How does the Pattern of Growth Impact Poverty Reduction in Rural China?

The high economic growth and increasing inequality have been the two main features of the Chinese economy since the end of the 1970s. The economic growth contributed to a substantial reduction in poverty, and the worsening income distribution contributed to an increase in poverty. The paper defines and measures patterns of growth through the poverty elasticity of income sources. It makes methodological contributions in the derivations of this elasticity. The paper analyzes the patterns of growth in Rural China in 2007–2013, utilizing the Chinese Household Income Project (CHIP). The paper has developed a dynamic decomposition that identifies which policies are pro-poor and which are not. It has drawn many policy conclusions. The empirical results showed that economic growth has been unfavorable to the poor. It amounted to a loss of almost 25% of the growth rate. If China's objective is to eliminate poverty by 2020, such a degree of anti-poor growth should concern China's policymakers. They should make concerted efforts to have pro-poor policies that benefit the poor proportionally more than the non-poor. The paper has identified the income sources that lead to pro-poor outcomes, which help policymakers formulate pro-poor policies.