China's Urban Poverty

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China's Urban Poverty
Thesis/Dissertation Proposal
Date
No. of words
Name
Institution 
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Introduction
The households in the urban China have been pushed to higher living standards by the
increase in the level of income, while the economic situations concerning the households
prevailing in poverty had not improved in the 1990s. In fact, later after this period, the increases
were in this period with numerous reasons for the changes. One of these reasons is the reforms
during 1990s, which resulted to a substantial increase in prices of food, thus playing a significant
role in the determination of living standards of the poor1
. The other reason is the reforms aimed
at accelerating the social welfare, whereby the government focused on the provision of medical
care, old age pensions, subsidizing education and housing and putting a significant economic
strain on the low-income earners. The third reason is restructuring of the enterprise that had a
substantial effect on the poor households due to the increase in the rate of urban unemployment2
.
Prices of food were highly subsidized through a coupon ration system before the reforms
were made, and the coupons distributed to the family members and ages. However, market
oriented reforms were made in the agricultural sector leading to a significant increase in
production and establishment of the urban household receiving subsidized food coupon, but
without freedom of purchasing more varieties of food in the market places. Later in 1993, food
coupons were finally abolished by the government, and there was compensation to workers
through explicit wage subsidy at a rate that was universal3
. This was affecting households with
members who had not secured a job since the distribution of the coupons was in accordance to

1
Jian Chen and Fleisher, Belton “Regional income inequality and economic growth in
China.” Journal of Comparative Economics, 22/2 (2002)
2
John, Knight and Xue, Jinjun, “How high is urban unemployment in China?” Journal of
Chinese Economic and Business Studies, 4/2, 91-107 (2005).
3 Xin, Meng, Gregory Robert and Wan, Yujuan, ‘Urban Poverty in China and Its
Contributing Factors, 1986–2000,’ Review of Income and Wealth, 53/1, 167-189 (2007).
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the number of households and ages, and the explicit wage subsidies were distributed by members
who were working.
Background
During the end of 1990s, Chinese cities underwent a rapid economic transition due to the
phenomenon of rapidly growing low income and poor groups. The transitions also affected the
social security that had existed for a long period in relation to employment, housing, education,
income and pension. The reforms made the transitional gap continue expanding resulting to
growth in the urban low income and a population with high levels of poverty. There was a
significant variance with in the scale of urban poor, in the middle of 1990, and according to a
study conducted by National Bureau of Statistic, there were poverty incidences rate for urban
population and household ranging from 4.4% to 3.84% in the year 1995. Moreover, the urban
poverty line was setting per capita annual income of 1500, which was based on the calculations
of urban absolute poverty in families and population ranging from 12.42 and 3.33 million4
.
According to Development Bank, in 2002 there was a report that indicated the incidence
rate of urban poverty in China in 1998 amounted to 4.7% and with the inclusion of the
immigrants; the rate would reach 7.4% by 19995
. Therefore, urban poverty in China was a
structural feature that entails the general poverty of the residents in the urban areas,
unemployment causing extreme poverty, and migrant poverty being considered a new problem.
The incidence of urban poverty rate in 2000 in thirteen cities was identified to be higher ten
percent than higher, compared to 1995, as it was indicated by a sample survey conducted on the
same cites. The increase in the population lay off, unemployed, migrated from rural areas,

4 China Urban Poverty Research Group, (CUPRG) Urban Poverty: New Challenge for
China’s Development (Beijing: Chinese Economics Press, 2003) 23
5 Khan, Azizur and Riskin, Carl, Inequality and Poverty in China in the Age of
Globalization, (Oxford and New York: Oxford University Press, 2001), 40
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dropped out, or retired is contributing to the diversification of the urban poverty by the end of the
1990s6
. The high poverty incidences were distributed to industrial wars and changes in the
market economy, and the industries that are labor incentive like textile and excavating industries
like related to energy and large quality of commercial services industries7
.
Problem statement
In China, there are rapid economic changes leading to the need to focus on identifying
those regarded to be among the urban poor, significant demographics on family and
characteristics of labor markers. The research will also seek