Capitalist Reforms and Extreme Poverty in China: Unprecedented Progress or Income Deflation?

Great thread by Jason Hickle about his new research paper arguing against the neoliberal narrative.

TLDR: Socialist China (Pre Reforms) was assumed to have 80% poverty rate by neoliberal agencies, and since the reforms, its rate has declined and declined and now extreme poverty is eliminated. The truth is different. When looking at things like the basket of goods, Socialist China (Pre Reforms) had just 5% of people unable to afford to live. This increased up to 60% after capitalist reforms, a trend seen worldwide.

Unlike the rest of the world, China slowed, halted and reversed this trend, bringing it down to around 5% in 2018, after which there is no clear data yet. This Hickel attributes purely to the measures by the CPC and Xi, which no one else bothers to put in place because of the neoliberal narrative created and funded by places like the World Bank, IMF etc.

In the end:

Thankfully, China has gradually recovered from this crisis. Real data only goes to 2008, but Moatsos credibly indicates the poverty rate was down to 5% by 2018, as the labour movement gains strength and as Xi's anti-poverty programmes deliver progress.

What can we learn from all this? Well, public provisioning systems (and price controls) can be very effective at preventing poverty and improving social outcomes. Especially in developing countries. This enabled China to outperform much richer nations.

But note that the poverty line here is focused on basic needs. Clearly China of the 1980s needed to increase industrial production to deliver higher-order living standards! We argue this could have been done without the capitalist reforms, thus preventing quite a lot of misery.

I’ll read the full paper later. And while I won’t go quite as far as Jason in saying they could have done entirely without the capitalist reforms, especially with the collapse of the USSR (, I’m sure with hindsight there are many things they would’ve done differently.