Do government transfers reduce poverty in China? Micro evidence from five regions

Abstract

This paper estimates urban and rural poverty rates across five Chinese province-level administrative regions (Shanghai, Liaoning, Guangdong, Henan and Gansu) using representative household survey data from the China Family Panel Studies survey. The types of government transfer payments that households in poverty received and the ability for such payments to lift them from poverty are also assessed. Consistent with published estimates from China's National Bureau of Statistics, the results highlight substantial disparities in poverty rates between provinces in 2014. Nevertheless, for each province, the poverty rates estimated from the survey data were notably higher than the official figures. Although the problem of rural poverty continues to be a significant focus of Chinese policymakers, the results suggest that the poverty rate was higher in urban than in rural areas in most provinces. This partly owed to the higher cost of living in urban China, which is captured in the poverty lines defined for this analysis. In 2014, the most common types of government transfer received by households in poverty were agricultural subsidies or social assistance - principally the dibao. Regarding the latter, the results suggest some improvement in payment targeting in rural areas between 2012 and 2014, but the majority of dibao recipients in most provinces still had income above the defined poverty line in 2014. Furthermore, across all provinces, the vast majority of households living below the defined poverty line did not receive social assistance at that time.