In early 2021, China declared victory in successfully eradicating extreme poverty, lifting every citizen above the national poverty line. The country’s poverty line was established in 2011 at RMB 2,300 (US $340) per year at constant 2010 prices, equating to RMB 6.3 (US $ 0.93) per day. Yet there has been heated debate across international forums over how pertinent the definition may be. While where to draw the monetary poverty line is important, a traditional income-based definition is rather limited. Risk, a key dimension of poverty, must be managed well to prevent the vulnerable from falling back into poverty.

In this article, published on the website of the Forum for Agricultural Risk Management in Development, we focus on looking at poverty from a risk perspective. Being less tangible to poverty dimensions such as food security and health, risk is often less discussed, yet we believe the ability to manage risk is vital to getting out and staying out of poverty. In our analysis, we assess poverty in China within the risk dimension of the comprehensive Rural Multidimensional Poverty Index, which is comprised of three indicators:

• Credit denial: China had a relatively low proportion of its population borrowing from financial institutions or using a credit card, and the proportion drops when we focus on the rural and poorest populations.
• Risk exposure and coping strategies: To prevent poor households from falling back into the poverty cycle, having formalised coping strategies—such as access to insurance or support from government or nongovernmental organisations—can be crucial when they are hit with shocks.
• Risk of climate shocks: With a high dependence on natural resources, rural residents are particularly vulnerable.

Read the full article here.