Capitalist reforms and extreme poverty in China: unprecedented progress or income deflation?

Dylan Sullivan, Michail Moatsos and Jason Hickel

New Political Economy, 2024, vol. 29, issue 1, 1-21

Abstract: It is widely believed that China's socialist economy had relatively high rates of extreme poverty while the capitalist reforms of the 1980s and 1990s delivered rapid progress. This narrative relies on World Bank estimates of the share of people living on less than $1.90 a day (2011 PPP), which show a sharp decline from 88 per cent in 1981 to zero by 2018. However, the World Bank’s poverty line has been critiqued for ignoring variations in the actual cost of meeting basic needs. In this paper we review data published by the OECD on the share of people unable to afford a subsistence basket. These estimates indicate that from 1981 to 1990, when most of China’s socialist provisioning systems were still in place, the country’s extreme poverty rate was on average only 5.6 per cent, substantially lower than in capitalist economies of comparable size and income at the time: 51 per cent in India, 36.5 per cent in Indonesia, and 29.5 per cent in Brazil. China's comparatively strong performance is corroborated by data on other social indicators. Moreover, extreme poverty in China increased during the capitalist reforms of the 1990s, reaching a peak of 68 per cent, as privatisation inflated the prices of essential goods and thus deflated the incomes of the working classes. These results indicate that socialist provisioning policies can be effective at preventing extreme poverty, while market reforms may threaten people's ability to meet basic needs.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/13563467.2023.2217087 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:cnpexx:v:29:y:2024:i:1:p:1-21

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/cnpe20

DOI: 10.1080/13563467.2023.2217087

Access Statistics for this article

New Political Economy is currently edited by Professor Colin Hay

More articles in New Political Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().