Introduction

2But the impact of these policies on social hierarchies has been seldom discussed. This article bridges this gap, first of all by examining the allocation of poverty funds by eight rural county governments under the Xi administration, and secondly by examining the impact of poverty alleviation discourse and policies on social hierarchies in a ninth rural county.

Theory and literature review

3This article examines how the approach and priorities of local governments in allocating poverty alleviation funds shapes the distribution of power and resources at the local level.

4Poverty, and the policies intended to reduce poverty, are inherently political because they touch upon the distribution of resources and the issue of “who gets what, when and how” (Lasswell 1936). They are also political because they touch upon moral understandings of who is a socially worthy individual and why. Whether poverty is seen as something one should be proud of, as in Maoist China, or something shameful, as in most contemporary societies, these different perspectives have a profound impact on social hierarchies (Yang, Walker, and Xie 2019).

5These simple considerations have long been obscured in mainstream academic literature because, as anthropologist James Ferguson (1994) lamented, much of the scholarship on poverty has depoliticised questions of resource allocation. Embedded in the conceptual apparatus of “development” theories, the focus of developmental studies has remained largely “technical and managerial.” These studies tried to understand what policies worked or failed and why, but usually did not question what “working” meant, or what were the impacts on social hierarchies and power relations.

6Part of the academic literature has nonetheless sought to explore the political implications of public approaches to poverty (Bernstein 1977; Heyer, Robert, and Williams 1981; Galli et al. 1981; Ferguson 1994). Following a constructivist approach rather than a positivist or a structuralist framework, these studies focused on the impact of development work on the distribution of power and resources, worldview, and perceptions (Ferguson 1994).

8Poverty in China has long been highly political. Chinese leaders fear that poverty contributes to social instability and reduces the regime’s legitimacy (Duckett and Wang 2015: 26). Nonetheless, the Chinese discourse on poverty has been increasingly framed as a scientific, rather than a political issue. As a case in point, the Third Plenary Session of the 18^th CCP Central Committee in 2013 proposed the formation of a “scientific and effective social governance system” that would “scientifically implement poverty alleviation management.” Mun Young Cho’s study of the dibao (低保, minimum livelihood guarantee) in China illustrates the shift towards a more numerical, economic, and scientific rationality (Cho 2010).

9This shift has occurred progressively since the market reforms of the 1980s, and the welfare system that emerged was fragmented and deeply unequal, with serious regional imbalances (Carrillo and Duckett 2011). In the 1980s and 1990s, the most prominent approach to poverty alleviation in China was, as Wu Guobao argued, “a trickle-down regional economic development strategy, in which the income growth of poor households is expected to be realised via regional economic development” (Wu 1997).

10But growth-led poverty alleviation policies failed to effectively reduce poverty because they support well-connected and large projects instead of small producers. According to Duckett and Wang (2015), such growth-led poverty alleviation policies were undermined by the commodification and privatisation of welfare during the 1990s. In addition, Park, Wang, and Wu (2002) showed that problems in selecting the recipients of poverty alleviation funding led to little actual impact on poverty.

11Comparing two Chinese provinces, Donaldson (2011) also found that the large infrastructure and industry development projects were less effective than micro-projects in alleviating poverty. In another study, Shenggen Fan and Connie Chang-Kang (2006) explained that the Chinese government’s focus on intercity highways was not as effective in reducing poverty as the construction of lower-quality roads in remote areas would be. According to Jonathan Unger (2003), credit meant to assist the poor went instead to enterprises, in the belief that they would provide jobs. Ben Hillman (2003) also argued that health and education stagnated, as infrastructure and industrial growth were prioritised.

12In the early 2000s, rising inequality and social instability led to another policy shift, towards more inclusive growth and more redistribution (Ngok and Huang 2014). Several nationwide social insurance schemes were rolled out and progressively included migrant workers and rural residents. The 2000s were also characterised by tax reforms benefiting the rural poor, and by increases in poverty alleviation funds. Overall, however, although great strides were made in reducing poverty, rural welfare has remained minimal and regressive (Gao et al. 2013), and subsidised loans have not always found their way into the hands of poor people (Fan, Zhang, and Zhang 2002).

13The dibao, in particular, became one of the major pillars of poverty reduction in China, but its conceptualisation and implementation changed over time. Originally thought of as a way to support laid-off workers during the transition to the market economy, the program was then redirected towards prioritising aid to the old, the sick, and people unable to work (Cho 2010; Gao 2017; Solinger 2017). As Yang, Walker, and Xie (2019) showed, this re-targeting of dibao programs has diminished the stigma associated with being taken care of by the state, but it has also limited the program’s ability to significantly reduce poverty. Overall, the extant literature shows that the dibao makes a significant difference in the poverty of its recipients, but has a very small effect on overall poverty (Chen, Ravallion, and Wang 2006; Shi Li and Sui Yang 2009; Golan, Sicular, and Umapathi 2015).

14Since coming to power in 2013, Xi Jinping’s government has been credited by analysts with several innovations in poverty alleviation approaches. First, the “precision poverty alleviation” (jingzhun fupin 精準扶貧) approach aims to target poor households rather than whole villages, and to create custom-made projects adapted to their needs, in order to allocate funds more accurately. Second, in line with Xi’s focus on eradicating corruption and the misallocation of funds, the government has sought to increase and better supervise the role of Party institutions in village-level poverty alleviation (Tan 2018). Poverty alleviation criteria were established on which officials are evaluated, alongside established criteria such as GDP (Gross Domestic Product) and social stability.

15However, since Xi Jinping came to power, little research has provided a comprehensive overview of the poverty alleviation approach followed by the Chinese government. In addition, very little research has paid attention to the impact of poverty alleviation policies on social hierarchies and the respective roles of different social groups on the ground.

16The article seeks to bridge this gap by exploring how poverty alleviation approaches in rural China shape the distribution of power and resources at the local level. It argues that the “trickle-down” approach to poverty alleviation, which repeats 1990s growth-led patterns of poverty alleviation, results in strengthening local hierarchies of wealth and power and consolidating a new social elite group in the countryside.

Data and methods

17Three types of data were used: poverty alleviation budgets of eight counties, interviews in a ninth county, and official documents and articles. First, the research is based on a detailed study of poverty alleviation budgets published on local government websites in eight poverty-stricken counties. The county is a relevant spatial division since this “level of government is primarily responsible for delivering public services, managing local state-owned enterprises, and coordinating the economy” (Hillman 2010). In May 2019, according to the Chinese government website, there were 570 counties identified nationwide in China that received special central funding to fight poverty alleviation.

18The counties chosen here are from three different areas:

• • 3 All GDP estimates come from World Bank data from 2019.

  Guizhou Province. Per capita GDP in 2018: 41,244 yuan.3 Daozhen, Pan, and Puding counties. Guizhou is a poor province by Chinese standards, and in 2019 it hosted 47 poverty-stricken counties, among the most numerous in China.

• Henan Province. Per capita GDP in 2018: 50,152 yuan. Sui, Fengqiu, and Xichuan counties, and X County. Henan’s economy is among the least economically developed in China, although the province is one of the most populated.

• Jilin and Heilongjiang Provinces. Per capita GDP in 2018: 55,611 yuan and 43,274 yuan, respectively. Antu and Gannan counties. Jilin and Heilongjiang represent the old industrial north, with a traditionally stronger economy but an impoverished population. They have a few poverty-stricken counties.

20The second type of data on which the article is based is a set of interviews with ten recipients of industry poverty alleviation funding in 2018 and 2019 in a ninth county in Henan: X County, unidentified because of the sensitive content of my interviews. Like the other two Henan counties cited previously, X is part of the national poverty alleviation program, and is an important part of the Central Plains Economic Zone. Interviewees were asked about their motivations to be part of poverty alleviation programs, about their perceptions of the local state’s poverty alleviation work, as well as the implementation of these programs and the impact on their businesses. Interviews were analysed using qualitative methods and were used to provide insights into the perceptions of poverty alleviation programs by their local participants.

21Last, I have drawn on a wide range of official documents published on government websites, and on local newspaper articles, which provide insights into the implementation of poverty alleviation policies, and into the different arguments and sensitivities relating to poverty alleviation among the central leadership and the local government. In particular, I reviewed all available newspaper articles and officials documents related to industry‑poverty alleviation since 2014 in the nine relevant counties.

22The combination of ethnographic and quantitative data, as well as textual material, provides crucial insights into the official and popular discourse on poverty, as well as the impact of poverty alleviation policies on social hierarchies.

23The article proceeds as follows. The first part, based on comparative analysis of poverty alleviation budgets and official documents, shows that local governments use a “trickle-down” approach to poverty alleviation, by focusing on infrastructure spending and economic growth rather than direct financial transfers and social insurance provision to poor households. The second part, based on interviews and ethnographic data gathered in X County in Henan, shows that both the local state and local companies are the major beneficiaries of this approach, which strengthens local hierarchies of wealth and power and consolidates a new social elite group in the countryside.

A “trickle down” strategy

24This section examines the allocation of poverty alleviation funds in eight rural counties and provides evidence that local governments allocate funds to infrastructure development and economic growth, rather than direct financial transfers and social insurance (Figure 2). It highlights a market-oriented approach to poverty alleviation that relies on trickle-down effects, reproducing patterns that China experimented with in the 1990s.

“If you want to get rich, build roads first”

26The integration of rural road improvements within poverty alleviation projects dates at least back to the period 1995-1998, when a “Roads Improvement for Poverty Alleviation” (RIPA) project was implemented with the assistance of the World Bank (Hajj and Pendakur 2000).

28The budgets give further details about the types of roads built under poverty alleviation projects. They are mostly local and serve towns and villages. In Gannan County, for example, all road projects are concrete four-grade roads (the lowest road grade of the Chinese classification, usually characterised by limited road width and low quality) of 160, 120, 94.36, and 57.14 km, respectively. In other counties, projects are even smaller and more local: in Daozhen County, for example, out of 573 road construction projects, only 18 are longer than ten kilometres. Most connect villages to neighbouring villages, or groups of houses within villages.

29In addition to roads and bridges, local governments dedicate funding to housing and village infrastructure projects, which mainly include construction of “middle-class” (xiaokang 小康) housing, renovation of old houses, and the improvement of public infrastructure in residential communities. But Pan County, in Guizhou, is the only surveyed county with more than 50% of the infrastructure budget dedicated to housing and village infrastructure (arguably, because Pan County’s budget includes “villagers self-funding” for housing).

30Although widely publicised, in most surveyed counties, relocation projects are also a minor part of the surveyed poverty alleviation budgets. Only in Daozhen County do relocations amount to a significative proportion of housing projects.

31The third largest item that stands out in poverty alleviation infrastructure is investment in photovoltaic systems. In three counties (two in Henan and one in Jilin) out of the eight surveyed, this makes up more than 15% of the infrastructure budget, and in one case (Antu County in Jilin), more than 40%. This accent on solar energy is in line with the central government’s strategy, announced in 2014, to alleviate rural poverty and reduce the solar energy industry’s overcapacity by deploying photovoltaic systems (Geall et al. 2017).

Helping companies boost the local economy

33Policies based on supporting major businesses to boost the local economy in poor regions constituted one of the main poverty alleviation approaches in the 1990s. Under the name of “industry poverty alleviation,” this approach has also been part and parcel of poverty alleviation since the inception of the “targeted poverty alleviation” plan by Chinese president Xi Jinping in 2013.

34Fengqiu county’s budget, in Henan, gives a relatively detailed account of the industry poverty alleviation program (Figure 4). Among the biggest items in this category, “subsidies and infrastructure construction for employment bases”, “investment in the collective economy” and “subsidies to private limited liability corporations” stand out. As the following section will show, funding under these items is largely distributed to existing local enterprises.

35A close examination of media reports and official documents in the other surveyed counties suggests a similar emphasis on corporate actors and cooperatives.

36Overall, the budgets and local media reports in the eight survey counties suggest that local governments generally choose to support existing companies through subsidies and investment, rather than encouraging new entrepreneurship. This is consistent with the central government’s discourse: under Xi Jinping’s leadership, the government supports the largest enterprises in order to provoke a “trickle down” effect in the local population. According to this strategy, “The carriers for these policies are mostly key enterprises,” as Kun Yan (2016) argued.

40This argument hints at a paternalist approach to poverty alleviation, seeking to “bring discipline to the lives of the poor so that they can become competent actors who (…) recognise and act on their interests as freely choosing agents of the market” (Soss et al. 2009). Poor people are considered bad market actors who need incentives and coercion from the government to enforce rational and disciplined behaviour.

From “social assistance” to a “self-help” approach

41In contrast to infrastructure spending and subsidies to enterprises, the surveyed budgets are characterised by a striking absence of direct financial help, subsidies to poor households, and living allowances.

45Part of the explanation for the scarcity of direct financial help, subsidies to poor households, and living allowances, is that most of the direct financial help to poor households is given in the form of social insurance, in particular the “dibao,” a minimum livelihood guarantee payment for people below the poverty line. Social insurance is usually not included in government budgets and has its own system of funding and expenditure.

46However, there is evidence that funding for the dibao has begun to stagnate in the countryside and has decreased in urban areas (Solinger 2017). Part of that stagnation is explained by the falling number of recipients as absolute poverty diminishes in China.

50The Chinese approach to poverty alleviation reveals a strategy that seeks to orient individuals towards market-conforming behaviour. This approach also reproduces patterns that were observed in China in the 1990s, despite the drawbacks highlighted by scholars and which the Hu/Wen administration sought to address (Wu 1997; Park, Wang, and Wu 2002; Unger 2003; Hillman 2003; Shi, Luo, and Sicular 2011; Donaldson 2011; Duckett and Wang 2015).

The rise of state-sponsored corporate paternalism

51What are the social and political consequences of this return to a growth-led poverty alleviation approach for local communities? How is poverty alleviation perceived, used, and framed locally? The second part of this article, based on ethnographic and interview data in X County, explores the impact of poverty alleviation on the local distribution of power and resources. It highlights the central role of local company owners in poverty alleviation programs, and the emergence of a new state-sponsored corporate paternalism that is profoundly reshaping the local distribution of power and resources.

Transformation of authority patterns: Entrepreneurs in charge of local welfare

52A poverty-stricken county on the banks of the Yellow River in Henan, X County shows a similar pattern in its allocation of poverty alleviation funds to those studied in the eight other counties, as Figure 6 shows.

53Like the other case-study counties, X County has also adopted strategies that put local companies at the centre of poverty alleviation work. This is accomplished by funnelling funds to companies, which in turn are responsible for redistributing the funds and providing employment to poor households.

55Another interviewee, a business owner in the same industry, provided more details about how the employment base scheme works:

• 20 Interview conducted in X County in April 2018.

The government helps companies with preferential measures. The government gives subsidies and funds to companies, and helps them take loans. Then, companies help the poor with [this] money [by providing employment]. This is what we call “companies lead workers out of poverty.”20

56A second way industry poverty alleviation works in X County is through shareholding cooperatives. Yue, the leader of an agricultural cooperative in X County, explained that cooperatives must have a minimum of five members to register with the local government. He initially invested 4 million yuan in his cooperative, about 60% of the total investment, which gave him the power to make all decisions regarding the company. Today, 60 families participate in the cooperatives by providing their land and getting dividends in return.

57The cooperative, Yue explained, is in fact like a shareholding company, but benefits from advantageous tax policies. This confirms findings from the scholarly literature. Farmers’ cooperatives have experienced rapid expansion in the last two decades in China, encouraged by fiscal incentives and policy support (Deng et al. 2010). But field studies have shown that most of these agricultural cooperatives were shell cooperatives or de facto “commercial enterprises controlled by officials, business entrepreneurs, and merchants” (Hu et al. 2017).

58Now, Yue said, his cooperative is part of the poverty alleviation program. Over the last five years, the county has invested first 1.2 million then 0.96 million yuan in the cooperative. The cooperative, in turn, must transfer a fixed amount (1,000 yuan per year) to poor local households (about 200) in the form of dividends each year during the next five years:

• 21 Interview conducted in X County in March 2019.

[Poor households] take the government’s money to buy shares in my company. That money is given to them (...) In total, [they each invest] 8,000 RMB, and they can get 1,000 RMB of dividends each year.21

59In both the employment-base scheme and the cooperative scheme, two mechanisms are at play: a trickle-down mechanism (boosting local companies will have positive results on the local poor population), and subsidies or dividends distributed to poor households who participate in employment or cooperative shareholding schemes.

60In effect, by reaching poor households through the intermediary of companies, the local government pushes business owners into the crucial role of service providers and community leaders and lends them legitimacy as central actors of the poverty alleviation effort.

61That legitimacy relies on a perception of society as naturally hierarchical, and of business owners as welfare providers. In this regard, industry poverty alleviation schemes accelerate the rise, observed by An Chen (2014), of new patterns of authority centred around business owners, allowing for a cost-effective mode of local governance.

62The legacy of a traditional Confucian model, with its “emphasis and acceptance of hierarchical structure” and on the “interdependence of human relations” (Leung and Nann 1995), may arguably also play a role in the reconstruction of local authority patterns centred around business owners. Such patterns bring back a tradition of Chinese welfare in which a gentry class, while “politically, economically and socially privileged, [was] also expected to undertake social responsibilities and to promote the well-being of ordinary people and serve the interests of their own communities” (Pan 2017).

• 23 Interview conducted in X County in April 2018.

Wealthy entrepreneurs are successful because they were brave, audacious, industrious, and intelligent. If you support them, they will make the best of this opportunity and help the community develop. On the other hand, if you support poor people, they will waste their opportunities.23

Welfare funds captured by local entrepreneurs

64This poverty alleviation approach serves the business interests of the business owners who take part in poverty alleviation schemes.

• 24 Article published on X County’s government website, 2017.

Turning its back on previous policies that relied on relief money, and inspired by central policies, the county has now turned to companies to develop the local economy (…) What “industrial poverty support” actually supports are the two foundational industries of the county that were created from scratch.24

State co-optation and reinforcement of existing business hierarchies

69Poverty alleviation schemes also reinforce existing hierarchies by reinforcing the power of the already best-connected and best-performing companies.

70Poverty alleviation policies supporting small entrepreneurs from poor households exist, but they are scarce. As part of a program led by the municipality, the county has put in place a policy to grant subsidies to 40 “self-employed poor people.” One of these “self-employed poor people,” Liu, told me his story. Liu had worked for ten years as a driver in a big city before coming back to his village. He was categorised as a “poor household” by his village committee. His is now among the twenty remaining “poor households” in a village that counts many successful entrepreneurs in the car parts industry.

72But such support for entrepreneurship on provided to poor households is marginal in the local state’s poverty alleviation strategy. The scope and funding for self-employment pales in comparison with the scope and funding for established businesses. According to local budgets, in 2018, the funds dedicated to entrepreneurship represented less than 0.2% of the industry poverty alleviation funds. In addition, funding for self-employed households is limited to agricultural self-employment, while support to established enterprises targets various agricultural and industrial sectors.

73The county’s “returning migrant workers entrepreneurship park” is a good illustration of this bias towards big businesses. Despite its name, the park mainly comprises big companies from outside the county – mostly from South China and Hong Kong – which have settled there to benefit from tax cuts and low wages. Other companies include X County’s leading enterprises, but very few run by return migrant entrepreneurs and none by poor households.

74Within the business community, the poverty alleviation programs also enforce the existing hierarchy by supporting the strongest and most connected local companies. Beneficiaries of subsidies, in practice, are often selected through close contacts with the local government.

77Yue, by contrast, obtained the poverty alleviation subsidies. The industry poverty alleviation program, Yue explained, is administered by the local county government finance department:

The application is instructed by the Finance Bureau (…) then it is approved by a panel of experts (…) at the township government level (…). The city must know how much money you will spend and how you will spend it (…) because the Finance Bureau cannot spend 1.2 million renminbi for no reason (…) and they can inspect [the cooperative].

Political patronage of businesses

79State support comes at a cost. The official discourse emphasises that it gives entrepreneurs a special responsibility to take on a central role in poverty alleviation. As leaders chosen and nurtured by the government, they have a debt towards both the local state and the local population:

• 34 Article published on X County’s government website, 2018.

Wang [a local entrepreneur] absorbed all of the twenty-three poor households in his village into his factory. He said: “As a person, I must know how to be grateful. This factory was built by the government. I must repay society.34

80The co-optation and the flow of funding and subsidies that comes with state support also enable the government to secure a strong control of business actors. These measures also feed into perceptions of business actors as unable to function without government help. The local official media contribute to such perceptions. A local article mentions that in one company, after having built a new workshop and bought new equipment, “the operating capital was stretched and the company in dire difficulties. Fortunately, the township coordinated 500,000 yuan of poverty alleviation loans to cover its urgent need.” Industry poverty alleviation schemes thus entrench local officials as the most prominent holders of local power, and encourage strong interventionist policies on their part.

81While benefiting companies, poverty alleviation schemes also increase their dependency on the local government, and subject business owners to continuing support from the state. In the long run, entrepreneurs themselves have observed that local state support distorts the market and maintains companies that would have otherwise collapsed.

82As a result, not all local entrepreneurs were enthusiastic about participating in state-led poverty alleviation programs. One entrepreneur, for example, explained why he refused to take the government’s poverty alleviation subsidies:

• 35 Interview conducted in X County in April 2018.

We don’t want to accept government subsidies (…) We feel more comfortable earning our own money (…) There is no free lunch in the world. If you take this money, you will be very tired, the government will make visits, will give you subsidies according to projects, depending on if you want to expand [your business].35

Conclusion

84The article has argued that poverty alleviation in rural China predominately focuses on infrastructure investment and support to the local economy, rather than on social insurance, education, and household subsidies. Support to local companies, the article argues, entails co-opting established enterprises, rather than supporting new entrepreneurship among poor households. Overall, the Chinese approach to rural poverty alleviation highlights the emergence of a state-sponsored corporate paternalism that strengthens local hierarchies of wealth and power.

86This approach, moreover, is undergirded by a local official discourse that is essentially market-oriented and considers poor people either lazy and unwilling to work; or sick and unable to work. For the former category of poor people, the official discourse calls for forcibly integrating them into the market economy. Only poor people in the latter case are considered an acceptable target of state-sponsored welfare.

87All in all, this approach resembles the neoliberal perspectives identified, in other contexts by Ferguson (1994) and Harvey (2007), where market dynamics are considered the central mechanism for governance and welfare, and where business-friendly policies are adopted in the belief that they will trickle down to the poor. But the Chinese discourse and policies differ from these neoliberal perspectives in that companies and company owners are forced to play an active role in poverty alleviation. While the approach to poverty reduction follows a trickle-down principle, the state actively seeks to make the trickle-down process work by forcing companies to play a role in alleviating poverty.

88This has many important implications. On the one hand, this approach marks the rise of a new type of state-sponsored corporate paternalism, intended to coax local business owners into becoming service providers and community leaders. This, in turn, accentuates patterns of authority and power centred around business owners and local governments.

89On the other hand, however, the case of X County shows that local business owners are divided in their reactions to state-sponsored corporate paternalism. Among the local business community, two types of discourse coexist. One sees business owners as natural social leaders and responsible for the well-being of their local community. The other, on the contrary, considers individuals as self-reliant in the market economy and does not give business owners a role in ensuring the welfare of their community. Due to these mixed reactions, it is still uncertain whether the current Chinese administration, which has chosen to strongly support corporate paternalism and to enhance the social role of business owners, will manage to impose this approach onto local communities.