China’s Stone Soup Strategy – How China benefitted from it

China's Stone Soup Strategy - How China benefitted from it

China’s poverty alleviation programme

  • Xi Jinping After becoming president in 2013, listed poverty alleviation as one of his administration’s core missions, and set a deadline of 2020. In 2016, the central government’s 13th five-year plan made an explicit commitment to eradicate extreme poverty by 2020.

Campaign Mode –

  • The strategy was packaged as campaign. It brought about enthusiasm towards meeting a clear goal by a designated deadline. The campaign elevated poverty alleviation as the top priority of the national agenda.

Incentives –

  • Incentives were aligned at the local level, spurring local authorities to design appropriate plans customised to local needs. Local government officials in national-level counties were no longer evaluated strictly by their annual GDP. Instead, they would be evaluated by their poverty alleviation achievements.

Leaving no one behind –

  • The government of the country also tracked poverty at household levels. A National Poverty Registration System was established to record, track and manage every poor household. For a country as massive as China, tracking individuals and their families required enormous effort – and it was deployed.

The Stone Soup –

  • Important partners were invited to add ingredients to the stone soup of eradicating absolute poverty. In China, when the government issues an explicit call to action, companies, foundations and non-profit organisations want to show that they are heeding the call and bring their skills and resources to the table. It was announced in February 2021 that absolute poverty had been eradicated from China..

How it worked –

  • Unlike other issues such as education, health care or environmental protection, poverty alleviation requires an amalgam of all types of interventions. The government provided the pot, the water and the stone and many private sector players rushed to provide more ingredients

Why did private players support –

  • In China, working alongside government is a requisite component to operating one’s business. With its poverty alleviation strategy, the government created a structure which aligned incentives. Everyone could contribute their own skills and resources to the campaign, with the contributors’ return on investment being improved relationships with local and national government
  • In the case of state-owned enterprises, matching efforts were made between their areas of expertise and geographies which could benefit from them.

Tencent &

  • Tencent and also launched a poverty alleviation programme and used their platforms and technology to boost sales of farm products.

Heren Foundation and Fuyao Group

  • The Heren Foundation and the Fuyao Group, established by Cao Dewang, handed over 400 million yuan directly to local governments to enable them to carry out their poverty alleviation mandates.

Bill and Melinda Gates Foundation

  • The Bill and Melinda Gates Foundation focused on rural primary health care and nutrition, subjects in which they have great expertise.

Critical Evaluation –

  • Despite the tremendous achievements, the poverty elimination campaign failed to address the root cause of rural poverty: the underdeveloped rural human capital. 1 Research shows that 63 percent of rural students drop out before graduating from high school. Furthermore, the problem runs beyond schools; it includes malnutrition, health problems, and lack of early childhood development.
  • This stunning failure in human capital development will have profoundly negative impacts on the future of China. Currently, about 70 percent of the Chinese labor force not only has no high school education but also lacks the potential for human capital development. These workers are only suitable for labor-intensive jobs, such as assembly line work. They cannot be retrained for higher value-add jobs because of their lack of learning ability.
  • As China moves toward an innovation-driven economy and loses its comparative advantage for labor-intensive jobs to lower income countries, between 200 and 300 million working age Chinese might become structurally unemployable. High levels of structural unemployment will lead to social chaos. Jobless working-age people will become dissatisfied with the status quo and demand changes. Their anger will become a ticking bomb for the regime.
Sodhi Gautam

Sodhi Gautam

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