Offi cial Poverty Estimates

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The offi cial estimate of the rural poor population is based on the poverty line

defi ned by the National Bureau of Statistics (NBS). Rural poverty is defi ned

by NBS as ‘diffi culty in material well-being so great that a person or a family

cannot reach the socially acceptable minimum standard of living.’ Therefore

a fundamental principle in defi ning the poverty line is ‘the minimum expense

required to meet people’s basic living needs for necessary goods and services

under the specifi c conditions of time, place and social development’ (Tang,

1994a). The NBS divides basic personal consumption expenditures into

two categories, food consumption expenditures and non-food consumption

expenditures (clothing, housing, communications, fuel, health and medical

care, education, entertainment and so forth). Food consumption to meet

minimum calorie requirements is the most important factor for setting

the poverty line. To determine the poverty line requires; fi rst, an estimate

of minimum calorifi c intake based on nutritional standards; second, a

food consumption bundle to meet this; third, the monetary value of the

minimum food consumption expenditure based on the prices of the different

foods in this bundle; and fi nally, the Engel coeffi cient (food consumption

as a proportion of total consumption by the poor), which can be used to

calculate non-food consumption expenditures and the poverty line.

Based on the recommendations of the China Nutrition Association, the

NBS adopted a daily intake of 2400 calories per person as the minimum

nutritional standard (Wang et al., 1996). The following principles were applied

in defi ning the food bundle that met this nutritional standard. First, all food

in the bundle should be necessities, excluding what were deemed ‘harmful

and extravagant’ consumption (such as cigarettes, alcoholic beverages and

sweets). Second, the food bundle should refl ect the real consumption pattern

in rural areas. NBS estimated rural household consumption of essential

goods using the 1984 sample survey statistics on rural households. Table

A.4.1 shows the food bundle and the corresponding calorifi c intake adopted

by the NBS. The prices used by the NBS in calculating food consumption

expenditures are the weighted average prices of the various foods. An Engel

coeffi cient of 60 per cent was used in computing the non-food consumption

expenditure before 1998, on the grounds that 60 per cent was usually

employed internationally, and furthermore the cost of food constituted

about 60 per cent of the average total living expenses of Chinese rural

households in 1984 (Tang, 1994a).

Following this approach, the NBS calculated the 1984 rural poverty line

as 200 yuan per person per year.

Table A.4.1 Food consumption bundle adopted by the NBS

Consumption item Unit Amount Calorifi c Proportion

calories consumed intake of total

(Cal./Kg) (kg) (Cal./day) calories

Grain 3150 220.00 2115.6 88.0

Vegetable oil 8990 2.45 60.34 2.5

Vegetables 204 100.00 56.0 2.3

Pork 3950 8.70 94.0 4.0

Eggs 1635 1.30 5.8 0.2

Animal oil 8960 1.36 33.4

Mutton and beef 1746 0.54 2.6

Milk 1522 0.75 3.13

Poultry 1845 0.74 3.74 3.0

*

Fish, shrimp 1091 0.96 2.87

Sugar 3970 1.00 10.9

Fruit 604 3.00 4.96

Note: * The combined proportion of animal oil, mutton and beef, milk, poultry, fi sh and

shrimp, sugar and fruit.

Over the years, the NBS adjusted the poverty line established for 1984,

initially in line with the changes in the rural retail price index and later with

those in the rural consumer price index. In 1990 the prices of households’ selfconsumed

agricultural and other products used in the calculations changed

from controlled state-planned purchase prices to an average of state-planned

purchase prices and the above-quota purchase prices in contract purchases.

Table A.4.2 shows the NBS poverty line in different years.

In 1999 the NBS conducted a new set of poverty line calculations using the

1998 national rural sample survey data (NBS, 2000). A standard food bundle

of 27 items in 15 categories was established from the mean consumption

pattern of households with income per capita less than 800 yuan, adjusted

to meet a lower calorifi c standard of 2100 calories. The income necessary

to purchase the standard bundle of food items was estimated at 527 yuan.

The non-food expenditure share was calculated using a regression method.13

The estimated non-food expenditures at the poverty line were 108 yuan,

giving a poverty line of 635 yuan. However the non-food expenditure share

of 17 per cent from this approach was substantially lower than the 40 per

cent share assumed in the earlier calculations.

Table A.4.2 Per capita income and the offi cial poverty line for rural areas

Year Average annual net income Poverty line Poverty line /

per capita (yuan) (yuan) net income (%)

1978 134 100 74.6

1984 355 200 56.3

1985 398 206 51.8

1986 424 213 50.0

1987 463 227 49.0

1988 545 236 43.3

1989 602 259 43.0

1990a 686 300 43.7

1991 709 304 42.9

1992 784 320 40.8

1993 922 n.a. n.a.

1994 1221 440 36.0

1995 1578 530 34.2

1996 1926 580 30.1

1997 2090 630 30.1

1998 2165 635 29.3

1999 2210 625 28.3

2000 2253 625 27.7

2001 2366 635 26.8

2002 2476 627 25.3

Notes:

n.a.: not available.

a In 1990, the NBS changed the pricing of rural households’ self-consumed products.

Source: Tang (1994b) and other data provided by the NBS.

After setting the poverty line in different years, using the household survey

system it set up in one third of counties in the early 1980s and the income

data from more than 60 000 sampled rural households, the NBS estimated

the proportion of rural households and the rural population whose net

per capita income was below the poverty line. Table A.4.3 gives the NBS

estimates of the poor population in rural areas. According to these fi gures

the rural poor have decreased dramatically over the past 25 years. The

absolute poor population decreased from 250 million in 1978 to 28 million

in 2002, and the poverty-stricken population as a proportion of the total

rural population decreased from 31 per cent to 3 per cent.

Table A.4.3 Offi cial rural poverty headcount (1978–2002)

Year Rural population Poor population Percentage of

(million persons) (million persons) poor

1978 803 250 30.7

1984 843 128 15.1

1985 844 125 14.8

1986 850 131 15.5

1987 857 122 14.3

1988 867 96 11.1

1989 878 106 12.1

1990 896 85 9.5

1991 905 94 10.4

1992 912 80 8.8

1993 913 75 8.2

1994 915 70 7.6

1995 917 65 7.1

1996 919 58 6.3

1997 915 49 5.4

1998 920 42 4.6

1999 922 34 3.7

2000 928 32 3.4

2001 934 29 3.1

2002 935 28 3.0

Source: NBS (2000, 2001, 2002, 2003).