China's formula to reduce poverty could help developing nations

China has earned a reputation as the world's factory, exporting everything from cheap toys to high-end electronics. But it can now offer an even more valuable export - its formula for reducing poverty.

China has stepped up its overseas aid massively in recent years, a trend that has seen the China Development Bank become the world's largest lender.

Brett Rierson, China representative for the World Food Programme says the nation offers a model for developing countries. "China invested in agriculture to reduce poverty and successful agricultural projects were built up from the grass roots. These were not top-down solutions," he said.

"The Chinese government and World Food Programme selected the successful agricultural projects and implemented them throughout the nation. Think of the soft power China would gain if it focused this ability and exported it."

Rierson says African and Southeast Asian governments are negotiating with Beijing for Chinese participation in agricultural projects.

"It helps China have a positive image across all strata of society, not just the top leadership [in these countries]. To protect China's interests and those of Chinese citizens abroad, it's in China's interest to invest in soft infrastructure in developing countries."

In 2000, all United Nations member states adopted eight Millennium Development Goals to be achieved by 2015. No1 was to eradicate extreme poverty and hunger, and to halve the proportion of people living on less than US$1.25 a day from a 1990 figure. While the target of reducing extreme poverty rates by half was met five years ahead of the 2015 deadline, projections indicate that in 2015 almost one billion people will still be living on less than US$1.25 per day.

In May 2005, Beijing, the United Nations Development Programme and other international organisations jointly established a centre in Beijing to help reduce global poverty, the International Poverty Reduction Centre.

The centre provides information and international collaboration on poverty reduction.

In 2008, then premier Wen Jiabao proposed that donor countries, including China, double their donations to the World Food Programme over the next five years, cancel or reduce debts of least developed countries and waive tariffs for these countries' exports, as part of the effort to meet the Millennium Development Goals.

Last November, the World Bank and China launched a knowledge hub to spread knowledge of China's successes in reducing poverty both at home and in other countries, the World Bank website says. It is a virtual platform with seminars and studies held in various places, says World Bank spokeswoman Li Li.

World Bank Group president Dr Jim Yong-kim said: "China has lifted 600 million people out of poverty in the last 30 years. Demand is growing among other developing countries to learn from this remarkable progress. The knowledge hub will play an important role in making China's lessons available to the world and further our common mission to end extreme poverty."

Professor Deborah Brautigam, director of the international development programme at Johns Hopkins University in Baltimore, said China's poverty reduction involved allowing farmers to keep more of their profits, and bringing in foreign investment and technology.

While China has built hard infrastructure, such as railway lines, in developing nations since the 1950s, Beijing was now paying more attention to issues such as women's health, nutrition and farm production in developing countries in recent years, said Rierson.

Governments of emerging economies were investing in soft infrastructure to boost economic growth, he said.

For example, the Ministry of Agriculture and Ministry of Commerce plan to set up agricultural centres in 15 African states to provide expertise, including in irrigation and crop seeds. Some have started operating, he said.

"We're seeing the Chinese government start to be more engaged."

Beijing published its first white paper on foreign aid in 2011. According to the white paper, China gave 256.29 billion yuan (HK$320 billion) worth of aid to 161 countries and more than 30 international organisations by the end of 2009. It signed debt relief agreements with 50 countries cancelling debts totalling 22.58 billion yuan.

Asia and Africa, home to the largest poor populations, received 80 per cent of China's foreign aid, the white paper said.

"The world has seen a dramatic decrease in global poverty from 2005 to 2011 and this is to continue till 2015," said Laurence Chandy and Geoffrey Gertz in a paper for the Brookings Institution, a US think tank.

The number of poor people globally fell from over 1.3 billion in 2005 to under 900 million in 2010, and by 2015, that number could fall below 600 million, wrote Chandy and Gertz. "Poverty reduction of this magnitude is unparalleled in history. Never before have so many people been lifted out of poverty over such a brief period of time."

They predict that from 2010 to 2015, India will enjoy the biggest poverty reduction in the world, with 137.4 million Indians lifted out of the trap. China will be second with 50 million more Chinese lifted out of poverty.

The United Nations predicts China's poverty rate will fall to 5 per cent of the population by 2015 - about 65 million people.

Brautigam said: "I don't think China has been exporting its poverty reduction programme directly. China isn't exporting a programme, but China's rapid increase in overseas engagement could have the same impact."

Just as foreign investment and aid played a role in poverty reduction in China, investment by the Chinese and providing aid for developing countries could contribute to poverty reduction, she said.

However, Brautigam stressed: "Only African governments can play this role in Africa, not China. It was primarily China, not its foreign partners, that reduced poverty in China. The Chinese government did this by itself creating the conditions for wealth to be generated and for people to have greater opportunities."

Rierson agreed that poverty reduction is not something that one country can impose on another.

"You run into cultural and logistical challenges in other countries. I don't think you can guarantee success. But I do think you have an increased chance of success with what has been learnt in China."