China proving to be saviour of the world's poorest people

PUBLISHED : Monday, 14 February, 2011, 12:00am
UPDATED : Monday, 14 February, 2011, 12:00am

'For man holds in his mortal hands the power to abolish all forms of human poverty and all forms of human life.'

US president John Kennedy in his inaugural address 50 years ago

Kennedy made his speech during the cold war, when the Soviet Union and the United States had nuclear weapons aimed at each other and were capable of 'abolishing all forms of human life', while each was also competing to prove their rival ideologies were the most effective in abolishing 'all forms of human poverty'.

Today, China, a nominal communist state, is no longer involved in nuclear brinkmanship with the US but is making its own bid to end poverty and proving better at it than the US.

In Brazil, for instance, China has played a key role in pulling millions of Brazilians out of poverty, says the Brazilian consul in Hong Kong, Antonio Jose Rezende de Castro.

According to the Instituto de Pesquisa Economica Aplicada (Ipea), Brazil's economic research institute, 12.8 million Brazilians were lifted from poverty between 1995 and 2008, while another 13.1 million escaped extreme poverty. Ipea defined poverty as individual earnings of less than US$140 per month and extreme poverty by earnings below US$70 per month.

Although government policy played a big part, De Castro gave a lot of credit to trade and investment between China and Brazil. China overtook the US as Brazil's biggest trading partner in 2009 and Brazil's biggest foreign investor last year.

'If Brazil maintains the same trend towards decreasing poverty and inequality ... by 2016 its social indicators will resemble developed countries,' said Ipea.

Chinese and Brazilian officials met in the Brazilian capital Brasilia in August 2009 to discuss poverty reduction.

Yet this month, US Secretary of the Treasury Timothy Geithner sought an alliance with Brazil against the Chinese currency, which the US says is undervalued, reported the Financial Times. Although Brazilian manufacturing has weakened in the face of cheap Chinese-made goods, Brazil ran a US$4.8 billion trade surplus with China in the first 11 months of last year, meaning Brazil has little incentive to push for a stronger yuan.

'We have as many problems with the currency policy of China as we do with the currency policy of the US. It's not only China's currency policies that are loose. The world's policies are loose,' Marco Aurelio Garcia, adviser to Brazilian President Dilma Rousseff told Bloomberg last month.

Instead of ganging up against China, the US should co-operate with China in ending poverty in Brazil, Africa and other parts of the world, noted Maya Bhandari, an economist with London think tank Lombard Street Research.

Meanwhile, Swedish development aid organisation Diakonia and the European Network on Debt and Development said a triangular approach in Africa was needed between Chinese, Africans and the West.

'China's assistance to and co-operation with Africa are changing the rules of the game and threaten to leave governments and organisations that do not act strategically by the wayside,' said their report titled 'China and the end of poverty in Africa, towards mutual benefit?'

The United Nations Development Programme worked with China to end poverty in Africa at the Africa-China Poverty Reduction and Development Conference in November last year in Addis Ababa, Ethiopia.

'We are all drawn to an exchange of ideas with China because of the magnitude of its success in reducing poverty over the past three decades,' said UNDP administrator Helen Clark.

China lifted more than 600 million of its people out of poverty between 1981 and 2005, according to the World Bank. In 1981, 84 per cent of China's population was below the poverty line of US$1.25 a day but that figure fell to 16 per cent in 2005.

The extreme poverty rate in sub-Saharan Africa in the late 1990s was more than 58 per cent, said Clark, a former New Zealand prime minister. 'Since then, rapid growth contributed to reducing the extreme poverty rate to 50 per cent by 2005. A development breakthrough in Africa is within reach.'

In 2009, trade between China and Africa surpassed US$114 billion, with China accounting for 10 per cent of the continent's trade, up from 2 per cent a decade ago, said Donald Kaberuka, president of the African Development Bank Group.

China's foreign direct investment in Africa has increased from US$56 million in 1996 to US$7.8 billion in 2008, Kaberuka said.

China's huge investment in Africa has not been without problems. For example, International Rivers, an environmental non-governmental organisation, alleged the Kajbar dam in Sudan to be built by Chinese state firm Sinohydro will displace 10,000 people and threatens to fuel ethnic conflict in Sudan. Sinohydro has declined to comment on the allegations.

There has been violence against Chinese in Angola and shootings of local workers by Chinese company representatives in Zambia. Human rights groups have criticised the lack of transparency in Chinese multibillion-dollar infrastructure and mining deals in Congo.

Nonetheless, Diakonia's report said: 'There is an underlying assumption that Western policy is essentially progressive and Chinese policy essentially negative. It is wrong to demonise Chinese policy ... and Western governments should practice what they preach.'

Western governments could fulfil their pledges to increase aid to Africa, added the report. 'On corruption and good governance, Western governments could do more in prosecuting their own companies who engage in bribery; sign up to the UN Convention to combat corruption which very few Western governments have done; as well as initiate reform of the governance structures of the IMF and World Bank which leave much to be asked for in terms of giving voice to poor countries.'

On the available evidence, would it be reasonable to suggest that if a big reduction in world poverty contributes to world peace, then perhaps the Nobel Peace Prize could be jointly awarded to China and a prominent dissident?

China, it may be argued, deserves the prize since poverty increases the risk of war. An award to another Chinese dissident could be a signal that despite its record, China still has some way to go in securing human rights for its citizens at home.

Money talks

Chinese aid in Africa changes game rules, a Swedish group says

According to the World Bank, between 1981 and 2005, China helped lift this many of its people from poverty: 600m