Between 1978 and 2019, approximately 800 million Chinese people were lifted out of extreme poverty — accounting for roughly three-quarters of the entire world's poverty reduction during those four decades, and the fastest and largest reduction in extreme poverty ever recorded in human history according to the World Bank

The single largest reduction in human poverty in the recorded history of the species happened in one country across the working career of essentially one man’s political dominance. Deng Xiaoping did not personally lift 800 million people out of poverty. The reforms his December 1978 Plenum initiated — de-collectivisation of agriculture, restoration of family farming through the “household responsibility system” that had originated as a secret contract signed by 18 farmers in the Xiaogang village of Anhui province the same year, the 1980 establishment of Special Economic Zones at Shenzhen and Zhuhai and Shantou and Xiamen, the progressive opening to foreign direct investment across the 1980s and 1990s, and the eventual 2001 accession to the World Trade Organization — did lift 800 million people out of poverty. The distinction matters because the reforms were, in essential respects, corrections rather than inventions. As detailed in the CEPR economist Martin Ravallion’s counterfactual analysis of Chinese poverty reduction from 1978 to the present, the substantive question of what caused the extreme poverty of the 1978 baseline — a Chinese poverty rate of approximately 88 percent, higher than essentially any other country in the world at the time — is itself substantively bound up with the pre-reform Maoist policy regime that Deng’s reforms explicitly replaced. Ravallion’s counterfactual calculations suggest that if China had followed the industrial-development trajectory of comparable East Asian economies (Taiwan, South Korea, Japan) rather than the Maoist path across the preceding three decades, its 1978 poverty rate would have been approximately 14.5 percent rather than 88 percent. The bulk of the subsequent reduction was, in essential respects, catching up to where China would have been without the Maoist detour.

The mechanics of the actual reduction were, by every available account of the accumulated economic literature, substantially agricultural in the first decade and substantially industrial thereafter. According to the World Bank Group President Jim Yong Kim’s 2018 remarks at the International Forum on China’s Reform and Opening Up and Poverty Reduction, agricultural productivity gains in the immediate post-1978 period were substantially larger than the industrial gains that would follow — annual agricultural output growth reached 7.9 percent between 1978 and 1984, GDP growth peaked at 15 percent in 1983, and the substantial majority of the poverty reduction between 1978 and approximately 2001 came from rising rural incomes rather than from urban industrial employment. Agriculture’s contribution to poverty reduction across this period was, per some estimates, approximately four times that of industry or services combined. The critical mechanism was that the reallocation of Chinese agricultural production from collective farms to individual family plots (with the household responsibility system that allowed farmers to keep production above their state quota obligations) produced immediate and substantial gains in agricultural output — and that the higher rural incomes those gains produced were the specific substrate on which the subsequent industrial transition depended.

Three-quarters of global poverty reduction

The substantive scale of the Chinese poverty reduction, set against the broader global trajectory of poverty across the same four decades, is one that the international development literature has repeatedly characterised as unprecedented. As reported in the ASEAN+3 Macroeconomic Research Office’s analysis of China’s poverty reduction achievement, the approximately 800 million Chinese citizens who moved above the World Bank’s international poverty line between 1978 and 2020 represent approximately 75 percent of the entire global reduction in extreme poverty across the same 42-year period. Every other country in the world combined — every reduction in poverty achieved in India, Indonesia, Vietnam, Brazil, Nigeria, Ethiopia, Bangladesh, or any other developing economy across the same four decades — accounts for the remaining 25 percent. This is not because the other developing economies performed badly. It is because the Chinese population was, in 1978, so large a share of the global poor (approximately 40 percent) that even substantial poverty reduction in every other developing economy could not, in absolute terms, match what one country of 1.4 billion people did to itself. In February 2021, the Chinese government under President Xi Jinping formally declared “complete victory” over absolute poverty by the Chinese national poverty line — approximately a decade before the corresponding United Nations Sustainable Development Goal deadline of 2030.

The substantive question that the Chinese case raises for the broader international development community is whether the specific configuration of policies that produced the result is replicable elsewhere. Per a Quartz analysis of whether China’s poverty reduction path can be replicated at scale by any other country, the answer offered by essentially every serious development economist who has examined the question is: probably not. China’s specific circumstances — a very large domestic market, a substantially educated population by 1978 (the result of Mao-era literacy campaigns despite the broader Maoist economic failure), a favorable demographic dividend of a working-age population growing faster than dependents, a single-party government capable of implementing policy reforms without electoral cycles, a geographic location adjacent to the East Asian export-manufacturing economies of Hong Kong, Taiwan, Japan, and South Korea, and a specific historical accident of low wages combined with high infrastructure investment during the period when global manufacturing was migrating from developed economies — are unlikely to be replicated in the specific combination that produced the Chinese outcome. India, whose population has now exceeded China’s and whose current poverty rate is substantially higher, has been growing at approximately 6-7 percent annually across the past two decades but has produced substantially less poverty reduction per unit of GDP growth than China did across the same interval.

The costs of the achievement

The substantive costs of the Chinese poverty reduction are, by essentially every account of contemporary Chinese economic and political history, non-trivial. Income inequality within China has expanded substantially across the past four decades — the country’s Gini coefficient rose from approximately 0.30 in 1980 (comparable to Scandinavian countries) to approximately 0.47 in 2010 (comparable to Latin American countries), before subsequently declining somewhat under the Xi-era redistribution policies. Environmental degradation across the same period has been substantial: approximately 40 percent of Chinese rivers were classified as “seriously polluted” at the peak of industrial expansion in the 2000s, and Chinese urban air quality was consistently ranked among the worst in the world across the same period (though it has substantially improved across the past decade). Political freedoms have not accompanied the economic transformation: the single-party Chinese Communist Party government has, across the entire 1978-present period, maintained essentially undisputed political control, and the substantial expansion of Chinese state surveillance and internal security capacity across the past decade under the Xi administration has substantially constrained the political rights of Chinese citizens even as their economic circumstances have improved. Some heterodox economists — including the political economist Jason Hickel of the Autonomous University of Barcelona (and Visiting Senior Fellow at the London School of Economics), whose published critiques of the World Bank’s purchasing-power-parity methodology and its $1.90-per-day international poverty line have argued that a higher threshold (approximately $7.40 per day) more accurately reflects the income required to meet basic nutrition and health needs — have argued that the specific measurement approach the World Bank has used to produce the 800-million-people figure may itself substantially misrepresent the actual improvement in Chinese living standards over the same period. The 800-million figure remains, however, the standard measurement of the largest reduction in absolute poverty in the recorded history of the human species — a reduction that occurred in one country across approximately the working career of one political leader, and that has substantially reshaped the composition of the remaining global poor across the same four decades.