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China is poorer than we thought, but no less successful in the fight against poverty

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  • Chen, Shaohua
  • Ravallion, Martin

Abstract

In 2005, China participated for the first time in the International Comparison Program (ICP), which collects primary data across countries on the prices for an internationally comparable list of goods and services. This paper examines the implications of the new Purchasing Power Parity (PPP) rate (derived by the ICP) for China's poverty rate (by international standards) and how it has changed over time. We provide estimates with and without adjustment for a likely sampling bias in the ICP data. Using an international poverty line of USD 1.25 at 2005 PPP, we find a substantially higher poverty rate for China than past estimates, with about 15% of the population living in consumption poverty, implying about 130 million more poor by this standard. The income poverty rate in 2005 is 10%, implying about 65 million more people living in poverty. However, the new ICP data suggest an even larger reduction in the number of poor since 1981.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4621.

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Date of creation: 01 May 2008
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Handle: RePEc:wbk:wbrwps:4621

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Keywords: Rural Poverty Reduction; Population Policies; Achieving Shared Growth; ICT Applications;

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References

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  1. Chen, Shaohua & Ravallion, Martin, 2004. "How Have the World's Poorest Fared Since the Early 1980s?," Policy Research Working Paper Series 3341, The World Bank.
  2. Ravallion, Martin & Chen, Shaohua, 2007. "China's (uneven) progress against poverty," Journal of Development Economics, Elsevier, vol. 82(1), pages 1-42, January.
  3. Martin Ravallion & Shaohua Chen & Prem Sangraula, 2007. "New Evidence on the Urbanization of Global Poverty," Population and Development Review, The Population Council, Inc., The Population Council, Inc., vol. 33(4), pages 667-701.
  4. Wade, Robert Hunter, 2004. "Is Globalization Reducing Poverty and Inequality?," World Development, Elsevier, vol. 32(4), pages 567-589, April.
  5. Chen, Shaohua & Ravallion, Martin, 2007. "Absolute poverty measures for the developing world, 1981-2004," Policy Research Working Paper Series 4211, The World Bank.
  6. Ravallion, Martin & Datt, Gaurav & van de Walle, Dominique, 1991. "Quantifying Absolute Poverty in the Developing World," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(4), pages 345-61, December.
  7. Ravallion, M., 1998. "Poverty Lines in Theory and Practice," Papers 133, World Bank - Living Standards Measurement.
  8. Chen, Shaohua & Ravallion, Martin, 1996. "Data in transition: Assessing rural living standards in Southern China," China Economic Review, Elsevier, vol. 7(1), pages 23-56.
  9. Ruoen, Ren & Chen Kai, 1995. "China's GDP in U.S. dollars based on purchasing power parity," Policy Research Working Paper Series 1415, The World Bank.
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