Chapter 10: Managing Poverty Reduction

China’s policy focus on poverty reduction was admirable in its own right, and it was also critical for the creation of a productive labor force and a strong consumer demand base. Significant resource re-allocation, at the expense of traditionally more privileged urban groups, accelerated the transfer of labor from low-income pursuits mostly in rural areas to higher-productivity and hence better-paying jobs off the farm and in towns and cities. The impact of shifting financial resources to rural areas hit urban areas in the form of inflation, state-enterprise closings, unemployment, and increases in economic uncertainty. Urban protest against these effects slowed the pace of improvements in rural areas but did not stop them…