Targeted Poverty Alleviation Lies in Precisely Identifying the Poverty–Stricken Population: An Analysis of the Targeting Effect of the Rural Subsistence Allowance Policy

Zhu Mengbing, Li Shi＊

Abstract: Poverty–stricken populations must be identified precisely in the fight against poverty to implement the strategy of building a moderately prosperous society in all respects by 2020. The analysis based on the household survey in 2013 shows that the targeting accuracy is not high based on the standard of income and the accuracy is higher based on the standard of multidimensional poverty index. But the latter still has a low coverage rate. To gradually achieve integration of the rural poverty line and the rural subsistence allowance line,standards applied to identifying households entitled to subsistence allowances should be changed from the standard of income to multidimensional poverty indexes. A unified standard of subsistence allowances and a unified method for identifying related households should be developed. At the same time, coverage and funding of subsistence allowances should be extended and increased to better meet people’s basic needs.

Keywords: rural subsistence allowance line; poverty threshold by income;multidimensional poverty index; poverty line

1. Introduction

Poverty alleviation is a long–term task to be completed by developing countries along with economic growth. It is also a significant research project in development economics. The statistics from the World Bank show that as of 2015, the world still housed over 800 million poverty–stricken people, of whom nearly one tenth were in China. In 2015, world leaders gathered at the UN Summit to set the Sustainable Development Goals (SDGs), of which the first goal is to “end poverty in all its forms everywhere” by 2030.①Retrieved from http://www.un.org/sustainabledevelopment/sustainable–development–goals/.Meanwhile, the Chinese Government has made a firmer commitment to rid all Chinese of poverty by 2020.”②Common Development through Joint Efforts on Poverty Eradication–the keynote speech delivered by President Xi Jinping at 2015 Global Poverty Reduction and Development Forum on October 16, 2015. Retrieved from http://politics.people.com.cn/n/2015/1017/c1024–27708352.htmlChina has performed remarkably on poverty alleviation and development since reform and opening–up, reducing dramatically the poverty–stricken population and poverty headcount ratio. According to the original official poverty line(extreme poverty line) made on the basis of rural household’s per capita net income, the rural poverty headcount ratio dropped from 30.7% in 1978 to 1.6% in 2007; the poverty line (the minimum level of income) raised to RMB 1,196 per capita per year at current prices in 2008, on the basis of which the rural poverty headcount ratio declined from 10.2%in 2000 to 2.8% in 2010; in 2011, the poverty line(the new extreme poverty line) was lifted again,reaching RMB 2,300 per capita per year at previous prices in 2010, on the basis of which the poverty headcount ratio was cut from 17.27% in 2010 to 4.5%in 2016.③National Bureau of Statistics. Poverty monitoring report of rural China. Beijing: China Statistics Press.In all, 55.64 million people were taken out of poverty between 2013 and 2016.④A Solemn Promise and a Historic Span–Documentary of Poverty Alleviation Led by the Central Committee with Comrade Xi Jinping at Its Core since the 18th National Congress of CPC. Retrieved from http://news.xinhuanet.com/politics/2017–05/21/c_1121009267.htm.The living standard of poverty–stricken people has been raised prominently while infrastructures in poverty–stricken areas have been improved substantially.Poverty alleviation has played an important role for China to promote regional economic development,political stability, ethnic unity, stability in border areas and social harmony. Meanwhile, China’s efforts have also contributed dramatically to the alleviation of global poverty. China has formed successfully a development–oriented poverty alleviation path with Chinese characteristics. The absolute number of poverty–stricken population has slumped. However, China still housed 43.35 million rural people living in poverty at the end of 2016.Moreover, it has been more difficult and time–consuming to reduce poverty since 2010. After all,the remaining people have been living in extreme poverty for a long time. It is of challenge to change the situation in the short term.

To win the battle against poverty and to help the people living in poverty entering the moderately prosperous society together with the rest of the country by 2020 is a basic sign indicating the completion of building a moderately prosperous society in all respects.It matters whether the first centenary goal of national rejuvenation can be achieved. During the Central Conference on Poverty Alleviation and Development, General Secretary Xi Jinping (2015)said that “eliminating poverty, improving living standards, and achieving common prosperity are the basic requirements of socialism and an important mission of the CPC.” “officials at all levels must, for the sake of consolidating class foundation and popular support for the Party’s governance and maintaining the Party’s close ties with the people,” solve issues such as “who must receive poverty relief,” “who is to implement poverty relief” and “how to implement poverty relief” to win the battle against poverty; “In places where poverty alleviation work is tough,Party committees and governments should take the fight against poverty as their top priority for the 13th Five–Year Plan period (2016–2020),and use it to promote local social and economic development”. To adapt to requests of poverty alleviation in the new era, in 2015, the CPC Central Committee and the State Council set China’s 2020 poverty alleviation goal: providing adequate food and clothing for aid–recipients and ensuring them access to education, basic medical care and housing; all rural residents living below the current poverty line being out of poverty; eliminating poverty in all poverty–stricken counties and regions (Party Documents Research Office of the CPC Central Committee,2017, pp. 213–214). Xi Jinping stressed that the“targeted poverty alleviation strategy must be adopted to find the root of poverty and address it correspondingly. We must do full justice to the strengths of China’s socialist system and construct the pattern of poverty alleviation by implementing the responsibility system at provincial, municipal,county, township and village levels respectively.We should focus on Six Precisions, specifically:precise aid–recipients, precise scheduling of poverty relief projects, precise funding, precise help for impoverished households, precise designation of officials at the village level to carry out poverty eradication measures and precise poverty alleviation effects, to ensure that aid–recipients benefit from the implemented policies. We stick to implementing policies by people, local conditions, the roots of poverty and the type of poverty. We relieve poverty–stricken people by developing local industries with special characteristics, relocating them from impoverished areas, providing employment and schooling, carrying out ecological protection projects and establishing a subsistence allowance system” (p. 212). The item “precise aid–recipients”ranking first in the Six Precisions is the premise and foundation to solve the three main problems of “who must receive poverty relief,” “who is to implement poverty relief” and “how to implement poverty relief”. We focused on discussing the subsistence allowance policy in precisely identifying people living in poverty. First, it discusses alignment of the rural subsistence allowance system, the poverty–stricken household identification and registration system. Second,it analyzes the targeting accuracy of the rural subsistence allowance system based on data from the household survey 2013. Third, it analyzes the targeting accuracy of the rural subsistence allowance system according to multidimensional poverty indexes. And last, it suggests applying multidimensional standards to identifying households entitled to subsistence allowances and developing the unified subsistence allowance line to be integrated gradually with the rural poverty line to give full play to the role of minimum living security through the subsistence allowance system.

2. The rural subsistence allowance system, the poverty–stricken household identification and registration system need to be aligned

The rural subsistence allowance system, the poverty–stricken household identification and registration system are the main measures adopted to identify impoverished rural households in China.In April 2014, the State Council Leading Group Office of Poverty Alleviation and Development(LGOP) released the notice to implement the Scheme of Identifying and Registering Poverty–stricken Rural Households to Achieve Poverty Alleviation and Development. On one hand, serving as the premise for implementation of the targeted poverty alleviation strategy, the poverty–stricken household identification and registration system was adopted to identify and register every poverty–stricken household and poverty–stricken village for the first time, to figure out the actual impoverished population base and degrees and causes of poverty.Measures could then be adjusted dynamically to be more effective in poverty alleviation. In practice,the poverty–stricken household identification and registration system adopts the family’s income as the main evaluation standard with an overall consideration of factors such as housing, education and health. Each poverty–stricken household is identified and registered through a process of application, appraisal, announcement to the public and approval.①Since implementation of the poverty–stricken household identification and registration system in 2014, about 800,000 poverty alleviation officials have conducted field trips to identify and register in all 128,000 poverty–stricken villages and 89.62 million poverty–stricken people to manage them dynamically.From August 2015 to June 2016, the government has organized officials to“check”the status of registered poverty–stricken households nationwide, adding the names of 8.07 million others who were previously not registered while removing 9.29 million names of those who are not poverty–stricken. In 2017, LGOP organized local governments to check progress towards poverty alleviation made in 2016, identifying 2.45 million people who were lifted out of poverty as poverty–stricken once again. The measure has enhanced further targeting accuracy of the poverty alleviation policy. Some scholars think that the poverty–stricken household identification and registration system should be established based on accurate measurement of the household’s income and consumption.However, in practice, poverty–stricken households are determined via“democratic appraisal,”which calculates income and consumption in a different way.Consequently, the difference between registered poverty–stricken households and appraised poverty–stricken households ranges from 37% to 50%.On the other hand, as the minimum living standard guarantee program, the rural subsistence allowance system has been developing rapidly over the past decade since its release in 2007. The latest statistics from the Ministry of Civil Affairs show that China has housed in all 28.462 million rural households (49.036 million people) that were enjoying rural subsistence allowances at the end of 2015; the fiscal expenditures of governments at all levels on rural subsistence allowances reached RMB 93.15 billion in 2015.②The average annual rural subsistence allowance line per capita was RMB 3,685 in Q4 2015. The rural subsistence allowance line differed greatly by province.Henan Province witnessed the lowest line, which was RMB 2,232 per capita per year. Shanghai housed the highest, reaching RMB 9,480 per capita.The rural subsistence allowance system is mainly applied to households with income per capita lower than the local minimum living standard, i.e., residents in extreme poverty. The subsistence allowance system and the poverty–stricken household identification and registration system are two main policies applied nationwide to identifying poverty–stricken households. However, they are different in terms of implementation and “targeting”. Regarding implementation of the poverty–stricken household identification and registration system, provincial poverty alleviation and development offices, after confirming the impoverished population, distribute quotas to counties and villages to identify and register poverty–stricken households through a process of application and appraisal. On the contrary, local governments set the subsistence allowance line while local civil affairs authorities identify households entitled to subsistence allowances. Those two systems are managed by the “poverty alleviation and development office,”the standing organization responsible for poverty alleviation, and local civil affairs authorities respectively. Unfortunately, the subsistence allowance line is not aligned perfected with the poverty line. Moreover, both authorities (civil affairs authorities and poverty alleviation and development offices) have adopted two identification procedures and standards, resulting in both overlapping and different beneficiaries.①In the research project report On Targeting Effect of the Rural Subsistence Allowance System and the Poverty–stricken Household Identification and Registration System issued by the China Institute for Income Distribution of Beijing Normal University (internal report), the data from household survey 2015 in poverty–stricken areas was applied to analyze subsistence allowance beneficiaries and registered poverty–stricken households to reach the conclusion that the degree of overlap of both types of households is 50% at most.

From the perspective of targeting objects, the poverty–stricken household identification and registration system is applied to rural subsistence allowance beneficiaries and people living below the poverty line. In comparison, the subsistence allowance system serves as a policy of minimum living standard guarantee for families that cannot be lifted out of extreme poverty from development of local industries and employment. Along with changing the demographic structure of the poverty–stricken rural population, the proportion of impoverished households registered with an incapacity has grown. Consequently, the subsistence allowance system plays an increasingly vital role in poverty alleviation. During the national conference on poverty alleviation held in 2015, General Secretary Xi Jinping said that “currently, there are between 20 million and 25 million poverty–stricken people who are partially or totally incapacitated. It is inevitable that there will still be such a poverty–stricken population in 2020 whose minimum living standard should be guaranteed by the social security system. This involves the question of the integration between the rural poverty line and the rural subsistence allowance line. At present, the rural poverty line is stipulated uniformly by the central government while the rural subsistence allowance line is determined by local governments,resulting in certain gaps between the two lines in numerous areas. The rural poverty line and the rural subsistence allowance line should be coordinated. The minimum guiding line in the rural subsistence allowance system should be determined in accordance with the national poverty line.Regional subsistence allowance lines lower than the minimum guiding line should be lifted gradually to be equal to the national poverty line to give full play to the role of minimum living security through the subsistence allowance system” (Party Documents Research Office of the CPC Central Committee,2017, pp. 221–222). “Quality of statistics should be improved. The poverty alleviation system should neither leave out people truly in need nor cover non–poverty–stricken people” (p. 216). In 2017,during the 39th group study by the Political Bureau of the CPC Central Committee, General Secretary Xi Jinping stressed again, “to strengthen effective alignment of the rural subsistence allowance system and the poverty alleviation and development system to cover all people in need in the system” (p. 237).Full play of the role of minimum living security of the subsistence allowance system is determined to a great extent by its targeting effect on people living in extreme poverty. Dynamic research should be conducted in respect to whether the subsistence allowance system is applied nationwide to benefiting all impoverished households entitled to subsistence allowances. On the whole, the targeting effect of the subsistence allowance system directly concerns fulfilling the promise of the “to eradicate extreme poverty” by 2020 and realizing the strategic goal of building a moderately prosperous society in all respects.

Specifically, unlike the unified national poverty line,②LGOP determines the poverty line and adjusts it in accordance with economic growth, inflation and living standards. In 2011, the rural poverty line was raised to be RMB 2,300 in the annual per capita net income (at constant 2010 prices). In 2014, LGOP released the notice to implement the Scheme of Identifying and Registering Poverty–stricken Rural Households to Achieve Poverty Alleviation and Development. The rural poverty line was set at RMB 2,736 in the per capita net income in 2013 (amounting to RMB 2,300 at constant 2010 prices).the rural subsistence allowance line is determined by municipal, county–level and district–level governments based on their affordability, local spending on necessities and the level of economic development. In addition, the line will be adjusted regularly along with changes in the prices of basic necessities and improvement of local people’s lives.Thus, the rural subsistence allowance line differs by city, county and district.①According to data released on the official website of the Ministry of Civil Affairs, the subsistence allowance line differs greatly by province due to economic development gaps. Overall, subsistence allowance lines are high in developed counties and cities in East China and low in underdeveloped areas in West China.According to quarterly subsistence allowance lines released by the Ministry of Civil Affairs, they will be raised only in general and adjusted per quarter in most cities, counties and districts.According to relevant regulations, China’s rural subsistence allowance system is applied to rural residents with a family per capita net income lower than the minimum living standard in registered districts and counties.However, in practice, in addition to income,rural subsistence allowance beneficiaries are also identified via factors such as family assets, age,vulnerability, sick or disabled family members and natural hazards, none of which can be estimated by a unified quantitative standard. In some counties(cities), subsistence allowance beneficiaries are the most poverty–stricken families in villages based on the impression of village officials and villagers.They may also be voted for by villagers in some counties (cities). Rural subsistence allowance beneficiaries have been identified according to income and other factors in practice. However,statistical criteria and the subsistence allowance line vary by region, making it hard to compare the effect of identification of households entitled to subsistence allowances in different regions. Some local governments, limited by poverty–stricken affordability, can only grant low subsistence allowances, which are insufficient to guarantee the minimum living standard of rural households in extreme poverty. In these cases, the subsistence allowance system cannot give full play to the role of minimum living security.

The subsistence allowance system is a main part in China’s transfer payment system. Along with increased subsistence allowances and beneficiaries,the targeting effect of the subsistence allowance system has raised concerns from a growing number of scholars in recent years. In comparison to the rural subsistence allowance system, the sound urban subsistence allowance system has been in place for a long term. More research has been conducted on its targeting effect (Wang, 2006; Chen, Ravallion& Wang, 2006). Research on the targeting effect of the rural subsistence allowance system is small in amount and incomplete in content for reasons such as a lack of representative samples. According to the field survey conducted by Ling Wenhao and Liang Jingang (2009) in a village in Anyang City,the targeting accuracy of the rural subsistence allowance system was 65.63%. They ascribed the great deviation of the targeting accuracy to current unscientific methods applied to calculating rural family incomes and non–standard procedures to target households entitled to subsistence allowances.Deng Dasong and Wang Zengwen (2008) put forward a new mechanism to identify households entitled to subsistence allowances under the “rigid system” and “soft environment”. The mechanism was a binomial logistic regression model established with family characteristics as indicators. They applied the mechanism to study data obtained by Wuhan University from field surveys in rural areas in 33 counties and cities nationwide in 2007 and reached the conclusion that the targeting accuracy of the rural subsistence allowance system was about 79%. Zhang Weibin (2010), after analyzing targeting effects of the rural subsistence allowance system in poverty–stricken areas in Chongqing,concluded that the targeting accuracy was 65% and the coverage rate was merely 14.8%. The targeting accuracy is low when income is applied as the only criterion to identifying households entitled to subsistence allowances. The identification accuracy of rural subsistence allowance beneficiaries should be improved by adjusting the dynamic management cycle of rural subsistence allowance beneficiaries and developing new identification technology.Han Huawei and Xu Yuebin (2013; 2014)studied implementation of the rural subsistence allowance system in Henan and Shaanxi Provinces and compared its targeting effect when rural households entitled to subsistence allowances were identified via the traditional method of income and multidimensional poverty indexes respectively. The result shows that errors occurred in determining the poverty line standard greatly affect the targeting accuracy of the rural subsistence allowance system. The targeting accuracy is low if income is the only standard applied to identifying impoverished households. The effect is remarkable if impoverished rural households are identified via multidimensional poverty indexes such as family assets, the labor force, children’s education and family members’ physical conditions.①They have found that if income is the only criterion applied to identifying poverty–stricken households, over 70% of poverty–stricken rural households cannot obtain subsistence allowances and the error rate of the subsistence allowance policy (the proportion of non–poverty–stricken rural subsistence allowance beneficiaries) is as high as 65.74%. After income is replaced by multidimensional poverty indexes for identifying poverty–stricken households, the omission rate and the error rate of the subsistence allowance policy have decreased from 70.32% and 65.74% to 42.28% and 42.32% respectively.Yi Hongmei and Zhang Linxiu (2011), based on data collected from a survey of representative rural households nationwide, measured impoverished households with destitution indexes and studied the targeting effect of the rural subsistence allowance system via multidimensional poverty indexes. The results showed that the rural subsistence allowance system was suffering from a high omission rate at present.②Based on data from the household survey conducted by the Centre for Chinese Agricultural Policy of CAS in Jiangsu Province, Sichuan Province, Shaanxi Province, Jilin Province and Hebei Province in 2008, have found that 25.5% of the most poverty–stricken rural households in sampled villages received subsistence allowances in 2007; the proportion of extremely poverty–stricken households was 20%, of which only 50.67% have been covered in the rural subsistence allowance system.Wang Zengwen and Deng Dasong (2012),after studying survey data from 20 provinces and cities in China, concluded that inaccuracy of the social relief system was as high as 46.7%. Golan et al. (2017) applied Panel Data collected from 2007 to 2009 from the Rural Dataset of Chinese Household Income Project (CHIP) to study the poverty reduction effect and targeting accuracy of the rural subsistence allowance policy. Results show that the impoverished population outnumbers subsistence allowance beneficiaries since the subsistence allowance line and the poverty line are different, resulting in a limited poverty reduction effect of the rural subsistence allowance policy.They applied income, the regular standard, and propensity score analysis to study the targeting error of the rural subsistence allowance policy and discovered severe targeting inaccuracy for the rural subsistence allowance policy.③They have found that if the subsistence allowance line is set by income, the error of exclusion of the rural subsistence allowance policy ranges from about 89% to 94% while the error of inclusion is about 86% to 94%. Thanks to propensity score analysis, both the error of exclusion and the error of inclusion decline. However,the targeting error remains high.Han Huawei and Gao Qin (2017), on the basis of China Family Panel Studies (CFPS) 2012 Data, studied the targeting effect of the rural subsistence allowance system and concluded that there was an omission rate over 70% when income was applied as the sole standard to identifying subsistence allowance beneficiaries, affecting the poverty reduction effect in households entitled to subsistence allowances.Hence, controversial conclusions have already been reached on the targeting error of the current rural subsistence allowance policy. We applied data from household survey 2013 to analyze the targeting effect of the rural subsistence allowance policy,aiming to further study the alignment of the rural subsistence allowance system and the poverty–stricken household identification and registration system.

3. Overview of rural subsistence allowance beneficiaries

3.1 Data description

We primarily uses data from rural survey samples from CHIP 2013①CHIP referred to four waves of household surveys conducted in 1988, 1995, 2002 and 2007 respectively. From July to August, 2014, CHIP has conducted the fifth wave of household survey nationwide to collect income and expenditure information in 2013 and named it CHIP 2013. CHIP 2013 has been accomplished jointly by China Institute for Income Distribution of Beijing Normal University and experts at home and abroad under the support of NBS and funded by National Natural Science Foundation of China. The survey was carried out by Annual Household Survey Office of Integration of Urban and Rural in NBS.launched by the China Institute for Income Distribution of Beijing Normal University. CHIP 2013 obtained 10,490 samples of rural households from 14 provinces and collected their personal information, family’s total income and total expenditure including the obtained social relief, of which the most significant item was subsistence allowances. The data can be applied to studying targeting effects of the rural subsistence allowance policy. We, after deleting abnormal values,②CHIP 2013 Rural Dataset includes rural household samples in the Xinjiang Uyghur Autonomous Region but lacks their basic information in respect of consumption and family asset. As a result, they were not analyzed in this paper.identified 10,068 valid samples. Data shows that among these sampled households, 697 households, or 6.92%, are subsistence allowance beneficiaries. The proportion is slightly lower than the coverage rate of the rural subsistence allowance system nationwide released by the Ministry of Civil Affairs,③According to Statistical Report of the People’s Republic of China on the Development of Social Services (2013) released by the Ministry of Civil Affairs, by the end of 2013, 29.311 million households, or 53.88 million people, have been covered in the rural subsistence allowance system. Retrieved from http://www.mca.gov.cn/article/zwgk/mzyw/201406/20140600654488.shtml. According to China statistical yearbook 2014 complied by NBS, China housed 629.61 million rural population in 2013. As a result, the coverage rate of the rural subsistence allowance system is 8.56%. It is about 6% by household.indicating that samples applied in the paper are highly representative.

Table 1 shows per capita income of permanent residents in sampled households,④Permanent residents in the household mentioned in this paper do not include rural migrant workers working outside of their hometowns for over six months.per capita income of subsistence allowance beneficiaries and per capita subsistence allowance lines in sampled provinces in 2013.⑤The rural subsistence allowance lines vary in 200 counties in the survey. The actual average annual subsistence allowance lines per capita in these counties are calculated based on their Q4 subsistence allowance lines per capita released on the official website of the Ministry of Civil Affairs in 2013.Subsistence allowance lines differ greatly by province. Subsistence allowance lines are high in provinces located in developed eastern coastal regions in China such as Beijing,Jiangsu Province and Guangdong Province but low in provinces of central and western regions such as Sichuan Province, Hubei Province and Gansu Province. Generally, rural households’ per capita income is higher than subsistence allowance lines in the sampled provinces. According to the ratio of the subsistence allowance line to rural households’ per capita income, the subsistence allowance line is less than 25% of rural households’ per capita income in most sampled provinces. Beijing witnesses the highest ratio, which is 31%. The ratio is the lowest in Henan Province and Hubei Province, merely reaching 15%. Table 1 also shows that per capital income of subsistence allowance beneficiaries is generally higher than local subsistence allowance lines in these 14 provinces. The result is the same even if subsistence allowances are excluded when per capital income is calculated. According to the ratio of the subsistence allowance line to per capita income of subsistence allowance beneficiaries, the ratio is the lowest in Henan Province and Anhui Province in Central China and highest in Jiangsu Province and Guangdong Province in East China.The ratio of sampled rural households in which per capita income (excluding subsistence allowances)is lower than the subsistence allowance line to total sampled households is the rate of coverage of households entitled to subsistence allowances.It is about 3.7%. In that case, the rate of coverage of households entitled to subsistence allowances is low nationwide. It should be clearly stated that the coverage rate here is calculated by exclusion of subsistence allowances. Other transfer incomes are considered in the calculations. Subsistence allowance beneficiaries consider subsistence allowances as a vital source of income. The issue is endogenous. The rate will reach 8.7% if the private transfer income is excluded in the calculations;it will be up to 13.3% if all transfer incomes are deducted. The rate is high in Gansu Province,Liaoning Province and Jiangsu Province and low in Henan Province and Guangdong Province. The subsistence allowance system is underfunded in Henan Province. Consequently, the rate of coverage of households entitled to subsistence allowances is low since the subsistence allowance line is RMB 1,772 per capita per year, much lower than per capita income of local households and subsistence allowance beneficiaries there. The subsistence allowance line in Guangdong Province, which is higher than that in most of the other provinces and cities, is lower in comparison with per capita income of local households and subsistence allowance beneficiaries in the province. Guangdong Province and Jiangsu Province have the same development level. However, ratios of the subsistence allowance line to per capita income of local households and to per capita income of subsistence allowance beneficiaries respectively in the former are lower than those in the latter, resulting in a lower rate of coverage of households entitled to subsistence allowances in Guangdong Province.

3.2 Targeting accuracy of the subsistence allowance system by income

Table 1 Family’s per Capita Net Income and Subsistence Allowance Line in Different Province

The subsistence allowance policy is minimum living security for people living in poverty. As a result it should cover “all qualified rural poverty–stricken households”. Subsistence allowance beneficiaries should be managed dynamically to check and timely remove unqualified ones.The scope of “qualified” households is different when the subsistence allowance policy is made and implemented respectively. Income is the only evaluation criterion when the subsistence allowance line is made. Subsistence allowance beneficiaries are those of whom family’s per capita income is lower than the subsistence allowance line. In comparison,when the policy is implemented, local civil affairs authorities apply multidimensional indexes such as family asset and medical expenditures to identify households entitled to subsistence allowances. Thus,the targeting accuracy of the subsistence allowance system by income only tends to be lower than when evaluated by multidimensional indexes.

Currently, the subsistence allowance line does not equal the poverty line. Speaking from the perspective of poverty alleviation, it would be more reasonable to set the subsistence allowance line on the basis of the poverty line or set the poverty line as the subsistence allowance line. The subsistence allowance policy plays the role of minimum living security. It will be useless no matter how accurate the policy is if the subsistence allowance line is always below the poverty line.①Since implementation of the rural subsistence allowance policy in 2007, it has been debated repeatedly whether to determine the subsistence allowance line according to the minimum living standard or the national poverty line (Wang, 2006; Zhang, 2007). We applied both lines when analyzing the targeting effect of the current rural subsistence allowance policy.Based on these considerations, we estimate targeting accuracy of the rural subsistence allowance system by the subsistence allowance line and the poverty line respectively.

3.2.1 Targeting accuracy by the subsistence allowance line

First, we estimated targeting accuracy②Targeting accuracy is the proportion of qualified subsistence allowance beneficiaries among the total subsistence allowance beneficiaries.of the rural subsistence allowance system by the subsistence allowance line. The targeting accuracy is usually evaluated based on the omission rate and the error rate (Cornia & Stewart, 1993). It has become increasingly popular to apply these two indexes to evaluating the effectiveness of the subsistence allowance policy in research (Coady &Grosh, 2004; Chen, Ravallion & Wang, 2006; Park,Wang & Wu, 2002; Yang, Gao & Li, 2015). The omission rate refers to the proportion of omitted households entitled to subsistence allowances among households entitled to subsistence allowances; the error rate means the proportion of unqualified subsistence allowance beneficiaries among subsistence allowance beneficiaries. In addition, targeting accuracy of the subsistence allowance system and the effective coverage rate③The effective coverage rate is the proportion of subsistence allowance beneficiaries among the total households entitled to subsistence allowances.are also applied in. Table 2 shows targeting accuracy by region. Based on the subsistence allowance line,the actual coverage rate of the rural subsistence allowance system was low but the omission rate and the error rate were high in 2013. Among 697 households enjoying subsistence allowances,only 64 households, or about 9.18%, are qualified subsistence allowance beneficiaries. The omission rate and the error rate are as high as 82.61% and 90.82% respectively. On comparing the targeting accuracy of the rural subsistence allowance system in three sampled regions, we have concluded that East China witnesses the highest omission rate but the lowest error rate; West China houses the lowest omission and error rates; Central China the highest error rate.

Two possibilities can be deduced from high omission and error rates. First, to some extent, the rural subsistence allowance system deviated is from providing minimum living security for poverty–stricken rural households. Second is that income has been replaced by other indexes to be applied as crucial criteria to identifying households entitled to subsistence allowances. Regarding reasons for the first possibility, the coverage rate of the rural subsistence allowance policy is low due to the low rural subsistence allowance line and limited funding from local governments and man–made factors affect targeting accuracy when the policy is implemented.①On the basis of county–level data collected by the Ministry of Agriculture and Rural Affairs from 1981 to 1995, Park et al. (2002) studied regional targeted poverty alleviation strategies and found that these strategies were implemented in poverty–stricken counties. However, selection of poverty–stricken counties was affected by non–economic factors, resulting in deviation of these strategies and ineffective use of poverty alleviation funds.

3.2.2 Targeting accuracy by the poverty line

The subsistence allowance system and poverty alleviation are core policies adopted to reduce poverty in rural areas in China. The subsistence allowance line and the poverty line vary, leading to different operators and operating methods to implement these two policies. Moreover, the subsistence allowance line differs by region due to economic development gaps while the poverty line is stipulated by the state uniformly. As a result, the subsistence allowance line may be higher than the poverty line in some areas but lower in others.②The rural subsistence allowance line has grown by 7.22% annually on average. However, it was still lower than the rural poverty line by 2014. For example, in 2014,the average rural subsistence allowance line was RMB 2,777 per capita per year while the poverty line was RMB 2,800 per capita per year. Specifically, the average rural subsistence allowance line is higher than the poverty line in Beijing, Shanghai, Tianjin, Zhejiang Province, Jiangsu Province, Inner Mongolia Autonomous Region, Guangdong Province, Hainan Province and Liaoning Province.In this context, the next issue that should be studied is the targeting accuracy of the subsistence allowance policy by the poverty line. Based on the poverty line set according to the annual per capita income in rural areas in 2013,③Poverty–stricken households are identified according to the standard of whether the rural family’s per capital net income surpassed the poverty line released in 2013 (RMB 2,736 per capita per year).we calculated the omission rate and the error rate of the subsistence allowance system respectively (Table 2). Both are high and similar to those calculated for the subsistence allowance line, indicating that the subsistence allowance system to some extent deviated from precisely targeting poverty–stricken populations with low incomes.

We identified 541 poverty–stricken households from sampled households according to the povertyline. As mentioned above, 697 families from sampled households enjoy subsistence allowances.After comparing poverty–stricken households and subsistence allowance beneficiaries, we noticed that only 18.11% of poverty–stricken households enjoy subsistence allowances. The subsistence allowance line and the poverty line are different. As a result,only 14.06% of subsistence allowance beneficiaries live below the poverty line (Table 3). In that case,some subsistence allowance beneficiaries are not living in extreme poverty.Dataset, we further applied the rural dataset from CFPS 2014 to analyzing the targeting effect of the rural subsistence allowance system. The study shows that based on the subsistence allowance line,the omission rate and the error rate of the rural subsistence allowance system are as high as 80%and 69% respectively while the targeting accuracy is merely 31%. According to the poverty line by income, only 21% of poverty–stricken households enjoy subsistence allowances while about 36%are covered in the subsistence allowance system.It should be noticed that according to statistics of the Ministry of Civil Affairs, the number of rural subsistence allowance beneficiaries has declined increasingly since 2015, indicating progress is being made in the implementation of the removal mechanism for unqualified subsistence allowance beneficiaries. However, the coverage rate has not been 100% for households entitled to subsistence allowances. Actually, a certain proportion of households entitled to subsistence allowances are not covered in the subsistence allowance system.Moreover, data from the household survey 2015 in poverty–stricken areas show that about 40% of subsistence allowance beneficiaries are from 10%of rural households making the lowest income,indicating that the targeting error of the subsistence allowance policy has not been significantly improved.①Targeted Poverty Alleviation and Minimum Living Security of the Subsistence Allowance System is a research project report released by China Institute for Income Distribution of Beijing Normal University (internal report). It applies the latest data to analyzing targeting effect of the rural subsistence allowance system.According to the report, the omission rate of the system is obvious.The result is also in line with the conclusion reached here, which analyzed data from CHIP 2013 to find the high omission rate of the rural subsistence allowance system.

Table 2 Estimation of Targeting Accuracy of the Subsistence Allowance System(%)

Table 3 Subsistence Allowance Beneficiaries and Poverty–stricken Households (%)

The basic requirement to implement targeted poverty alleviation is to cover all rural households entitled to subsistence allowances through the subsistence allowance system. However, our results show that rural households entitled to subsistence allowances cannot be identified precisely when the rural subsistence allowance policy is implemented if the subsistence allowance line is made by income only. This is caused by five reasons.First, multidimensional indexes are applied to identifying households entitled to subsistence allowances. Income is a crucial but not exclusive criterion applied to identifying households entitled to subsistence allowances in practice. Rural households entitled to subsistence allowances are evaluated by municipal or county–level governments based on factors such as income,family structure, family misfortune and natural hazard. Second, “inconsistency” of the subsistence allowance line and the poverty line results in a low coverage rate of the subsistence allowance system among poverty–stricken populations. Table 1 established that the subsistence allowance line is generally low in rural areas and is even lower than the poverty line in some areas. In these cases,some households living below the poverty line would be omitted even if the targeting accuracy of the subsistence allowance system is 100%.Third, subsistence allowance beneficiaries are not admitted and removed in a timely manner. Income of rural households approximating the subsistence allowance line or the poverty line tends to fluctuate greatly, resulting in delayed identification of qualified subsistence allowance beneficiaries by income. In that case, some subsistence allowance beneficiaries are not poverty–stricken. Fourth,errors occur when income is calculated. Few effective measures are adopted to evaluate income of households entitled to subsistence allowances.It is also hard to calculate or monetize hidden income (Deng & Wang, 2008; Golan, Sicular &Umapathi, 2017). In–kind income used to be the primary source of income for rural households.Nonetheless, China has witnessed an increasing number of rural migrant workers in the past few years, driving up their money income. However,money income is transferred randomly, making it hard to compare rural households’ actual income. Fifth, misconduct exists in identification of households entitled to subsistence allowances.Rural subsistence allowance beneficiaries are evaluated by rural officials and villagers via a series of open and transparent procedures.However, it does not rule out possible black case work in the process. Unfair evaluation of subsistence allowance beneficiaries and sluggish removal of unqualified ones also contribute to low targeting accuracy of the subsistence allowance system.

Regarding these reasons for the low targeting accuracy, we have focused on the first reason. To identify rural households entitled to subsistence allowances via multidimensional indexes is in line with the principle of multidimensional poverty,indicating progress made in implementation of China’s poverty alleviation policies. To provide additional support we evaluated the targeting accuracy of the subsistence allowance system via multidimensional poverty indexes.

3.3 Differences in characteristics between subsistence allowance beneficiaries and poverty–stricken households

Poverty–stricken households include subsistence allowance beneficiaries and households not enjoying subsistence allowances while subsistence allowance beneficiaries consist of poverty–stricken households and non–poverty–stricken households. We identified these four types of rural households from the CHIP 2013 Rural Dataset and compared essential characteristics of poverty–stricken subsistence allowance beneficiaries (poverty–stricken households enjoying subsistence allowances), non–poverty–stricken subsistence allowance beneficiaries (non–poverty–stricken households enjoying subsistence allowances) and poverty–stricken households not enjoying subsistence allowances. These three types of rural households account for over 10% of sampled households. Poverty–stricken subsistence allowance beneficiaries, non–poverty–stricken subsistence allowance beneficiaries and poverty–stricken households not enjoying subsistence allowances amount to 98, 599 and 443, respectively,accounting for 0.97%, 5.95% and 4.40% of total sampled households. Table 4 shows the essential characteristics and differences among these three types of rural households.

Based on the data in Table 4, householdsdiffer in family income and structure, living condition, family assets and consumption. After comparing characteristics of poverty–stricken subsistence allowance beneficiaries with poverty–stricken households not enjoying subsistence allowances, we noticed that both should be regarded as impoverished households if income is applied as the criterion to making the poverty line. Nonetheless, they differ greatly from each other. Regarding poverty–stricken subsistence allowance beneficiaries, numbers of permanent residents and students at school are smaller; adults’average education level is generally lower; the living conditions are worse; family assets are fewer;the proportion of medical expenditure is larger.Meanwhile, we also noticed numerous similarities between non–poverty–stricken subsistence allowance beneficiaries and poverty–stricken subsistence allowance beneficiaries in respect to family structure. Regarding non–poverty–stricken subsistence allowance beneficiaries, proportions of the disabled family members and adults with primary education or below are larger; the age of head of household is older; living conditions are worse; the proportion of medical expenditure is larger. If subsistence allowance beneficiaries are evaluated via multidimensional indexes, households with disabled family members or bearing other heavy burdens will also be covered in the subsistence allowance system even if their income is above the poverty line. In fact, it makes sense to cover them in the system.①In addition, we further studied characteristics of the family structure of targeted subsistence allowance beneficiaries (qualified rural subsistence allowance beneficiaries), unqualified subsistence allowance beneficiaries (rural subsistence allowance beneficiaries of which the per capita net income is higher than the county–level/municipal subsistence allowance line) and omitted households entitled to subsistence allowances (rural households not enjoying subsistence allowances but with the per capita net income lower than the county–level/municipal subsistence allowance line). The results show that unqualified subsistence allowance beneficiaries and targeted subsistence allowance beneficiaries share similar family structures, that is, larger proportions of ailing and disabled family members and adults with primary education or below, worse dwelling conditions, lower value of family assets and a larger proportion of medical expenditures. The family structure is dramatically different in omitted households entitled to subsistence allowances. If the subsistence allowance line is set by income only, some households in which the income is slightly higher than the line but housing disabled family members or bearing other heavy burdens would be wrongly identified as those that“should not enjoy subsistence allowances.”

Table 4 Differences in Characteristics Between Subsistence Allowance Beneficiaries and Poverty–Stricken Households

3.4 Analyses of factors affecting identification of non–poverty–stricken subsistence allowance beneficiaries and poverty–stricken households not enjoying subsistence allowances

To further verify the impact of multidimensional indexes in identification of subsistence allowance beneficiaries, we analyzed differences in characteristics of three types of rural households,variables resulting in poverty in particular. It applies the Probit model to analyzing differences in factors resulting in poverty among poverty–stricken subsistence allowance beneficiaries, non–poverty–stricken subsistence allowance beneficiaries(unqualified subsistence allowance beneficiaries)and poverty–stricken households not enjoying subsistence allowances (omitted households entitled to subsistence allowances). The following is the equation.

Prob (P) is the dependent variable valued as 0 and 1, indicating whether the rural household is an unqualified subsistence allowance beneficiary(income is the only criterion; if the household is an unqualified subsistence allowance beneficiary,P equals 1; if it is a poverty–stricken subsistence allowance beneficiary or the omitted household is entitled to subsistence allowances, P equals 0);α is the intercept (or the constant term); Xiis the explanatory variable; βiis the regression coefficient of the explanatory variable; εiis the error term. We mainly selected 12 indexes related to identification of subsistence allowance beneficiaries which result in poverty as explanatory variables. These indexes include family income (logarithms of 2011 and 2012 family incomes), family structure (numbers of permanent residents and students at school and proportions of ailing family members and disabled family members), features of the labor force(the proportion of the labor force with primary education or below), features of head of household(age of head of household), living conditions (with or without a bathroom), family assets (logarithms of productive fixed assets, financial assets and net house value respectively) and consumption (the logarithm of medical expenditures per capita).Moreover, we further included the province as a dummy variable. Table 5 shows estimated results of the model.

Table 5 Factors Affecting Accurate Identification of Subsistence Allowance Beneficiaries

Factors resulting in poverty are similar between poverty–stricken subsistence allowance beneficiaries and unqualified subsistence allowance beneficiaries but significantly different between unqualified subsistence allowance beneficiaries and omitted households entitled to subsistence allowances. This means that “unqualified subsistence allowance beneficiaries” would not be covered in the subsistence allowance system when income is the only criterion applied to identifying households entitled to subsistence allowances.Nonetheless, according to the regression analysis these households are similar to poverty–stricken subsistence allowance beneficiaries in terms of the number of students at school, education level of the labor force, proportions of ailing family members and disabled family members, living conditions,family assets and medical expenditures per capita.Consequently, they can be easily identified as households entitled to subsistence allowances. These results coincide with focused population targeting in actual implementation of the rural subsistence allowance policy. Generally, in addition to family income, other factors such as family structure,illness or natural hazard will also be considered when rural subsistence allowance beneficiaries are identified.

These results indicate that the concept of multidimensional poverty may play a role in actual identification of households entitled to subsistence allowances. Consequently, the targeting accuracy of the subsistence allowance policy should be evaluated via multidimensional poverty indexes. There is not a unified workable set of rules for application of multidimensional poverty indexes. Local authorities have different understandings on multidimensional poverty indexes resulting in targeting errors in the identification of households entitled to subsistence allowances. Therefore, further studies should include to what extent multidimensional poverty indexes be applied to identifying households entitled to subsistence allowances and whether deviations occur even if subsistence allowance beneficiaries are identified via multidimensional poverty indexes.

4. Deviation of identification of subsistence allowance beneficiaries via multidimensional poverty indexes

Income is not the only factor being taken into consideration during actual identification of subsistence allowance beneficiaries. The targeting accuracy will be underestimated if income is applied as the only criterion. It is also the main reason for low targeting accuracy of the rural subsistence allowance system criticized by existing research. To evaluate the targeting accuracy of the rural subsistence allowance system more objectively, we put forward new quantitative criteria to identify subsistence allowance beneficiaries and analyze targeting accuracy of the system via multidimensional poverty indexes.

4.1 Identifying multidimensional poverty index

In recent years, except for the poverty line determined by income, a growing number of scholars tend to estimate the poverty headcount ratio in China via multidimensional poverty indexes in a bid to more precisely target poverty–stricken populations and subsistence allowance beneficiaries in rural areas in China. Amartya Sen (1999), who advocates the multidimensional poverty theory,thinks that poverty is a deprivation of the basic capability of people through low income or other factors. Therefore, he puts forward the theory of defining poverty via the capability approach, i.e., the multidimensional poverty theory. According to the theory, in addition to low income, poverty can also be caused by other factors such as education, health,housing and enjoyed public services. Supported by the theory, on the basis of multidimensional poverty indexes and China’s actual conditions, we put forward new multidimensional criteria to identify poverty–stricken rural households. These criteria include the following (Table 6).

First, education–caused poverty. Combining multidimensional poverty indexes mentioned in the UN Millennium Development Goals, we define poverty–stricken households as those in which education expenditure①At present, the burden of education expenditures has been calculated according to the proportion of education expenditures in total household income or consumption. We adopted the first approach, that is, the proportion of education expenditures in the total household income (excluding subsistence allowances).accounts for over 50% of total income or students drop out of school during the compulsory education period.

Second, health–caused poverty. We define poverty–stricken households as those with disabled family members or family members suffering serious illnesses or in which the proportion of medical expenditures is more than three times of the average.②The average proportion of medical expenditures in total household consumption is 16.79% in sampled households. As a result, households in which medical expenditures accounts for over 50% of total income are defined as poverty–stricken households.

Third, poverty with respect to housing. We define poverty–stricken households as those without a bathroom.

Fourth, poverty with respect to consumption.We define poverty–stricken households as those in which consumption expenditure per capita are lower than RMB 3,000 (accounting for about 5% of sampled households) in 2013.

Table 6 Multidimensional Poverty Index

4.2 Targeting accuracy of the subsistence allowance system via a one–dimensional poverty index

After determining the multidimensional poverty indexes, we calculated the proportion of poverty–stricken households and targeting accuracy of the subsistence allowance system under each dimension respectively (Table 7). It is not hard to see that education–caused poverty–stricken households,health–caused poverty–stricken households and poverty–stricken households with respect to housing and consumption account for 4.04%, 11.33%, 2.18%and 4.97% of sampled households respectively.Therefore, poverty headcount ratio is the highest with respect to health. Next are the dimensions of consumption and education.

Table 7 One–dimensional–poverty–index–based Proportion of Subsistence Allowance Beneficiaries

The poverty headcount ratio of sampled households is 19.85% with respect to any one of these four dimensions, the number reaching 1,998. However, only 14.66% receive subsistence allowances. Among the 697 households enjoying subsistence allowances, 293, or 42.04% are poverty–stricken with respect to at least one dimension. Thus, targeting accuracy of the rural subsistence allowance system is 42.04% according to multidimensional poverty indexes. We studied further targeting accuracy of the subsistence allowance system from the perspective of each dimension (Table 7) and noticed that it is higher for poverty with respect to health, reaching 23.15%, but is as low as 10.33% with respect to consumption. Table 8 shows the degree of overlap between poverty–stricken households identified via multidimensional poverty indexes and subsistence allowance beneficiaries. Only 14.66% of these poverty–stricken households enjoy subsistence allowances, indicating low coverage of the subsistence allowance system. By comparison,42.04% of subsistence allowance beneficiaries are poverty–stricken households via multidimensional poverty indexes. This rate can be regarded as targeting accuracy of the subsistence allowance system. The targeting accuracy of the subsistence allowance system will be increased after multidimensional poverty indexes replace income only consideration and are applied to evaluating households entitled to subsistence allowances.However, it should be noticed that both poverty–stricken populations and the poverty headcount ratio will surge after multidimensional poverty indexes are adopted. The poverty–stricken population greatly outnumbers poverty–stricken households covered through the subsistence allowance system nationwide with the deviation being much larger in less developed areas.

Table 8 Multidimensional–poverty–index–based Targeting Accuracy of the Subsistence Allowance System (%)

4.3 Multidimensional–poverty–index–based targeting accuracy of the subsistence allowance system

Multidimensional poverty indexes are developed as the framework through which to measure the poverty headcount ratio and the poverty rate of each sampled household. Followings are the steps used to develop multidimensional poverty indexes: (1)determine dimensions; (2) determine the poverty threshold of each dimension; (3) determine the weight in each dimension (see Table 6); (4) weight and total dummy variables of poverty under all dimensions to obtain multidimensional poverty scores of each sampled household (the higher the score, the greater the degree of poverty); (5)determine poverty thresholds (the value of K) use these multidimensional poverty scores to identify households that are poverty–stricken.

According to the above–mentioned criteria and algorithm, households for which the multidimensional poverty scores surpass the value of K are regarded as multidimensional poverty–stricken households. The approach can be adopted to calculate the poverty headcount ratio and the effective coverage rate of the subsistence allowance system under a certain K. Table 9 shows contribution of each dimension under the multidimensional poverty measure;①It should be pointed out weights of multidimensional poverty indexes in this part are not designed according to equally weighted indexes. As a result, the poverty incidence does not decline in accordance with growth of poverty thresholds (the value of K).Table 10 is performance of the subsistence allowance system.If K is valued as 0.1, 13.44% of sampled households are poverty–stricken under any one of these dimensions (except the dimension of consumption).Moreover, 13.75% enjoy subsistence allowances. If K is valued as 0.2, the effective coverage rate of the subsistence allowance system is as high as 22.22%under any two of these dimensions (except the dimension of consumption). If K is valued as 0.3, the effective coverage rate of the subsistence allowance system goes up to 50%. If K is valued as 0.4, the poverty headcount ratio of sampled households is 3.96% while the effective coverage rate of the subsistence allowance system is 10.03% under these four dimensions comprehensively or under the dimension of consumption. Overall, among 1,998 multidimensional poverty–stricken households,293 enjoy subsistence allowances. The targeting accuracy of the subsistence allowance policy is 42.04% via multidimensional poverty indexes. The effective coverage rate is as low as 14.66% while the omission rate is as high as 85.34%. In this case,most multidimensional poverty–stricken households are not covered in the subsistence allowance system.①Moreover, we adopted equal weighting, which is frequently adopted in existing literature, to measure the targeting accuracy of the subsistence allowance system. The result is similar to that achieved via the above–mentioned method.

4.4 Policy implementation deviation and improvement

These results show that the targeting accuracy of the subsistence allowance system will be raised dramatically after multidimensional poverty indexes replaces income only when evaluating households were entitled to subsistence allowances. Rural subsistence allowance beneficiaries are identified via multidimensional poverty indexes rather than income alone, marking progress made in China’s poverty alleviation policies and the targeted poverty alleviation strategy.

Table 9 Multidimensional–poverty–index–based Poverty Headcount Ratio and Contribution of Each Dimension (%)

Table 10 Multidimensional–poverty–index–based Effective Coverage Rate and Targeting Accuracy of the Subsistence Allowance System (%)

However, it should be noticed that over 80% of poverty–stricken populations are not covered in the subsistence allowance system even under multidimensional poverty indexes.First, some municipal, county–level and district–level governments consider too much about affordability when making the subsistence allowance line, resulting in a small coverage rate of the subsistence allowance policy and low subsistence allowances. In that case, the policy is of little help to rural poverty–stricken subsistence allowance beneficiaries. Nor can it cover all poverty–stricken households entitled to subsistence allowances. Second, local governments fail to define clearly the subsistence allowance line via multidimensional poverty indexes and income respectively in actual operation. Multidimensional poverty indexes have been considered in actual identification of households entitled to subsistence allowances. However, there is not a unified workable set of rules for application of multidimensional poverty indexes, resulting in targeting errors to some extent in identification of households entitled to subsistence allowances.Third, different approaches are adopted to identify households entitled to subsistence allowances in theory and in practice. Quotas of subsistence allowance beneficiaries are determined according to the local poverty line by income.In practice, subsistence allowance beneficiaries are identified via multidimensional poverty indexes. Consequently, multidimensional poverty–stricken households outnumber poverty–stricken households living under the poverty line. This is likely the core reason for the excessively high omission rate of the subsistence allowance system via multidimensional poverty indexes.

Therefore, we suggest perfecting and dynamically adjusting the policy to identify subsistence allowance beneficiaries in practice to increase targeting accuracy of the subsistence allowance system. Local governments should invest more funds in the subsistence allowance system and expand its coverage to let the subsistence allowance policy truly play the role of minimum living security in the battle of targeted poverty alleviation. Also, more attention should be paid to studying the theory and measures used for multidimensional poverty targeting. Under the lead of a socialist political economy with Chinese characteristics, the multidimensional poverty theory should be applied to guiding China’s poverty alleviation to unify the theory and practice. Measures should be adjusted according to local conditions to effectively reduce poverty. Meanwhile, both assets and income are considered when urban subsistence allowance beneficiaries are identified. This approach can be used to develop a unified identification strategy under multidimensional poverty indexes to boost targeting accuracy of the rural subsistence allowance system. Particularly, the poverty–stricken household identification and registration system launched in 2014 is a major application of the multidimensional poverty concept in poverty alleviation. Experience to date should be summarized and used in actual operation. In some areas, subsistence allowance beneficiaries was evaluated from five aspects: housing, consumption,the number of students at school, educational background of the labor force, and disabled and ailing family members making it easier to reduce poverty. The poverty line and the subsistence allowance line should be “combined as one” in the alignment of the rural subsistence allowance system and the poverty alleviation system. To achieve this, a set of mechanisms and approaches is in urgent need to precisely identify poverty–stricken populations. That is the foundation needed to win the battle of targeted poverty alleviation.

5. Conclusion

The key to implementation of the targeted poverty alleviation strategy lies in precise identification of poverty–stricken populations. We centered on identification deviations of poverty–stricken populations in China’s rural subsistence allowance system and used it as an example to analyze targeting effects of the poverty alleviation policy. On the basis of the CHIP 2013 Rural Dataset,we compared the characteristics of rural subsistence allowance beneficiaries, unqualified subsistence allowance beneficiaries and omitted households entitled to subsistence allowances to analyze targeting effects of the subsistence allowance policy.Our analysis reached the conclusion that among all sampled rural households, 697, or 6.92%, received subsistence allowances in 2013. The degree of overlap is low between subsistence allowance beneficiaries and poverty–stricken households by income. A majority of subsistence allowance beneficiaries are not poverty–stricken households by income and vice versa. The conclusion is consistent with results achieved from most research on the targeting effects of the rural subsistence allowance policy and backed by the latest analysis. In addition to income, multidimensional poverty indexes were also applied to identifying subsistence allowance beneficiaries to some extent in implementation of the subsistence allowance policy. As a result,we further studied the targeting accuracy of the subsistence allowance system via multidimensional poverty indexes.

We compared non–poverty–stricken subsistence allowance beneficiaries with poverty–stricken subsistence allowance beneficiaries, and noticed numerous similarities in family structure. In both groups, proportions of disabled family members and adults with education at or below the primary level are larger; the age of head of household is older;the living condition is worse; the proportion of medical expenditure is larger. These indexes differ greatly from those in poverty–stricken households not enjoying subsistence allowances. In that case,identification of subsistence allowance beneficiaries is affected by multidimensional poverty indexes to some extent. Consequently, the targeting effect of the subsistence allowance system should be analyzed via multidimensional poverty indexes.

After comprehensively considering multidimensional factors such as health, education, living conditions and consumption, we put forward the approach to evaluate targeting effect of the subsistence allowance system via multidimensional poverty indexes and calculated relevant results. The targeting accuracy of the subsistence allowance system via multidimensional poverty indexes is 42.04%, which is much higher than that via income alone. China’s rural poverty headcount ratio surge correspondingly via the use of multidimensional poverty indexes because the targeting accuracy of the subsistence allowance system is increased. However, over half of the multidimensional poverty–stricken people entitled to subsistence allowances have not enjoyed subsistence allowances.

Precisely targeting poverty–stricken populations is the priority of targeted poverty alleviation. Some households entitled to subsistence allowances are omitted since they are identified via inconsistent criteria during the implementation of the subsistence allowance policy. To address this issue, we make the following suggestions. (1) Multidimensional poverty indexes should replace income and be applied to identifying households entitled to subsistence allowances. A unified scheme should be developed to precisely identify poverty–stricken households under a same subsistence allowance line. (2) More funds should be invested in the local subsistence allowance system to increase subsistence allowances and expand coverage of subsistence allowance beneficiaries in poverty–stricken areas. In this way, the subsistence allowance system can give full play to the role of minimum living security in targeted poverty alleviation. Authorities concerned should insist on implementing the important instructions of General Secretary Xi Jinping on“comprehensively determining the minimum guiding line in the rural subsistence allowance system in accordance with the national poverty line” to achieve a “combination of the poverty line and the subsistence allowance line”. To realize this,“investment in poverty alleviation and development should match the requirements to win the battle against poverty.” “Growth of funds allocated by the central government for poverty reduction and central government capital construction spending applied for poverty alleviation should be consistent with intensified efforts to reduce poverty. The central government’s general transfer payments and special transfer payments applied to improving living standards should be slanted to favor poverty–stricken regions.” “Poverty alleviation funds should be managed in a transparent way. Audit supervision should be enhanced to intensively address, investigate and deal with duty–related crimes in poverty alleviation and severely punish practices of seizing or misappropriating, making fraudulent applications to claim and wasting poverty alleviation funds.” (Party Documents Research Office of the CPC Central Committee,2017). Sticking to the strengths of China’s socialist system and winning the battle against poverty are preconditions to build a moderately prosperous society in all respects, achieve progressively common prosperity, the essential requirement of socialism, consolidate the class foundation and mass base for the Communist Party of China to exercise power in the interests of the people in this new era and realize national rejuvenation. It will add a new luster to the history of development of human society. As General Secretary Xi Jinping summarized, “Since the 18th National Congress of the CPC, the Central Committee has implemented targeted poverty alleviation, increased investment and developed new approaches to break new ground in development–oriented poverty alleviation.After long–term endeavors, we have followed a poverty relief path with Chinese characteristics,and lifted more than 700 million rural people out of poverty, laying the foundation for moderate prosperity throughout the country. China has lifted more people out of poverty than any other country,and it was the first to realize the United Nations Millennium Development Goals. This achievement deserves to be recorded in the annals of human social development, and it proves the worth of the CPC’s leadership and Chinese socialism.” (Publicity Department of the Central Committee of the Communist Party of China, 2016).

(Translator: Yang Weizhen; Editor: Xiong Xianwei)

This paper has been translated and reprinted with the permission ofSocial Sciences in China, No. 9,2017.