Poverty Alleviation of Ministry of Finance

【Overview】 2010 is the last year for the implementation of the "Outline for Poverty Alleviation and Development of China's Rural Areas (2001-2010)" and the achievement of stated objectives of the "Outline". Financial sectors at all levels implemented the deployments of the "Outline" and the important instructions of the State Council on poverty alleviation and development. On the one hand, they increased financial investment and made innovations to the mechanism for management of financial funds to improve the poverty reduction effect of the funds; on the other hand, they strived to promote the balanced development of poor areas and enhance the development capacity of impoverished areas, improved basic public services, increased financial transfer payments to poverty-stricken areas and improved the fiscal policy framework for multi-channel support for the development of impoverished areas.

　　Financial aid is the most important policy support for poverty alleviation in China and financial investment in poverty alleviation and development is powerful guarantee for the government to promote poverty reduction. In 2010, to implement the arrangements of the “Outline” and achieve the stated objectives, financial departments at all levels further increased financial investment in poverty alleviation and development, promoted the key work for poverty reduction and strengthened the management of financial anti-poverty funds to enhance the effectiveness of special poverty alleviation and development.

　　【Financial investment in poverty alleviation】 In 2010, in accordance with the requirements of the Fifth Plenary Session of the 17th CPC Central Party Committee, the central government increased financial anti-poverty funds and allocated 22.268 billion Yuan of poverty relief funds, 2.539 billion Yuan more than that in 2009, up 12.87%, of which 21.927 billion Yuan (including transferred funds) was subsidy for local financial anti-poverty funds, 2.591 billion Yuan more than that in 2009, up 13.4%, maintaining a high growth rate. According to preliminary statistics, the 28 provinces with the task of poverty alleviation and development allocated a total of 7.16 billion Yuan of financial anti-poverty funds in 2010, up 6.8% over 2009. In addition, the central government allocated lottery public welfare funds of 170 million Yuan to support the implementation of entire village advancement in poor old revolutionary base areas and explore the establishment of a mechanism for stable investment of central government’s lottery public welfare funds in poverty alleviation and development. The increasing investment of financial anti-poverty funds provided financial guarantee for the implementation of the "Outline for Poverty Alleviation and Development of China's Rural Areas (2001-2010)". While increasing financial investment in poverty alleviation and development, the central government further improved the method for allocation of financial anti-poverty funds to ensure the funds are effectively used in rural poverty-stricken areas for the poor. According to statistics, in 2010, the proportion of central government’s financial anti-poverty funds for the eastern, central and western areas was respectively 1.95%, 32.08% and 65.97%, the proportion of anti-poverty funds for the western provinces continued to rise and the priorities were further highlighted.

　　【Pilot projects of contiguous development】 In 2010, the central government issued financial anti-poverty funds of 500 million Yuan to expand the pilot area for contiguous development and support the implementation of pilot projects in 100 counties of 22 provinces in the central and western areas, giving priority to infrastructure construction in contiguous poor areas, improvement of production and development environment, development of featured competitive industries and income growth of the poor by production and alleviating the prominent problems in production and living. While expanding pilot area for contiguous development, the central government also explored the mechanism for reform of pilot program for contiguous development to improve the effectiveness of pilot projects. After the reform, the pilot project implementation period and pilot planning development period were both adjusted from one year to three years to urge local governments to enhance the level of planning development and project implementation. The central government’s financial subsidy for each pilot county changed from 10 million Yuan to 5 million Yuan per year in the first two years. In the third year, the figure will be determined based on performance evaluation. The reform of pilot work created conditions for scientific planning and implementation of the project in local areas and increased the enthusiasm of local governments for strengthening management of pilot projects to improve the effectiveness of pilot projects.

　　【Pilot mutual funds】  Pilot project of mutual funds in poor villages is a kind of innovation on the mechanism for the use of financial anti-poverty funds in recent years and significant results have been achieved since the implementation of pilot projects in 2006. In order to give play to the role of mutual funds for poor villages in a larger area and alleviate the fund shortage problem in impoverished areas, in 2010, while regulating the management of original anti-poverty funds for pilot villages, the central government allocated financial anti-poverty funds of 285 million Yuan to further expand pilot area of mutual funds, 60 million Yuan more than that in 2009, up 26.7%, and increased 1900 pilot villages for the project, 400 more than that in 2009. Meanwhile, pilot projects were required to aim at rural areas not receiving any financial aid, standardize financial operations and strengthen supervision, management and risk control to ensure the healthy operation of mutual funds. Over the past five years for the implementation of pilot mutual funds in impoverished villages, the pilot projects played a positive role in addressing the fund shortage problem of the poor in production, enhancing the capacity of self-organization and self-management of the poor and improving the credit environment of poor areas, welcomed by local cadres and the masses.

　　【Innovation of poverty alleviation mechanism in minority areas】In 2010, to implement the ethnic-minority policies issued by the State Council and the spirit of the Party Central Committee’s instructions on poverty alleviation and development, the central government continued to give priority to the central and western minority areas with relatively prominent poverty problem in the allocation of financial anti-poverty funds to help minorities embark on a way of common prosperity. In 2010, the central government allocated 1.539 billion Yuan of financial anti-poverty funds for the development of minorities, 299 million Yuan more than that in 2009, up 24.1%. The funds were mainly used to support the poverty alleviation and development of poor minority areas. First, increase efforts on the project of “vitalizing border areas and enriching the people”. 700 million Yuan was arranged for this project, up 44.6% over 2009. The subsidy for land border counties rose from 3 million Yuan to 4 million Yuan and the financial investment to border farms of Xinjiang Production and Construction Corps increased from 500,000 Yuan to 1.5 million Yuan; Secondly, increase support for the development of ethnic minorities and the minorities with special difficulties. 327 million Yuan was issued for the development of ethnic minorities, 20 million Yuan more than that in 2009, to help the minority villages complete the task assigned by the “Planning for Supporting the Development of Ethnic Minorities (2005-2010)”; 144 million Yuan of special funds was allocated for the minorities with special difficulties, 53 million Yuan more than that in 2009, to address the outstanding poverty problem of Shanyao people, Lemo people and the southern areas of Xinjiang; Thirdly, implement pilot projects to protect the villages with ethnic characteristics in impoverished areas. 60 million Yuan was issued for the implementation of pilot projects to protect the villages with ethnic characteristics in impoverished areas, up 20% over 2009, to support the development of featured industries in poor minority areas, protect featured folk houses and promote the development of featured cultures; Fourthly, implement pilot projects of supporting the development of featured competitive industries with the special funds for “vitalizing border areas and enriching the people”. In order to explore new mechanisms to accelerate the development of border minority areas, the government allocated 57 million Yuan of minority development funds for the implementation of pilot projects to support the development of featured competitive industries with the special funds for “vitalizing border areas and enriching the people” in 12 border counties of 9 provinces, and concentrated funds to support key links so as to solve the bottleneck problem restricting industrial development and help minorities increase income and get rich through industrial development.

　　【Reform of Rain Plan implementation modalities】 In 2010, the central government and LGOP jointly launched pilot program for reform of Rain Plan implementation modalities and support the implementation of pilot projects in 9 counties of central and western 9 provinces. The pilot projects attempted to change the training targets from surplus labors of poor families to unemployed junior and senior high school graduates; change the training purposes from improving labor skills for employment transfer towards the city to improving the overall quality of new labors and enhancing their ability for stable employment and sustainable income growth; change the training priorities from  short-term skills training to guiding and encouraging children from poor families to receive secondary and senior vocational education and skills trainings for at least one year; and change the way of subsidy issuance from indirect subsidy through training bases to direct subsidy to poor families. The pilot projects had good effects on targeting at poor families in poverty alleviation and development, enhancing the capacity of labors in impoverished areas for stable employment and continuous income growth and alleviating the intergenerational transmission of poverty.

　　【Poverty alleviation and development in poor farms and forest farms】 In 2010, the poverty problem in state-owned poor farms and forest farms was also outstanding and the poverty alleviation and development in state-owned impoverished farms and forest farms was an important part of China’s poverty alleviation and development. In 2010, to accelerate the poverty reduction in state-owned poor farms and forest farms, the central government issued 290 million Yuan of financial anti-poverty funds for state-owned impoverished farms, 10 million Yuan more than that in 2009; allocated 260 million Yuan of financial anti-poverty funds for state-owned impoverished forest farms, 10 million Yuan more than that in 2009. On this basis, to improve the efficiency of capital use in the state-owned impoverished farms, the central government and Ministry of Agriculture took the poverty reduction effect and management of anti-poverty funds of poor farms as factors for consideration of fund allocation. Together with the State Forestry Bureau, the central government further standardized the allocation of anti-poverty funds for poor forest farms and urged local governments to regulate the management of funds and comprehensively summarize the results of poverty alleviation and development in state-owned impoverished forest farms in the "Eleventh Five-Year Plan" period.

　　【Management of financial anti-poverty funds】 In 2010, while increasing investment in poverty alleviation and development and promoting the priorities of financial poverty reduction, the central government attached great importance to strengthening management of the use of financial anti-poverty funds and focused on improving transfer payment and strengthening performance evaluation. As for the management of allocation of funds, the central government informed local governments in advance the estimated subsidies to further enhance the integrity of local budgets. At the same time, it continued to practice the mechanism for earmarking of financial anti-poverty funds. On February 12, 2010, the central government allocated 10.216 billion Yuan of anti-poverty funds for local government, more and earlier than 2009. In deepening the performance evaluation, the central government strengthened the reward and punishment incentives for performance evaluation and increased rewards to 200 million Yuan, 100% up over 2009. It rewarded 21 provinces with Grade A and B in the performance evaluation and the performance of various provinces in 2010 was better than that in 2009. 6 more provinces won Grade A and B and the total scores and single indicator scores of many provinces were all higher, indicating the positive role of performance evaluation of financial anti-poverty funds in promoting standardized management of anti-poverty funds in local areas and enhancing the effectiveness of poverty alleviation and development.

　　【Multi-channel improvement of pro-poor policy】 In 2010, while increasing financial investment in poverty reduction, in accordance with the requirements of the construction of public finance, to improve the equalization of basic public services and promote the enhancement of self-development capacity of impoverished regions, the central government constantly increased transfer payments to poor areas and implemented more pro-poor policies to further improve the policy framework for multi-channel poverty reduction.

1. Establishment of regional financial transfer payment system. The central government continued to deepen the financial reform, established the financial transfer payment system in central and western areas, minority regions,, poor counties and towns, old revolutionary base areas and border areas, and constantly increased transfer payments. The gradual improvement of financial transfer payment, combined with other pro-poor measures, enhanced the level of financial support for minority regions, old revolutionary base areas and border areas and enhanced the anti-poverty capacity of impoverished areas.

2. Regional development and ecological policy implementation. At the beginning of this century, the central government implemented the western development strategy and the ecological construction project by returning farmland to forests or grassland, which had a significant poverty reduction effect in relevant areas. To consolidate the results of western development and ecological construction, guarantee the basic living of impoverished regions and poor people and gradually increase transfer income of poor families, the central government continued to promote the western development and implement and consolidate the projects of returning farmland to forests.

3. Implementation of the policies for equalization of basic public services. With the establishment and improvement of the framework of public finance and the enhancement of national financial resources, the central government continued to improve the basic public services in rural poor areas. For example, it implemented a number of agriculture-benefiting subsidy policies, constantly expanded pilot area for the renovation of dilapidated buildings in rural areas, gradually established the funding guarantee system for rural compulsory education, the new rural cooperative medical system, new rural old-age insurance system, the rural minimum living security and social relief system and natural disaster relief system, implemented a funding policy for students from needy families and continued to enhance the financial security standards.

　　The establishment of above systems and the implementation of the pro-poor policies formed a financial policy framework for multi-channel poverty reduction, enhanced the ant-poverty capacity of impoverished regions, improved the environment and conditions for development, alleviated the outstanding difficulties of poor masses in production and living and had a significant poverty reduction effect.