Maqbool Maik

Islamabad - How China, the world's second largest economy has been fighting rampant poverty in order to create economically better off society in the socialist republic?

Background discussions and interviews with people from various strata of the Chinese society in a recent visit revealed that Beijing could make it possible only through the massive economic reforms.

As a major policy option, China scraped in late 70s the decadent centralized economic planning system followed by the then Soviet Union (USSR) and shifted to more dynamic socialist economic model that gradually transformed the country. The ruling Communist Party of China (CPC) had undertaken massive urbanization supported by ever tough regulatory regimes to gradually fight the poverty.

Peoples Republic of China has reduced the yawning gap between the rich and the poor from 300 million people living under poverty line in 1980 to 100 million last year largely through urbanization process, nominal junk of state subsidy and strict rule of law.

‘China is growing stronger and stronger because of the economic development that is driven from the lessons learnt from its past mistakes’, Chen Fengxiang, a key member in CPC's Central Executive Committee and Vice Minister of International Department of the ruling party told The Nation in Beijing on July 9.

To further make the society more prosper and egalitarian, China's powerful President Xi Jinping who also happens to be CPC's General Secretary and Chairman Central Military Commission is aggressively pursuing his four point strategy towards achieving that goal.

On top of his agenda is economic development of the lesser developed regions in south west and west of the country, and that is backed up by aggressive campaign against red tapism through enforcement of stricter laws.

Despite spectacular economic development over more than three decades, China is targeting its 100 million people-8% of total population, who are still living below the poverty line which implies that total eradication of poverty, remains a major challenge for the socialist republic to surmount in a shortest possible time.

The policy of socialist market economy had not only ushered into major national gains, targeted efforts to give more economic ownership to the Chinese citizens through equitable distribution of national resources continues unabated. ‘The ongoing process of urbanisation in China aims at reducing the gap between the rich and the poor’, leading China's political scientist, Professor Hairong Lai told this scribe in Beijing.

Professor Lai, who works as Director in China Center for Overseas Social and Philosophical Theories, a think tank of the ruling Communist Party of China, sounded upbeat about a positive outcome of the government efforts in fighting the poverty. Lai said through urbanization the Chinese government has been able to create better economic conditions for its rural population as situation on the ground has changed with 50 percent achievement of the policy objective in 2014.

‘The government is encouraging the multinational companies to work in the rural areas so that local population gets better employment opportunities there’, Professor Lai said. In addition to these efforts, the Chinese government has also undertaken a number of other initiatives to tackle the poverty problem.

These incentives include provision of unemployment allowance, farms to market roads for the rural poor population, compulsory school education, health insurance and vocational training programmes. ‘The government is also using subsidy as a short term measure to control poverty’, professor Lai said. As part of the policy, Lai said that the Chinese government is also trying to reduce poverty by containing inflation rate to the single digit between 3 percent to 5 percent as a key in relation to 1.3 percent population growth and 10 percent GDP growth target.

Lai listed two crucial factors that essentially turned around China's economy: Beijing's decision to joint WTO in 2004 and its paradigm shift from central economic planning system to socialist market economy in early 80s in order to make the sagging national economy growth oriented. As a result, the national economy saw a major turnaround that led to massive Foreign Exchange reserves to $3.84 trillion in 2014. The stock of inbound Foreign Direct Investment (FDI) was recorded at $1.26 trillion, while outbound FDI in that year was $511 billion.

Likewise, the inbound FDI was recorded at $128 billion in 2014, while outbound Chinese investment in that year was $120 billion. With GDP per capita at $7,588 in 2014, value of China's trade was registered at $4.3 trillion in the same year. While the value of Chinese exports in monetary terms was $2.34 trillion against $1.96 trillion imports in the same year.

On the other hand it looks dismal in Pakistan where more than 60 percent of its population is still living under the poverty line and there seems to be no serious effort to address the issue. Would Pakistani rulers follow the foot prints of brotherly neighbour in transforming the Islamic Republic into a real welfare state?