Poverty Alleviation Investment and Private Economy in China

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1 Poverty Alleviation Investment and Private Economy in China

2

3 Lin Wang Poverty Alleviation Investment and Private Economy in China An Exploration of The Guangcai Programme

4 Lin Wang Market Economy Academy Peking University Beijing, China, People s Republic ISBN ISBN (ebook) DOI / Springer Heidelberg New York Dordrecht London Springer-Verlag Berlin Heidelberg 2014 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Exempted from this legal reservation are brief excerpts in connection with reviews or scholarly analysis or material supplied specifically for the purpose of being entered and executed on a computer system, for exclusive use by the purchaser of the work. Duplication of this publication or parts thereof is permitted only under the provisions of the Copyright Law of the Publisher s location, in its current version, and permission for use must always be obtained from Springer. Permissions for use may be obtained through RightsLink at the Copyright Clearance Center. Violations are liable to prosecution under the respective Copyright Law. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. While the advice and information in this book are believed to be true and accurate at the date of publication, neither the authors nor the editors nor the publisher can accept any legal responsibility for any errors or omissions that may be made. The publisher makes no warranty, express or implied, with respect to the material contained herein. Printed on acid-free paper Springer is part of Springer Science+Business Media (

5 Preface: Background and Content A Basic Overview In the past two decades, China s economy has experienced a tremendous development with GDP rocketing upwards at a rate of 9.8 % annually while people s living standard has been improved greatly. However, poverty still remains as a key social problem. To eradicate poverty and to pursue peace have always been the two main goals sought consistently by people from all countries. The alleviation of poverty is concerned with the level of human civilization, the well-being of numerous people, the realization of a harmonious society and the long-term stability of Socialist China. After the Third Session of the Eleventh Central Committee of the CPC, the central government came to realize that the private economy is beneficial and supplementary to the state-owned economy and should be encouraged. When receiving representatives from the collective and private economy in 1983, Hu Yaobang delivered a speech titled How to draw the line between honors and disgraces?, in which he said, all causes which are beneficial to the nation and its people are lofty; all those who work hard and make contributions to the nation and its people are honorable; yet those who love ease and hate work, who disobey the labor disciplines, who are chaotic and lawless are disgraceful. The speech inspired private businessmen greatly and promoted the development of private enterprises. It was under such circumstances that the Guangcai Programme emerged. China has long been attaching great importance to poverty alleviation, especially in the former revolutionary base areas, areas inhabited by minority nationalities, remote and border areas as well as poverty-stricken areas. The central government has taken a series of effective steps and formulated policies as well as regulations accordingly to boost their development. The poverty alleviation and development programme refers to a set of significant strategic measures taken along with the implementation of the reform and opening up policy. It arose out of the imbalance in development between urban and rural areas and was aimed to alleviate and erase poverty and eventually realize common prosperity. Since the Third Session of the v

6 vi Preface: Background and Content Eleventh Central Committee of the CPC, working with tireless efforts and under the guidelines of constructing a socialist country with Chinese characteristics put forward by Deng Xiaoping, the Chinese people of all ethnic groups made significant achievements in poverty alleviation, rejuvenation and the prosperity of the Chinese nation. Since 1986, we have been carrying out the poverty alleviation and development programme in a systematic, organized manner and on a large scale throughout the whole country. Until 1994, the number of people who still lacked adequate food and clothing dropped from 250 million in 1978 to 80 million. In April 1994, ten entrepreneurs headed by Liu Yonghao initiated the Guangcai Programme and thereupon they emerged as one of the most vigorous forces in China s poverty alleviation practice. Setting common prosperity as its aim, the Guangcai Programme invests mainly in the less-developed areas in the central and western regions of China, which not only helps the local people break off the chains of poverty but also contributes to the growth of these enterprises. It has been more than 15 years since the Guangcai Programme was founded and its achievements in poverty alleviation have been widely reported. However, through the piles of documents related to the Guangcai Programme, it s a pity that there is no book introducing it in a systematic and theoretical manner, which is the ultimate goal of the author. After a systematic analysis of the huge wealth gap in China, the author looks back upon the origin, background and progress being made. In the following Chap. 1, he expounds the development, organizational structure and achievements in poverty alleviation. In Chap. 2, the author deliberates on the theoretical structure of the Guangcai Programme. He starts with the theoretical basis, citing the theories of balanced and unbalanced development of the economy in regional economics and combining them with the poverty alleviation practices the Guangcai Programme has been undertaking, he concludes that the Guangcai Programme is a confirmation and development on the theories of regional economics. By combining them with the achievements that the Guangcai Programme has attained, he proves it to be an enrichment and development of the theory and practice of poverty alleviation. The Chinese traditional value of righteousness and profit, which means righteousness outweighing profit and seeking profit by virtuous means, is also the core value of the Guangcai Programme. In addition, the Guangcai Programme also sets a good example to private enterprises in shouldering social responsibility. In Chap. 3, the author uses theories of Non-Governmental Organizations (NGOs). He first defines the meaning of NGO. Since the Guangcai Programme is the epitome of a Chinese NGO, all relevant theories are applicable to it. At the same time, the Guangcai Programme is a special NGO and has many unique features and qualities. After a comparison of some major indicators between the Guangcai Programme and some foreign NGOs, the author devises a comparatively ideal structure for its poverty-relief mechanism, which is feasible and instructive in current Chinese society. Being an extension of regional economics, Chap. 4 provides a keen insight into the regional poverty-relief practices and points out the problems therein.

7 Preface: Background and Content vii The author makes a summary of his views in Chap. 5. He points out that by making people its target and sustainable development its core value, the povertyrelief practices carried out by the Guangcai Programme promote the innovation and transformation of the traditional Chinese poverty-relief pattern. Combining the subjects brought up in Chap. 4 and the analysis in the first section of Chap. 5, the author comes up with suggestions for Chinese poverty-relief causes, especially for Guangcai poverty alleviation practices. The chapter concludes with reflections on two different types of poverty-relief practices, transfusion and hematopoiesis, which will not be deliberated upon here. Research Methods The content of this book is based on Western economics and Chinese poverty-relief practices. The author wields the latest tools and methods of modern theoretical economics to expound the relationship between the Guangcai Programme and the private economy. He also combines the theory analysis with case studies and the description of phenomena with deep reasoning: 1. For basic theories, the author adopts relevant theories of development economics and public economics as its background knowledge, discards unrealistic hypothesis and attaches importance to their pragmatic effectiveness in practice. 2. For statistical analysis, the author uses a methodical set of tools and applies principles of statistics and descriptive statistics, managing to present the research results in a direct and three-dimensional manner. 3. As far as the method of comparative analysis is concerned, the author introduces the comparison of quantity on the basis of the traditional comparison of countries, integrating quantitative comparisons with qualitative comparisons. Innovation and Issues New thoughts are provided in this book: 1. Various perspectives and principles are used to provide different reference points by which the contributions the Guangcai Programme has made to China s poverty- relief cause can be measured. The author borrows theories from development economics and discusses the devisal of poverty-relief mechanisms from the perspective of the supply of public products, breaking the conventions of using statistics alone to measure the achievements. 2. A comparison of different poverty-relief methods upheld in different countries is introduced to the research of the Chinese poverty-relief cause and constructive suggestions are proposed to the system and structure of the Guangcai Programme.

8 viii Preface: Background and Content Further deliberations and analysis are made on the differences between transfusion and hematopoiesis. However, some flaws are inevitable in this book: 1. Research on the poverty-relief mechanism of the Guangcai Programme should have been furthered. For one, a lack of field investigation leads to a comparatively weak combination of theory with practice. In addition, further deliberations should have been made on the evaluation of the correspondence between the Guangcai Programme and the theory of global poverty alleviation and of the poverty-relief mechanism of the Guangcai Programme. 2. There was a lack of data and documents, and some subjects could have been studied further. For instance, the reference points of poverty alleviation results vary from one country to another, which leads to a limited level of accuracy; most of the data about regional development are cited from the Statistical Yearbook of China and Financial Yearbook of China, yet some data and the profile of some subjects are not accessible; moreover, computing is inevitably subjected to man-made interference. 3. Further studies are needed on the evaluation and incentive mechanism.

9 Contents 1 The Development of the Guangcai Programme Background: The Seven-Year Priority Poverty Alleviation Programme Prologue: Let s Devote Ourselves to Anti-Poverty Guangcai Programme Progression: Suggestions on Developing the Guangcai Programme The Development of the Guangcai Programme Development of the Guangcai Programme The Inspection Period ( ) Projects-Driven Period ( ) The Large-Scale Development of the Western Region and Development of the Guangcai Programme (From 2000 to Date) Structure of the Guangcai Programme The Organizational Structure of the Guangcai Programme The Management Model of the Guangcai Programme Achievements of the Guangcai Programme Eliminating Poverty, Realizing Prosperity and Narrowing the Wealth Gap Put People First and Build a Harmonious Industrial Relation Protecting Environment and Promoting Balanced Development Between Human and Society Optimizing the Structure and Maintaining a Fair Competition ix

10 x Contents 3 Theoretical Structure of the Guangcai Programme The Theoretical Foundation for the Development of the Guangcai Programme The Guangcai Program Accelerating the Development of Economy The Guangcai Programme Coordinating the Regional Development The Guangcai Programme Promoting a Balanced Regional Development The Guangcai Programme and the International Poverty Alleviation Theory Theories and Policies of Poverty Alleviation The Mainstream Anti-poverty Method The Guangcai Programme and the Value of Righteousness and Profit The Traditional Value of Righteousness and Profit The Guangcai Programme Is a Transmitter of the Traditional Value of Righteousness and Profit Non-public Enterprises and Corporate Social Responsibility Corporate Social Responsibility Theory The Guangcai Programme and the Poverty Alleviation Mechanism of NGOs The Sphere of NGOs Types of NGOs Functions of NGOs NGOs and China s Poverty Alleviation A Comparison of CPCGP with Other Domestic and Overseas NGOs Background and History Social Origin Poverty Alleviation Mechanism Management System The Ideal Anti-poverty Mechanisms of the Guangcai Programme Participation Mechanism Targeting Mechanism Delivery Mechanism Management Mechanism Monitoring Mechanism Innovation Mechanism Cooperation and Exchange Mechanism Performance Evaluation Mechanism... 93

11 Contents xi 5 The Guangcai Programme and the Transformation of China s Poverty Alleviation The Current Condition of China s Regional Development The Regional Disparities Between the East and the West Reasons for Imbalanced Development Coordinated Efforts of the East and the West Against Poverty The Guangcai Programme and Chinese Poverty Alleviation The Guangcai Programme and Employment The Guangcai Programme and Social Wealth The Guangcai Programme Is Committed to Public Welfare Causes The Guangcai Programme and Building New Socialist Rural Areas Problems in China s Poverty Alleviation Some Proposals to Enhance Performance of the Guangcai Programme The Guangcai Programme and Transformation of Poverty-Alleviation Model The Guangcai Programme: A Transformation and Innovation of China s Poverty Alleviation Model The Definition and Features of Poverty Alleviation Model The Innovation of Poverty Alleviation Mode by the Guangcai Programme An Institutional Innovation: Suggestions on Policies and Systems of Poverty Alleviation The Price System The Taxation System Improve the Land Property Rights System Reforms of the Household Registration System That Urban and Rural Areas Are Segmented Improvement of Finance Transfer Payment System Improvement of Rural Social Security System Reflections on the Two Different Types of Poverty-Relief Practices, Blood Transfusion and Blood Generation Rights Poverty and Institutional Defects of Traditional Poverty Alleviation From Blood Transfusion to Blood Generating References

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