CHINA: China's fading socialist credentials almost disappeared yesterday when the government admitted the number of farmers living in poverty surged by 800,000 last year, despite a 9 per cent economic growth rate that enriched the urban middle class and corrupt party officials.
The first rise in poverty since the start of market-orientated reforms in 1978 will embarrass and alarm the communist leadership, which sees the growing gap between urban rich and rural poor as the greatest threat to the stability of the world's most populous country.
According to the Poverty Alleviation Office, the rise means that more than 85 million - one in 11 rural residents - subsist on less than 637 yuan (€62) a year.
The poverty rate remains extremely serious, the director of the taskforce, Liu Jian, told Beijing News. His comments were surprisingly candid, emphasising the growing importance of the poverty debate in the higher echelons of the party.
The trickle-down benefits of spectacular economic growth of 7-9 per cent are questionable. Although the coastal manufacturing and financial centres are more prosperous than ever, the poorest in remote inland areas have seen fewer benefits.
Beijing blamed natural disasters and pointed out that the number of peasants living on slightly higher incomes of 882 yuan a year fell by 1.2 million.
But officials and economists say it is becoming more difficult to spread the benefits of economic growth to the countryside. During the 1990s, six million people a year were lifted out of poverty. In 2001 and 2002, this had shrunk to two million.
"The rise in abject poverty in rural areas is not a surprise," said Prof Lin Yueqil of the Social Studies Institute of China. "The economy is growing as fast as ever, but the quality of the growth is declining . . . so we are seeing a rising gap between the top and the bottom income groups." Although the central government has pumped vast sums into the least-developed western areas, much of it is reportedly wasted by corrupt or inefficient officials.
The Audit Association recently estimated that a tenth of the 48.8 billion yuan spent on poverty alleviation schemes was embezzled.