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Perkins - Poverty Reduction in China
Perkins - Poverty Reduction in China
Perkins - Poverty Reduction in China
Presentation to the International Workshop on Challenges to Poverty Reduction in Chinas New Development Stage Beijing, February 25, 2011
Outine of Presentation
This talk will attempt to make three points:
(1) That China has unusually low household consumption as a share of GDP and to avoid large scale unemployment of labor and other resources a large expenditure gap needs to be filled by an unusually large rate of investment (or other government expenditure) much of which must be done directly or indirectly by government. This is both a problem but it is also an opportunity. (2) I then will illustrate alternative anti poverty programs that could be used to help fill this gap (my main point is simply that even very large anti-poverty programs will still leave a large gap that can be filled with infrastructure investments of the kind now being pursued. (1) The first example will be a large income subsidy to the bottom 20 percent of the rural together with urban poor at the same poverty level. (2) The second example will be a program to provide urban housing to the entire floating population of migrants. (3) The purpose of these exercises is to make one simple pointChina can afford to spend a very large amount of money on anti-poverty programsor to put it differently, Chinas government has to spend huge amounts of money on something in order to keep the growth rate up and it makes sense to spend more of this huge sum on programs that address poverty issues.
60
40
Trade Surplus
20
10
2002
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2003
2004
2005
2006
2007
-10
2008
854
1414.55
1812
2970
4075
6482
8500
10000
11500
13000
14500
Y = CHH + CG + IM + IG + (X M)
Table 1
Breakdown of Chinese GDP in 2009 Billion RMB %
12112.99
35.1
CG Consumption (government)
4439.69
12.9
8125.2
23.5
8321.15
24.1
1503.33
4.4
GDP (total)
34502.36
100
Table 2 Rising Capital Output Ratio GDCF/GDP (%) 1978-1979 1980s 1990s 2000-2007 2008-2009 37.15 35.17 37.76 39.83 45.8 GDP growth rate (%) 9.65 9.69 9.96 10.5 9.37 3.85 3.63 3.79 4.25 4.89 K/O ratio
over 5000
Urban urban lowest 10% next 10% next 20% 1981.15502 2031.88854 4319.73684
43.80%
US$2.74/day
2134
2134
Family apartments (millions) Total cost z(billion RMB) Cost per year over 10 years (billion RMB)
100 17072
50 4268
1707.2
426.8