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Economy

China ends poverty with help of towering debt and big handouts

Government aid brings little long-lasting relief to nation's poor

A migrant worker carries debris in the outskirts of Beijing. Many who technically fall above the poverty threshold still struggle, one attorney said.   © Reuters

BEIJING -- China has declared an end to poverty, but that victory came with snowballing debts in the nation's poorest counties that were used to finance handouts and subsidies, raising doubts about the sustainability of the government's campaign.

"Through eight years of sustained work, China has lifted its entire population of rural impoverished residents out of poverty," President Xi Jinping told a meeting of the Standing Committee of the Chinese Communist Party's Politburo on Dec. 3. "Nearly 100 million poor people have shaken off poverty," Xi said.

China's official poverty line for 2020 is 4,000 yuan ($612) a year. The central government alone has spent more than 530.5 billion yuan since 2016 to lift people out of poverty, focusing heavily on relatively low-income regions like Yunnan, Sichuan and Xinjiang.

But its aggressive push to eradicate poverty -- through such measures as relocating entire farming communities from poor, mountainous areas and disbursing monetary assistance -- has not always had the intended effect.

Just take Wang Shicui, who was encouraged to open an inn by the authorities in Chengkou, the city of Chongqing's poorest county. The local government handed out 100,000 yuan to renovate Wang's home into a guesthouse and provides the family with generous assistance for housing, education and health care. The family's income has shot up to about 100,000 yuan a year -- 10 times as much as before.

But the inn itself is not exactly thriving. Traffic is slow, and each guest spends only about 100 yuan there. The family lives mostly off public assistance, which in Chengkou is around 90%-funded by Chongqing. How long the city can keep such payments up is unclear.

Chinese media reported in July that Guizhou Province's Dushan County was 40 billion yuan in debt. The poor, mountainous county had been pouring its official budget and loans from both legitimate and shadow banks into massive infrastructure projects, such as a copy of the Forbidden City and a roughly 100-meter building in the style of a local minority group. Some say Dushan's interest payments alone could surpass its annual revenue, which is usually 1 billion yuan or less.

"Some municipalities have also been buying agricultural products from poor areas at far above market prices in order to lift incomes," a Chinese media insider said.

Critics also say China sets its poverty line too low. The World Bank considers anyone who lives on less than $1.90 a day to be extremely poor. This translates to $693.50 a year -- about $80 above the Chinese threshold.

Still, Xi looks to play up the eradication of poverty as one of his major political legacies ahead of the party's centennial this coming July.

Opinion within his administration is more varied. Premier Li Keqiang stressed in May that 600 million Chinese make only about 1,000 yuan a month, stirring controversy in China and abroad.

"It's not unusual for people to be living on 1,000 yuan or less a month in the outskirts of the city," said an attorney who works with low-income clients in Beijing.

"Everything is expensive in urban areas, so there are people who lead extremely difficult lives even if they fall above the poverty line," the attorney said.

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