy theory of distribution is conducive to both poverty reduction and development. Its core principle is to ‘maintain the goal of national common prosperity’, relying ‘on precise means to build a pro-poor market in which the government, market and society jointly work to emancipate the productivity of the poor and make them contributors to growth’. “An effective pro-poor market is not a distortion of the market, but a reconstruction of the market. The interaction of all market players in the operation of the pro-poor market is conducive to better handling the inherent tension between fairness and efficiency, realising social justice, balancing development and stability, and addressing the century-old challenge of baking a bigger cake and dividing it fairly”.

China’s basic economic system sees public ownership play a dominant role with diverse forms of ownership developing side by side. In the course of marching in the path of construction of a socialist society, CPC had theorised that building a ‘socialist market economy’ is necessary as a ‘market to exchange commodities’, due to the existence of commodity production. With its understanding of Marxism and the practical experience it had gained over all these years of manning the ‘socialist market economy’, it states: “Market rationality is not friendly to the ‘inefficient’ poor groups and poverty alleviation. Moreover, the closer we come to eliminating absolute poverty, the more negative the market becomes. Poor areas and poor people are often unable to participate in the market effectively or even excluded from the market altogether due to their remote geographical location, backward infrastructure and insufficient development capacity, and thus are in a weak position in the overall distribution pattern”. In order to overcome this anomaly, “Capable governments are needed to adjust the primary distribution and create a more efficient redistribution. In addition to the advantages of top-level design to mobilise, organise and guide poverty alleviation, the government can also influence the allocation of resources by improving their mobilisation and availability. The main means are to increase the supply of public services, improve the precise allocation of poverty alleviation resources, introduce pro-poor policies, stimulate social investment, and promote the transfer of asset returns in order to increase opportunities for impoverished communities and individuals to access the factor and product markets and reduce risks and vulnerability. The key lies in not only giving full play to the advantages of the market economy, but also to the superiority of socialism in mobilising resources where need be”.

Socialist market economy ensures a ‘pro-poor market’: “Under a pro-poor market mechanism, trading barriers are continuously broken, trading links are continuously ironed out, and transaction costs are continuously reduced, thus creating favourable conditions for production and unleashing productivity in poverty-stricken areas”. This was possible because the CPC-led government had a ‘visible hand’, which is ‘not a restless hand’ but an ‘essential enabling hand’ working for poverty alleviation. The intervention of the government ensured that the labour skills of those living in poverty struck areas are improved, enabling them to come out of poverty. Moreover, ‘income growth has expanded increasing their consumption capacity and demand, promoting production and exchange, and creating realistic conditions for optimal distribution’.

CPC considers that building of a pro-poor market is a major innovation in China's poverty alleviation practices. In 2015, Xi Jinping said, “we will take poverty alleviation and development as the main part of our economic and social development plan, greatly increase investment in poverty alleviation, roll out more policies and measures to benefit impoverished areas and people, improve the pro-poor nature of the market mechanism, promote inclusive economic and social development, and implement a series of major development initiatives that are more targeted”. With this understanding, Chinese government ensured that along with flow of resources to areas of ‘high technological content and high input-output efficiency’, development of poor areas and the employment and entrepreneurship of the poor was not stifled.

The government had ‘guided, organised and supported leading enterprises and entrepreneurs to establish various forms of linkages with poverty-stricken households in order to build an inclusive market for the benefit of the poor’. A programme titled, ‘10,000 enterprises helping 10,000 villages’ was undertaken. Wealthier provinces were asked to take at least one less-developed province to provide special guidance and assistance. With the Chinese government leading the way and enterprises following suit, trillions of yuan of social investments were made. Through this process, China made up for the shortcomings in infrastructure and public services in impoverished areas, and optimised the means of production to unleash potential productivity.

With these efforts and theoretical innovations CPC is trying to lead the country out of its economic backwardness and poverty. Deng Xiaoping said, “Poverty is not socialism, socialism means eliminating poverty, we must keep abreast of the times; that is the purpose of our reform”.

CPC states that it is marching ahead on the path of construction of socialism as shown by the revolutionary leaders and through the application of Marxism to Chinese conditions. Xi Jinping, general secretary of the CPC, launching the centenary celebrations exhorted the Party cadre to learn from the Party’s extraordinary past and understand how Marxism has profoundly changed China and the world: “Our Party's history is a history of continuously adapting Marxism to the Chinese context. Throughout its 100-year history, the CPC has been of one mind with the people, breathed the same breath as the people, and shared weal and woe with the people. With people's trust and support, the CPC is invincible in the face of any obstacles. It is the duty of the CPC to cement the unity of 1.4 billion Chinese people to create an unstoppable force to push forward the great rejuvenation of the Chinese nation”.

Let us hope that China completely eliminates poverty and continues its march on the path of construction of socialism and realises its strategic goals.