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The rich get richer, and the poor? Rural poverty and inequality in Tibet - indications from recent official surveys
TIN[Sunday, June 01, 2003 10:30]
Recent official surveys from the TAR and Qinghai - the latter province traditionally known to Tibetans as Amdo - reveal several startling results. Extreme poverty in the TAR, as measured by the official poverty line in China, was declining up until the end of the 1990s, but still remained at one of the highest levels in the People's Republic of China (PRC) by 1999, slightly higher than that of Qinghai. TIN does not have access to the data for the TAR past 1999, but in Qinghai, extreme poverty rates more than doubled in 2000 and remained at about 16 percent of the rural population in 2001. This sudden increase in extreme poverty took place despite the fact that 2000 marked the beginning of massive increases in government spending and investment under the Western Development Strategy.

Similarly, rural inequality in Qinghai rose sharply in 2000 and although average incomes were rising, the incomes of the poorest households were actually falling. Although the survey data do not indicate region or ethnicity, Tibetans are known to be the poorest ethnic group in Qinghai and are therefore probably disproportionately represented among the poorer households. The publicly available survey data for the TAR do not allow for an analysis of inequality. Nonetheless, the surveys in Qinghai seem to indicate that the Western Development Strategy has been benefiting the rich, whilst poorer households appear to have been marginalized in the process. Similar outcomes may also be taking place in the TAR and in other Tibetan regions.

One nation, two poverty lines…

There are two lines officially in use to define poverty in the PRC. One line, which shall be called the 'absolute line', is calculated by the Chinese National Bureau of Statistics (NBS) according to the standard international concepts of absolute poverty, that is, the minimum per person income required for a human to survive and subsist. It is calculated on the basis of the food required for a person to have a daily intake of 2100 calories a day as well as the basic non-food items also required for survival. While it is an arbitrary measure based on a range of subjective choices, the absolute line nonetheless gives a rough measure of absolute poverty. In 1997 and 1998 the NBS estimated this line to be 880 yuan (UKP 65; US Dollar 106.32; euro 90.32) per person, and 865 yuan in 1999 to 2001. This roughly corresponds to a World Bank calculation of one-dollar-a-day purchasing-power as a poverty line for China in 1998.

The second line, which might be termed as a 'benefit line', captures extreme poverty, i.e. poverty that is significantly below even an absolute threshold and therefore potentially indicates severe malnutrition or other forms of extreme destitution. The line is not necessarily related to an evaluation of minimum absolute needs, but rather, it is designed to target extremely poor households for the purpose of providing poverty relief and welfare benefits, thus its designation as a 'benefit' line. In the late 1990s this line was set at 635 Yuan (UKP 46.90; USD 76.72; euro 65.17). Although it is widely considered far too low, resistance towards raising the line appears to be related to the constraints of existing public funds available for poverty relief. Official Chinese government statements on poverty, as well as official statements by the World Bank, usually refer to poverty rates measured by this latter line.

The difference between these two lines, a little over 200 Yuan or about one third of the lower line, is extremely significant. For instance, at the national level the use of the absolute line more than doubles the poverty count. This indicates that the rural population is heavily clustered between the two lines, such that small changes in the line produce large changes in the poverty rates being measured. Nonetheless, the use of both official lines can give a rough evaluation of deep and broad poverty.

Poverty rates

According to the official rural surveys, poverty rates in both Qinghai and the TAR, measured by both the absolute and benefit poverty lines, were falling up to 1999, but in 2000 they rose sharply in Qinghai. TIN does not have data for the TAR past 1999. In particular, in 2001 just over 16 percent of the rural population in Qinghai was estimated to be living in extreme poverty, as measured by the lower line. This was an increase of more than fifty percent since 1997. Most striking, the proportion of households in Qinghai living under the very low per person income of 300 Yuan more than tripled to 3.3% in 2000, remaining at that level in 2001.

Graph: Poverty rates in Qinghai using the poverty lines specific to each year

Graph: Poverty rates in the TAR using the poverty lines specific to each year

In contrast to Qinghai, the most extreme forms of poverty in the TAR up to 1999 appear to have been kept much more under control. The proportion of households in the TAR living under the remarkably low incomes of 100 Yuan appears to have been eradicated. The proportion with incomes less than 500 Yuan was brought down to only one percent and in this regard the TAR appears to have performed better than both Qinghai and China as a whole. However, the proportion of the TAR households living under the benefit line (extreme poverty) of 635 Yuan was more than double the national rate, and significantly higher than in Qinghai. If these survey results are accurate, they imply that a large number of households in the TAR were clustered around the benefit line, subsisting between 500 and 635 yuan.

Moreover, if absolute poverty is considered, that is, the higher line of 865 Yuan calculated on the basis of actual basic needs, the TAR had among the highest rates of poverty in the PRC at almost 25 percent in 1999, significantly higher than the equivalent rate in Qinghai of just under 20 percent in the same year. It is also remarkable that the poverty rate in the TAR measured by the absolute line is 2.7 times higher than the poverty rate measured by the lower benefit line, implying that the population is heavily clustered around and between the two lines. In other words, the dilemma in the TAR appears to be not so much with the most extreme forms of poverty but with generalised widespread poverty, at least in terms of reported income.

This clustering is further emphasised if the proportion of households living under 1000 Yuan (UKP 76.86; USD 120.82; euro 102.63) is considered. Because 1000 Yuan is a mere 15 percent above the absolute poverty line, households living just below it are very vulnerable to falling into absolute poverty in the event of a failed crop, bad weather, land degradation, health problems, increased prices for essential services, and so forth. It is notable that in 1999, more than one third of the rural population in the TAR was estimated to be living below this slightly higher threshold. Similarly, 31 percent of the rural population in Qinghai was estimated to be living below this line in 1999 and just over one-third in 2001.

Income inequality

Income inequality is measured by comparing the richest and poorest households. The data for Qinghai are detailed and complete for this purpose, while the data for TAR do not differentiate among the richest 30 percent of households and thus cannot be used to measure inequality. In the Qinghai data, striking changes again took place in 2000 and 2001. In particular, there were significant increases in the numbers of both very poor and very rich households in each of these years.

Graph: Distribution of the rural sample in Qinghai in 1997, 1999 and 2001

Graph: Distribution of the rural sample in TAR in 1995, 1998 and 1999

This rising inequality becomes clear by examining the changing incomes from year to year of a typical household from each income group, i.e. lower, lower middle, middle, upper middle, and upper class. If examined in this way, several significant changes can be observed. In Qinghai, the average income grew steadily from 1997 to 2001, implying that rural standards of living were improving throughout that period. This is the finding that is commonly reported for the province. However, if broken down by income group, the incomes of the lower and lower middle class households fell sharply in 2000, which explains the rising poverty rates in that year. The income of the middle-class household remained stagnant - below the growing average - while the upper income households appear to have captured most of the gain. Thus the rising average incomes were mostly the result of gains by the upper middle and upper class rural households in Qinghai.

Graph: Changing rural incomes in Qinghai

Graph: Changing rural incomes in the TAR

Another way to represent inequality is to compare the share of total income captured by the richest 10 percent of households versus the share of the poorest 10, or similarly the share of the richest to poorest 25 percent. This is considered by many economists to be one of the most reliable and robust measures of inequality.

In the case of Qinghai, there is a dramatic leap in the ratio of the richest to poorest 10 percent in 2000. This was in part due to a sharp increase in the share of the richest 10 percent, from 22.5 percent of total income in 1999 to 28 percent in 2000, and in part due to a significant fall in the share of the poorest 10 percent, from 4.5 percent in 1999 to 2.1 percent in 2000. In comparison to other developing country settings, these are dramatic changes in a very short period of time. Usually inequality measures move much more slowly.

Graph: Income inequality in Qinghai

What does this say about Western Development in the Tibetan regions?

The surveys are limited by the fact that they do not indicate ethnicity nor region and thus it is impossible to say who is getting richer and who is getting poorer, and where they are getting richer or poorer. Nonetheless, most of the rural population in the TAR is Tibetan, while in Qinghai about one-quarter to one-third is Tibetan. Furthermore, it is widely acknowledged that in Qinghai Tibetans are the poorest ethnic group of the province, versus Chinese and Chinese Muslims (Hui). Also, the prefectures that are predominantly Tibetan, such as Yushu and Golog, are among the poorest of the province. Tibetans therefore tend to be disproportionately represented among the poor and unduly affected by increases in poverty and inequality.

It is not clear why there would have been such sharp increases in poverty and inequality in Qinghai in 2000. If the data are accurate, they might reflect the marginalization of poorer households from the fruits of the current economic development strategies. In particular, in prefectures like Tsolho where there has been substantial expansion of townships and roads in the river valleys, many of the poorer pastoral households are known to have been pushed further up the sides of the valleys onto lower quality land in the face of intensive valley development. Thus development may involve a dualistic process, which is likely to explain the increases in poverty and inequality alongside the acceleration of investment under the Western Development Strategy from 2000 onwards.

In the TAR, Chinese immigration has been largely urban and most of the rural areas have remained exclusively Tibetan. As a result, whereas rural inequality in Qinghai may represent disparities between Tibetans and other ethnic groups, rural inequality in the TAR would largely represent disparities among the Tibetans themselves.
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