The Power of the Market: 600 Million People in China Lifted Out of Poverty Since 1981

by: Mark Perry June 06, 2008 | about stocks: CHN / FXI / GXC / HAO / PGJ / SNO    

Mark J. Perry, Ph.D.

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Economic reforms that started in 1978 have helped lift 635 million Chinese people out of poverty, from 839 million in 1981 to 204 million in 2005 (see chart above), according to this study (Table 2). The poverty rate has fallen from 53% of the population in 1981 to 8% by 2001 (see chart above from the World Bank).

Bottom Line: Free market capitalism is the best path out of poverty. The difference between capitalism and socialism? Capitalism works.

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This article has 7 comments:

  •  
    Jun 07 12:32 AM
    So what do the blacks in US think about poverty? Depends, liberal or conservative!

    Liberals can never be happy, conservatives look around and count their blessings.

    Obama will try to convince conservative blacks that things have never been worse. Let us pray that truth will be exposed to the light of day, and that pandering in the black churches will end with some dramatic moves by the IRS... before, not after the elections!

    Kind of makes you wonder how they measure poverty in China?
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  •  
    Jun 07 11:56 AM
    Amazing that the CCP gets any credit for reform when they ran China into the ground for 40 years. The success since then should be seen against the catastrophic failures between 1949-1978, including millions who died in a government-policy inspired famine.

    Moving from USD $1 to USD $2 per day is important when you're dirt poor, but not much to celebrate. While most continue to struggle, the ruling CCP elite line their pockets with the nation's wealth, denying the majority of basic rights, and causing incalculable damage to China's environment.

    Is this really the measure of success? China should expect and demand more.
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  •  
    Jun 07 12:48 PM
    Correction: Capitalism works when combined intelligently with socialism. Worldwide.

    In the U.S., which eschews "socialism," unbridled capitalism
    has destroyed our financial institutions, government,
    health care system, affordable housing for citizens of modest means, peaceful nation, dollar, government surpluses, traditional mainstream religions, society and Western Civilization in general.
    So many of our great cities are now third world areas.

    To paraphrase..."Whi... most continue to struggle, the ruling GOP line their pockets with the nation's wealth, denying the majority of basic rights (affordable housing, education and health care, livable wages), and causing incalculable damage to (America's) environment." So very interesting how your paragraph so applies to life in America after thirty years of Republican rule and the end of "the level playing field."
    Reply | Link to Comment
  •  
    Jun 07 12:57 PM
    Socialism is not a economic system or political system but a religion. It must be kept out of govenment which it always destroys.

    Nazism and communisum are both socialistic. A little evil is still evil.
    Reply | Link to Comment
  •  
    Jun 07 04:01 PM
    In the United States, poverty line is defined as income less than $8,000 for a family of 3 living in 48 contiguous states. China uses definition of United Nations, which defined poverty as living on less than $1.25 a day, $456 a year. Even adjusted for PPP (purchasing power parity), it is equivalent to $900.00 per year. To most people, that level of income is "misery" level income. Now Chinese have elevated themselves from "misery" to "poverty". Yet, 14% of Chinese still live in "misery" level. Chinese are improving their living standard, but let's be realistic.
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  •  
    Jun 07 04:43 PM
    "Free market capitalism"!!! What a joke! China has a "market", but it is controlled and manipulated by communist party. It is definitely not "free". The communist party never denied their control of the market and they are very proud of it. Who are getting rich and super-rich? Not an average Chinese. In China, income distributions (inequality) is worse than any Latin American countries.
    Reply | Link to Comment
  •  
    Jun 07 05:19 PM
    When China joined WTO in 2001, she admit that China is not a free market economy but promised to become one by 2016. Instead of honestly reform the market, China is resorting to their favorite tactic of arm-twisting other countries to "accept" China as a "Market economy". Poor African countries were first to fall in line. The latest one to join the club is Switzerland under some dubious circumstances. But America and European Union still refuse to recognize China as "a free market economy". All the exports are subsidized one way or another. Then how in the world someone in the US will declare China as "a free market capitalism"?
    Reply | Link to Comment
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