Is the ADB’s Conjecture on Upward Trend in Poverty for China Right? An Analysis of Income and Multidimensional Poverty in China

In order to investigate the Asian Development Bank’s (ADB) finding of increasing trend in income poverty in China since 2000, this paper studies income and multidimensional poverty in China between 2000 and 2011 using China Health and Nutrition Survey data. It is observed the ADB proposed approach, adjusted for vulnerability, demonstrates an upward trend in income poverty. Income poverty is decreasing, however, for the World Bank’s poverty cut-offs ($1.25 or $1.90). To measure multidimensional poverty, along with income (with ADB’s adjusted Asian poverty line and World Bank’s poverty lines), other indicators such as health, education and living standards are considered in this paper. The evident disparities and diversities in rural and urban multidimensional poverty are further examined. Per capita net income, highest level of education and flush toilet are found to be major contributors to both rural and urban poverty. The rural–urban disparity in terms of mild and moderate poverty appears to have decreased in the period before 2009, however, there have been increases since then, and the gap in terms of severe poverty remained quite high in this decade. We find that food insecurity does not play a major role in the rural–urban disparity in poverty. In the recent period, health insurance has become more prominent in explaining urban destitution, while the rural population is found to be more vulnerable to income fluctuations. Our results also show long-term poverty to be highly influenced by health. Our findings raise questions about the adequacies in the provision of health insurance and the quality of education, particularly in rural China.