Consumption and Income Poverty in Rural China:1995-2018

This paper studies consumption and income poverty in rural China during the period from 1995 to 2018 using Chinese Household Income Project (CHIP) data. It finds that the wellbeing of Chinese rural residents has improved significantly during this period as part of China's rapid industrialization and economic growth. The incidence of poverty has fallen substantially, either measured in terms of income or consumption. However, consumption poverty is not consistent with income poverty. It was the substantial growth of consumption or income that brought about the sharp fall in poverty, whereas the redistribution of consumption or income in particular during the period from 2002 to 2018 was unfavorable for poverty reduction. A large number of rural household workers moved away from household farming to participate in local or urban non-farming activities, resulting in a fall in poverty in the households that engaged purely in farming, and economic growth led to a sharp fall in poverty within different rural household groups.