Download Report - Independent Evaluation Group - World Bank

CHINA: AN EVALUATION OF WORLD BANK ASSISTANCEBox 3.1China’s Poverty in InternationalPerspectiveWhile there is broad agreement on the tremendous progressChina has made in reducing poverty, estimates of the remainingproblem depend critically on how poverty is defined. UsingChina’s official poverty line (an income level equivalent to 66cents per day), the number of poor people has declined from 250million (26 percent) of the population in 1978 to fewer than 30 million(2.3 percent) in 2001. Using World Bank figures based on adollar-per-day consumption level in PPP terms, the number ofpoor has declined from an estimated 490 million (51 percent) in1978 to about 205 million (16.1 percent) in 2000.China has a relatively high proportion of poor people comparedwith other countries at similar income level. Based onthe most widely used poverty line of a dollar per day consumptionin PPP terms, China ranked fourth among countrieswith annual per capita PPP income between US$2,500 andUS$4,500 in 1999 (see table below). Comparisons of povertyamong countries are sensitive to definitions, however—especiallyto the poverty line used to divide, somewhat arbitrarily,the poor from the non-poor. The China household saving rateis high even in low-income households, making the comparisonbased on levels of consumption less meaningful. Using incomerather than consumption, only 9.8 percent of thepopulation would have been below the dollar-per-day povertyline in 1999. Moreover, the PPP comparison is based on averageconsumption, whereas to compare poverty levels acrosscountries, it ought to be based on the consumption basket oflow-income households. The main conclusion to be drawn isnot that poverty is relatively high or low, but that a large proportionof the population is close to the poverty line, howeverdefined.Comparison of Poverty among Selected CountriesPer capita PPP incomePercentage in povertyCountry (US$) (measured by $1 per day consumption)El Salvador 4,260 26.9Turkmenistan 3,340 20.9Paraguay 4,380 19.5China 3,550 18.5Peru 4,480 15.5Guatemala 3,630 10.0Indonesia 2,660 7.7Sri Lanka 3,230 6.6Jamaica 3,390 3.2Egypt 3,460 3.1Ukraine 3,360 2.9Jordan 3,880