In 2004, the Chinese government kept on giving key priorities to the issue of rural poverty. A series of preferential policies and measures have been laid out and put in practice by enlarging fiscal inputs to rural area, largely lightening tax burden of rural households especially those living in poor areas, fastening the construction of the rural social security system. Those lower-income rural households and other vulnerable groups who depended mainly on agriculture were widely benefited. Through corporate efforts of the whole society, new progress of poverty alleviation has been made in China in 2004.

1. General outlook of economic and social development of rural area

1.1 Agriculture

In 2004, the value-added of primary industry reached 2074.4 billion yuan, up by 6.3 percent over the previous year. The total output of grain was 469.47 million tons, up by 38.77 million tons or 9.0 percent. The output of cotton was 6.32 million tons, an increase of 30.1 percent; that of oil-bearing crops was 30.57 million tons, up by 8.8 percent. The output of sugar crops was 95.28 million tons, a decrease of 1.2 percent. Steady progress was seen in vegetable and fruits production due to expanded use of high quality varieties. The total output of meat for the year reached 72.60 million tons, up by 4.7 percent. The total output of aquatic products was 48.55 million tons, up by 3.2 percent.

1.2 Income of rural households

In 2004, the per capita annual net income of rural households was 2936 yuan, up by 314 yuan or 12 percent in nominal terms over the previous year. It registered the highest growth since 1997 with a real increase of 6.8 percent after price factors were deducted. As a result of a series of supportive and preferential agricultural policies, along with the pick-up of grain price in the market and favorable climate for agricultural production in 2004, rural households got much more income from agriculture, which was the record high since the reform and opening policy was adopted by reaching 176 yuan per capita, up by 20 percent. The income of the poor and low-income households depending mainly on agriculture increased markedly. By income quintile, the nominal income growth of the bottom 20% households was 16.3 percent, 4.3 percentages higher than the national average, 7.1 percentages higher than that of the top 20% households.

1.2 Life of rural households

In 2004, the per capita living expenditure of rural households was 2185 yuan, up by 241 yuan or 12.4 percent in nominal terms. After deducting price factors, the real increase was 7.3 percent which was the highest growth since 1997. The expenditure on food, clothes, housing, facilities, education, health, transportation and communications increased comprehensively. Both quantity and quality of assets and living facilities owned by rural households was improved significantly (table 1).   

Table 1: Assets and living facilities of rural households in China, 2004 and 2003

Indicator	2004	2003
Per capita floor space of living houses (square meter)	27.9	27.2
Proportion of rural households living in houses of reinforced concrete structure or brick and wood structure (%)	26.6	25.2
Proportion of rural households whose houses were linked with hard surfacing road (%)	49.6
Proportion of rural households with toilet（%）	89.9	89.5
Proportion of rural households with heating system（%）	41.5	40.1
Proportion of rural households using liquefied petroleum gas or electricity fuel（%）	10.6	8.9
Proportion of rural households using tap water（%）	34.6	32.6
Number of color TV owned per 100 households	75.1	67.8
Number of telephone owned per 100 households	89.2	72.8
Number of washing machine owned per 100 households	37.3	34.3
Number of refrigerate owned per 100 households	17.8	15.9
Number of motor cycle owned per 100 households	36.2	31.8

1.4 Income distribution

In 2004, the Gini coefficient within rural households was 0.3692, up by 0.0012 over the previous year, which was lower than the increment of 0.0034 in 2003. The income ratio of urban to rural households basically maintained last year’s level of 3.2:1.  

1.5 Social securities of rural area

In 2004, a total of 333 counties/cities conducted experiments on new medical care cooperation system in rural area, covering approximately 106.91 million of rural population and attracting 80.4 million farmers to the new system. Experiments of  the rural minimum income security system (DiBao system) were also made in some areas.

2. National poverty status

2.1 Poverty line

According to rural CPI, the government poverty line was adjusted from 637 yuan in 2003 to 668 yuan in 2004, low-income line from 882 yuan to 924 yuan.

2.2 Poverty size

By the end of 2004, the rural population in absolute poverty was 26.1 million, a decline of 2.9 million from the previous year and took up 2.8 percent of the total rural population, down by 0.3 percentage points. The low-income population that the food and clothing problems were preliminarily solved in rural area was 49.77 million, a decline of 6.4 million. The proportion of the low-income population to the total rural population was 5.3 percent, down by 0.7 percentage.

Figure 1: Size and proportion of absolute poverty population in   China, 1978-2004

Table 2: Poverty line, size and proportion of China, 2000-2004

Year	Absolute Poverty			Low-income
	Poverty Line (yuan)	Size (million)	Proportion (%)	Low-income line (yuan)	Size (million)	Proportion (%)
2000	625	32.09	3.5	865	62.13	6.7
2001	630	29.27	3.2	872	61.02	6.6
2002	627	28.20	3.0	869	58.25	6.2
2003	637	29.00	3.1	882	56.17	6.0
2004	668	26.10	2.8	924	4977	5.3

1.3 Poverty distribution

Of rural population in absolute poverty, 3.74 million lived in eastern region of China, 9.31 million in central and 13.05 million in western region. The proportion of absolute poverty population was 1.0%, 2.8% and 5.7% correspondingly. 8.37 million rural low-income population was in eastern region, 17.44 million in central and 23.96 million in western region. The proportion of the low-income population to the rural population in eastern, central and western China was 2.2%, 5.3% and 10.5% respectively.

Figure 2: The poverty distribution of rural China by economic strip, 2004

3. The improvement of poverty alleviation in 592 key counties covered by national poverty reduction program.

In 2004, poverty level in 592 key counties was also reduced. The main features are as following. 

3.1 Poverty population decreased

By the end of 2004, the rural population in poverty was 16.13 million in 592 key counties, a decline of 1.49 million over the previous year. The proportion of absolute poverty  was 8.1%, 0.8 percentage points lower than that of the last year. The low-income population was 25.8 million, a decline of 3.66 million. The proportion of low-income population to the total population of 592 key counties was 12.9%, a decline of 1.9 percentage points. The absolute poverty population and the low-income population of 592 key counties took account of 61.8%  and 51.8% of the national total respectively.

Table 3: Poverty size and propotion of 592 key counties, 2001-2004

3.2 Living standard of rural households improved

In 2004, the per capita net income of rural households in 592 key counties was 1582 yuan, up by 176 yuan or 12.5 percent in nominal terms. After deducting price factors, the real increase was 7.3 percent, 0.5 percentage points higher than the national average. The per capita living expenditure was 1392 yuan, up by 172 yuan or 8.7 percent in real terms, 1.4 percentages higher than the national average. The Engel coefficient dropped by 0.5 percentage to 53.2 percent. Rural households owned more assets and living facilities compared with that of the last year (Table 4).

Table 4: Assets and living facilities of rural households in 592 key counties, 2004 and 2003

Indicator	2004	2003
Per capita floor space of living houses (square meter)	21.0	20.5
Proportion of rural households living in houses of reinforced concrete structure or brick and wood structure (%)	52.5	51.0
Number of color TV owned per 100 households	52.8	47.2
Number of telephone owned per 100 households	35.9	28.1
Number of refrigerate owned per 100 households	6.2	5.4
Proportion of rural households with toilet（%）	85.0	83.9
Proportion of rural households with heating system（%）	71.4	70.7
Proportion of rural households having difficulties to get fuel(%）	36.6	44.5
Proportion of rural households using tap water（%）	33.4	32.2
Proportion of rural households having difficulties to get water (%）	13.2	17.7
Proportion of rural households accessible to polluted drinking water（%）	11.1	14.1

3.3 New achievement was made constantly in infrastructure

In 2004, the proportion of villages accessible to road, electricity, telephone, TV program, clinic and kindergarten increased compared with that of the last year in 592 counties (Table 5).    

Table 5: The access rate to rural infrastructure in 592 key counties (%), 2004 and 2003

Indicator	2004	2003
Proportion of natural villages accessible to highway	77.6	75.0
Proportion of natural villages accessible to electricity	95.1	93.9
Proportion of natural villages accessible to telephone	64.4	59.1
Proportion of natural villages accessible to TV program	87.8	86.5
Proportion of administrative villages with qualified clinics	72.5	70.2
Proportion of administrative villages with qualified health attendants	74.3	72.3