What Can ASEAN Learn from the People’s Republic of China’s Poverty Reduction Strategy?

Industrialization can be an effective pathway out of rural poverty. Non-agricultural employment can reduce poverty in rural areas by offering workers another source of income especially during periods of low employment in the cultivation cycle. Rural industrialization becomes increasingly important as agricultural activities decline in relative importance in the wider economy while also increasing rural laborers’ resilience to shocks by diversifying incomes. By offering employment opportunities in small and medium cities, non-agricultural rural enterprises can help slow the expansion of large cities that may not be able to accommodate large influxes of migrant workers.

Targeted governmental interventions can reduce poverty in places where economic growth cannot reach. PRC’s experience suggests that pro-poor interventions can be successful when the trickle-down effects of economic growth weaken and poverty rate is relatively low. The PRC government has channeled diverse resources to support targeted interventions that aim to address the country’s multi-dimensional extreme poverty. Targeted interventions can be industry-based, educational, and cash-transfer social protection approaches. Their selection will depend critically on the accurate identification of the poor, and diagnosis of poverty root causes.

Social protection programs for poverty reduction are more efficient when multi-dimensional poverty increases. In initial stages of economic growth, financial and organizational resources are often limited, thus, social protection programs can hardly be implemented. As growth continues, redistributing income becomes more feasible. And as poverty becomes multi-dimensional, it is increasingly difficult to overcome it merely through economic growth. While many rural families are not poor by the measure of income, they may still lack adequate education or health care that could help sever the inter-generational transmission of poverty. The PRC’s anti-poverty policy that shifts from a developmental approach to an approach combining development and social protection can thus shed some light on when to introduce and how to design pro-poor social protection programs.

Implications

Three approaches to reducing poverty are suggested, namely,

1. Identify a strategy to eliminate rural absolute poor through a rapid economic transformation;
2. Develop rural areas; and
3. Adopt a cooperative approach to understand and address multi-dimensional poverty.

ASEAN countries’ high economic growth rates have been underpinned by robust foreign investments leading to strong employment gains in the manufacturing sector that help countries to reduce poverty. As many ASEAN countries continue to depend on agriculture, there is scope for improvements that will positively affect the rural poor. (World Development Indicators show 7 out of 10 ASEAN member countries have an agriculture sector that accounts for more than 20% of its total employment, and 5 countries have an over 10% agricultural GDP share in 2017). PRC’s experience shows boosting productivity, promoting the rural industry, and developing small cities are key poverty reduction initiatives.

On the other hand, ASEAN can also share useful lessons with the PRC. In particular, Malaysia’s, Singapore’s, and Thailand’s experiences in urban poverty reduction, social protection programs, and rural tourism can help the PRC design and implement better poverty reduction and rural transformation initiatives.