（II）Special Poverty Alleviation –Policy Measures and Mechanism Innovation

【Improve the mechanism for large-scale poverty alleviation】

　　Since the 16th CPC National Congress, the Central Committee of CPC has put forward the strategy of implementing the scientific concept of development and coordinating urban and rural development and regional development and the guideline of "promoting agriculture by industry and boosting rural development by urban growth". While continuing to increase efforts for poverty alleviation and development, the government has invested in rural infrastructure and social services industry, adopted a series of agricultural subsidy policies, established the rural minimum living security system and developed strategies to promote the development of backward areas. As a result, a "grand pattern of poverty alleviation" integrating industry policy, regional policy and social policy has been gradually formed. The improvement of the large-scale poverty alleviation mechanism is mainly reflected in the following aspects:

　　The central government's investment in the "three rural issues" increased year by year. In 2003, the central government's investment in the "three rural issues" reached 214.4 billion Yuan, exceeding 200 billion Yuan for the first time. After that, the investment has been gradually increased (see figure below). By 2010, the central government’s investment in the "three rural issues" exceeded 800 billion Yuan, reaching 818.34 billion Yuan. While increasing the investment, the government has continuously improved the agricultural investment guarantee mechanism, highlighted the agricultural basis and strengthened infrastructure construction to promote the improvement of rural production and living conditions and accelerate agricultural development and farmers' income growth. 



　　Source: National Bureau of Statistics, "Poverty Monitoring Report of Rural China"

　　Issue a series of policies to support and benefit agriculture. In 2001, large-scale returning farmland to forest program was launched to prevent further destruction of ecological environment in western rural areas. In 2004, the government began to provide "three subsidies" to grain farmers to protect farmers’ enthusiasm for food production and protect the stable grain production. The first is grain direct subsidy: Based on the taxable land area or taxable output, calculate the amount of subsidy for the grain varieties designated by the state and deliver the subsidy directly to farmers. The second is improved varieties subsidy, mainly for wheat, corn and grain. The third is special fund allocated as subsidy for farmers in some places to purchase large agricultural machines. To reduce the burden on farmers and prevent the deterioration of the phenomenon of arbitrary fees, the central government launched pilot projects in 2001 and fully implemented the reform of rural taxes and fees in 2003. In 2004, it further increased efforts on the rural tax reform and clearly stated that the state will gradually reduce the agricultural tax rate until the complete abolition of agricultural taxes. By 2006 the country has abolished the agricultural tax. In 2006, agricultural tax was completely canceled nationwide.

　　In 2000, the central government began to implement the western development strategy, giving priority to infrastructure, ecological environment and resource development projects in the western areas, and constantly increased investment and fiscal transfer payments for the western regions, which played an important role in promoting the development of the western regions and solving the problem of food and clothing for the poor.

　　To improve rural financial services, China continues to promote rural financial reform. Under the premise of ensuring capital adequacy, strengthening financial supervision and the establishment of a rational and effective exit mechanism, the government encourages the establishment of community financial institutions with ownership in various forms in counties and allows private capital and foreign fund to be invested in.

　　Steady progress has been made in education, health care and other social undertakings. To continuously support the development of compulsory education in poor areas, the government implemented the second phase (2001-2005) of "National Project of Compulsory Education in Poor Areas". Meanwhile, the country began to provide free textbooks for the students from poor families in impoverished areas, canceled miscellaneous fees and began to implement the "two exemptions and one subsidy" policy to provide living allowance for boarding students in pilot areas. In 2005, it implemented the "two exemptions and one subsidy" policy for 16 million primary and secondary school students from poor families on the stage of compulsory education in 592 key counties for national poverty alleviation. It planned to exempt all students in western rural areas from various fees in compulsory education and provide free textbooks for students from poor families and living allowance for boarding students in 2006. This policy was universally implemented in rural China in 2007, which benefited 160 million school-age children, accounting for the nearly 80% of the 200 million primary and secondary school students nationwide. To solve farmers' difficulties in seeing a doctor, in 2003, the state established the new rural cooperative medical system in the pilot areas: on a voluntary basis, the farmers pay 10 Yuan per person per year, and the central and local governments give a certain percentage of grant funds. Subsequently, the state actively promoted the implementation of pilot projects for the new rural cooperative medical system and the central and local governments significantly increased subsidy standards. By 2009, the new rural cooperative medical system was established in 2716 counties, covering 833 million people, with an annual fund-raising of 94.4 billion Yuan, 133 Yuan per capita.

　　The rural social security systems have been further improved. Rural social security systems include rural minimum living security system, five-guarantee system, the pension insurance system and social relief system. Since the 16th CPC National Congress, according to the requirements of the central government, some regions have actively explored the establishment of rural minimum living security system, laying a good foundation for comprehensively solving the basic living problems of rural poor. In 2007, the State Council decided to establish the rural minimum living security system nationwide to make institutional arrangements for solving the problem of food and clothing for rural poor. China's poverty alleviation entered the new stage of "two-wheel drive". In 2009, the minimum living security system had a total of 47.59 million targets. In recent years, rural pension insurance system also witnessed development and will become an important policy option for solving the "three rural issues". The report of the 17th CPC Central Committee pointed out that we should explore the establishment of rural pension insurance system. The pilot projects were launched in 2009 and by 2012, the participation rate will exceed 50%, by 2017, this rate will exceed 80%, and by 2020, it will cover all the rural residents according to the plan. This system will completely change the existing rural pension system. Meanwhile, the rural social relief system is also being constantly improved, including expanding the concentrated support of rural "five-guarantee" targets, improving rural minimum living security system-related policies; improving disaster relief mechanism, promoting social mutual aid and charity assistance, and implementing rural special care and assistance policies, etc.

【Full implementation of pro-poor policies for the poor】

　　According to the requirements of "implementing the new poverty line and fully implement the pro-poor policies for low-income rural population" put forward by the "Decision" of the Third Plenary Session of 17th CPC Central Committee, in January 2010, the State Council Leading Group for Poverty Alleviation and Development issued the "Notice on the Full Implementation of Pro-poor Policies for Low-income Rural Population and Further Promoting Poverty Alleviation". According to the "Notice", based on the new situation of poverty alleviation and development, local governments must implement unified pro-poor policy for the poor living below the poverty line to cover all the targets through poverty alleviation and development and the minimum living security system; optimize the use structure of anti-poverty funds and improve household poverty alleviation measures; enhance the self-development capacity of impoverished areas and poor people, further strengthen and improve the pro-poor policies such as contiguous development, entire village advancement, transfer training for labors of poor families, poverty alleviation by industrialization, poverty reduction by relocation and mutual fund of poor villages; innovate poverty alleviation mechanism, do a good job in effective convergence between poverty alleviation and development and rural subsistence allowances system, establish a dynamic monitoring mechanism, improve the performance appraisal system, set up a multi-channel poverty alleviation cooperation mechanism, explore a new mechanism for systematization of the targets of poverty relief, and create pro-poor micro-credit mechanism.

【Improve the poor recognition and monitoring mechanisms】

　　According to the requirements of the "Decision" of the Third Plenary Session of 17th CPC Central Committee, to achieve the effective convergence between poverty alleviation and development and rural subsistence allowances system, in 2009, after summarizing the experience, the LGOP further improved the poor recognition and monitoring mechanisms.

　　First, determine a reasonable size of the targets. The basis for size determining is the poverty monitoring data of rural China announced by National Bureau of Statistics. The size of the targets of county-level poverty alleviation is estimated by the provincial poverty alleviation office, and that of township (town) and village-level is decided by the pilot counties themselves.

　　Secondly, regulate the poor identification procedures, mainly including the application of head of household, democratic evaluation, review and approval.

　　Thirdly, organize forces to develop software. According to requirements of pilot projects, it developed the mechanism for the effective convergence between the two systems and the poor rural household information management system.

　　Fourthly, carefully collect information of poor households. Revise and improve the information registration form for poor households, collect information of the identified poor households and enter the data so that the information on the poor of all villages and towns is covered and the county government has the e-records.

【Pilot projects for the convergence between the two systems】

　　The convergence between the two systems refers to the linkage between rural minimum living security system and poverty alleviation and development system. It is an important task put forward for poverty alleviation and relevant departments by the "Decision" of the Third Plenary Session of 17th CPC Central Committee. Since 2007, in the important documents on rural work, the CPC Central Committee and the State Council repeatedly stressed the need to improve the convergence between the two systems. Vice Premier Hui Liangyu also delivered important speeches and made instructions on this for many times.

　　In early 2009, LGOP and the Ministry of Civil Affairs issued the "Notice on Promoting Pilot Projects for Effective Convergence between Rural Minimum Living Security System and Poverty Alleviation and Development Policies". In February, the pilot projects were launched in 20 cities and counties of 11 provinces. In May, LGOP again issued the "Guidance on Promoting Pilot Projects for Effective Convergence between Rural Minimum Living Security System and Poverty Alleviation and Development Policies" together with the Ministry of Civil Affairs, Ministry of Finance, National Bureau of Statistics and the China Disabled Persons' Federation.

　　Under the great support of the relevant departments and the joint efforts of all parties, in 2009, the pilot projects for the convergence of the two systems were launched in 5955 administrative village of 340 towns in 20 counties of 11 provinces. The pilot projects explored some good practices and experience and achieved obvious results. They are not only welcomed by the rural households, but also affirmed by relevant departments. The convergence helps different disadvantaged groups get support and makes it possible for the poor to share the fruits of reform and development.

1.Main results of pilot projects

　　First, found out the situation of poverty, laying a foundation for targeting at the poor. Making full use of the reference files and cards and the object identification results, in accordance with democratic review process, local governments can identify the targets of poverty alleviation, targets of the minimum living security system and the overlapped targets of the two systems at a time. According to the new poverty line of 1196 Yuan, the governments identified 1.419 million rural low-income people, accounting for 14.7% of rural population in the pilot counties (most pilot counties are in deep poverty), including targets of poverty reduction of 1.224 million, accounting for 12.7% of the rural population, 461,000 targets of the minimum living security system, accounting for 4.8% of the rural population (excluding those living above the poverty line of 1196 Yuan), and the overlapped targets of 266,000, respectively accounting for 21.7% of the targets of poverty reduction and 57.7% of the targets of the minimum living security system,.

　　Secondly, expanded the coverage of policy support to benefit more poor people. The government paid the subsistence allowances for the identified objects of the minimum living security system. 589,000 of the objects of poverty alleviation enjoyed varying degrees of support policies, accounting for 48.1%, and the support coverage has been expanded significantly. The support measures cover ten areas: industrial development, poverty alleviation by relocation, Rain Plan training, renovation of dilapidated buildings, dividend sharing of economic entities, micro-credit, mutual funds, free education and subsidies, medical assistance, assistance and support measures of CPC cadres and all circles of society.

　　Thirdly, established archives, creating conditions for the implementation of classified support and dynamic management. Local governments have established detailed archives on the family income, poverty situation, needs and benefits received of the identified low-income households. Meanwhile, the governments divide the low-income households into five categories, namely "targets of poverty reduction, low-income objects of poverty reduction, objects of the minimum living security system, five-guarantee households and the relocated households in reservoir areas for poverty alleviation", creating conditions for the implementation of classified support and dynamic management.

　　Fourthly, set up information system, building a common working platform for all parties. The rural low-income households management system developed in the pilot projects has built a common working platform for guiding the resources of agriculture, water conservancy, education, health care, housing construction, family planning, forestry and other departments and all social circles to incline to low-income households under the grand pattern of poverty alleviation.

　　Fifthly, know well the objects' needs, providing a basis for the development of pro-poor programs. In the process of information registration, local governments have comprehensively understood the projects needed by the objects, the project content, category, scale, the investment and funding sources, etc, laying a basis for the development of new pro-poor programs.

2.Main practices of pilot projects

　　First, determine a reasonable size, mainly in two ways. First way: according to the national poverty line, based on rural poverty monitoring data of the statistical departments, determine the size of low-income population, such as Hebei, Hubei, Guangxi, Gansu, Qinghai and Xinjiang. The other way: taking into account the rural poverty monitoring data of statistic department, minimum allowance standards and their own financial resources, provincial (municipal) government determine the poverty lines and the size of low-income population by themselves such as Fujian, Jiangsu, Henan, Hunan and Chongqing.

　　Second, develop a detailed plan. Based on in-depth research and soliciting opinions from all sides, 11 provinces and 20 counties developed specific work plans. The plans of most regions identified the guiding ideology, goals, basic principles, implementation steps and safeguard measures and are scientific and thorough. Baojing County of Hunan put forward the general requirements of "one assessment, two examinations, three publicities and four in-place in key links" in the implementation plan, which is a typical example. One assessment refers to the assessment made by the village committee on the applications of rural households; two examinations refer to the examinations and approvals by township government and county government; three publicities are given by village, township and county-level government departments and four in-place in key links refers to propaganda, object recognition, classified assistance and dynamic management.

　　Third, promotion after success of pilot projects. To ensure a steady advance and orderly construction of pilot projects, after the initial determination of the size of town and village-level low-income population, select one or two town (s) and village(s) for trial. On the basis of their experience, launch the projects comprehensively. Luotian County of Hubei selected three kinds of towns respectively at good, average and poor situations and nine villages at the three levels among them as pilot areas. The county statistic bureau designed the household income survey form, registered the rural households below the poverty line of 1196 Yuan and reported to the higher authority. To ensure the authenticity and accuracy of the reported materials, special staffs of the Poverty Alleviation Office, Civil Affairs Bureau, Finance Bureau, Bureau of Statistics and Disabled Persons Federation were organized to conduct investigations into the households in the nine villages of the three towns, not missing any household or any farmer involved. In the investigation, they mainly used the method of "three observations and one calculation": observe the grain output, house conditions and labors and calculate the per capita net income of the households (by professionals of the Bureau of Statistics). After nearly one month's verification and calculation, they initially identified the incidence of poverty in the nine villages of the three towns.

　　Fourthly, carry out systematic training. According to the situation of the first few pilot projects, based on the pilot program, organize trainings for relevant staff to ensure the quality of the pilot projects. Zhangxian of Gansu organized trainings for the vice-mayors, poverty reduction cadres and village cadres, covering more than 300 trainees. Through the trainings, they made systematic introduction to the pilot program and explained in detail the indexes for each village and each household. In Luotian and Xiaochang of Hubei, the government even organized trainings for the data entry assistants.

　　Fifthly, identify the objects by democracy. In the pilot work, local governments in various places explored many effective methods for identifying the poor and gradually standardized the methods, mainly including five aspects, namely: the application, appraisal, review, approval and progressively publicity. Wuping County of Fujian used the method of "four insistences", "four prohibitions", "three excluding" and "three surveys". Four insistences: application of the applicant himself, village committee review, township (town) examination and county-level leadership approval; Four prohibitions: prohibition of black-box operation, no preferential treatment of relatives, no evenly distribution and no irresponsibility. Three excluding: the households with good housing conditions with hidden income, households not reviewed by village-level leadership, not studied by township government and not publicized, and the indolent households with self-help capabilities; Three surveys: survey on the objects of questionable conduct, survey on the objects someone disagrees; survey on the objects reported by the masses.

　　Sixthly, carefully gather information. After the object is determined, led by the village cadres, some trained personnel would register the relevant information of the low-income households to ensure the information collected is objective and true and do not miss anyone. In order to do this work, Yanjing Town, Zhang County of Gansu once organized more than 50 village cadres to register the information of the identified 921 low-income households in the town.

　　Seventhly, implement the pro-poor policies. Effective convergence between the two systems cannot be "hollow." The implementation of the policy is related to the success or failure of the pilot project, and related to the long-term existence of the system. With limited special anti-poverty funds, it becomes an important experience for implementation of the policy to actively integrate the relevant preferential agricultural policies and increase support for poverty reduction. The main practices of local governments in various regions include: provide subsidies to the industrial projects and small infrastructure projects, the relocation programs and renovation of dilapidated buildings of the poor covered by poverty alleviation program; provide free technical services for the poor; fees for mutual funds entry of the poor are paid by the village-level financial anti-poverty funds and protect the rights of poor households to benefits and their priorities to loans; provide fiscal discount for poor households’ micro-credit loans; carry out free trainings for entrepreneurship and transfer of employment and practical skills trainings; do not charge any fee from the children of poor families for secondary vocational education and provide annual subsidy to the students of junior and high schools, colleges and universities from poor families; provide agricultural insurance subsidy of 10 Yuan/ mu; exempt the poor from the new rural cooperative medical care costs, the governments provide commercial medical insurance subsidy according to the standard of 10 Yuan/person, and the reimbursement rate of expenses increased by 20 percentage points; mobilize party members, cadres and social forces to build twining partnership with the poor to help them in the forms of one to one, many to one and one to many.

　　In 2010, the pilot areas will be expanded. In the central and western regions, the government will strive to expand the coverage of the pilot projects to more than 80% of the key counties for poverty alleviation, and even the non-key counties when needed. In the eastern regions, the coverage of the pilot projects can be decided according to the actual situations.

【Improve the anti-poverty fund management and household-based mechanism】

1.Improve the management of financial anti-poverty funds

　　Substantial increase in financial anti-poverty funds. In 2009, the budgets of the central government and provincial governments for financial anti-poverty funds were 26.5 billion Yuan, 4.3 billion Yuan more over the previous year, up 19.4%, the highest increase and growth rate since 1986. Of which: central government’s budgets were 19.73 billion Yuan, with an increase of 3 billion Yuan, up 17.9%; provincial government’s budgets were 6.79 billion Yuan, with an increase of 1.3 billion Yuan, up 23.6%.

　　Capital investment structure has been optimized. The funds are mainly invested in key counties and poor villages. Of the 18.8 billion Yuan of financial anti-poverty funds provided by the central government for various provinces (excluding Xinjiang Corps, poor farms and poor forestry, etc), 13.9 billion Yuan was invested in key counties for national poverty alleviation, accounting for 74%, and 15.8 billion Yuan was invested in key villages, accounting for 83%.

　　Increased support for pillar industries and rural households. According to incomplete statistics, in 2009, of the13.64 billion Yuan of financial development funds arranged by the central government for the provinces, 6.25 billion Yuan was invested in infrastructure construction, accounting for 45.8%, down more than 10 percentage points over the previous year; 5.24 billion Yuan was invested to support industry development and rural households' production, accounting for 38.4%, up more than 10 percentage points over the previous year. This shows that local governments actively implemented the spirit of the Third Plenary Session of the 17th CPC Central Committee, gave full play to the role of large-scale poverty alleviation, put efforts to adjust and optimize the investment structure of anti-poverty fund, seriously carried out the convergence between the "two systems" and strived to implement the pro-poor policies for the poor and increase efforts for the support.

　　The proportions of the investment in infrastructure, industrial development and rural households in the provincial financial anti-poverty funds are more reasonable. According to incomplete statistics, among the 6.28 billion Yuan of provincial anti-poverty funds, 2.41 billion Yuan was invested in infrastructure construction, accounting for 38.4%; and 3.12 million Yuan was put in industrial development and rural households, accounting for 49.7%.

　　The management of funds has been further standardized. More priorities have been given to the "three guarantee", labor transfer trainings, industry development and poor people in the allocation of funds. Based on local actual situations, the provinces have constantly improved the anti-poverty fund allocation approaches, giving priority to key work, special impoverished areas and special poor people. Guizhou Province, for example, made coordinated arrangements for the allocation of the financial anti-poverty funds according to the principle of key work, poverty situation and poor areas. In 2009, a total of 1.058 billion Yuan of financial anti-poverty funds were invested in Entire Village Advancement program in Guizhou Province, including 870 million Yuan from the central government, accounting for 79%. Based on the foundation of factor method for the allocation of funds, Xinjiang included the "financial hardship" of various counties into the "factor distribution method", showing a strong support for the counties in economic difficulties. In 2009, Xinjiang allocated 459 million Yuan of financial anti-poverty funds to 27 key counties (cities) for poverty alleviation and development, accounting for 82% of the total, and directly invested 537 million Yuan of anti-poverty funds in the key villages for poverty alleviation and development, accounting for 78%. Tibet strived to implement pro-poor policies for the low-income households and took the poor as the main body of the pro-poor programs and gave priority to them in the relevant arrangements.

　　The mechanism for the use and management of anti-poverty funds has been constantly innovated. Local governments have made positive innovation to the mechanism for the use and management of anti-poverty funds and explored new models. In accordance with the requirement of large-scale poverty alleviation, Qinghai strived to achieve six changes in the use of funds: The objects of poverty alleviation and development changed from the key counties identified by the central and provincial government to all low-income people in the province; the goals of poverty alleviation and development changed from addressing the food and clothing problem to increasing income and lifting people out of poverty; the poverty alleviation and development forces changed from poverty alleviation and development departments to all sectors and the whole society; the poverty alleviation and development funds changed from the special funds for poverty alleviation and development to integrated all kinds of funds to support the infrastructure and industrial development in poor areas; the poverty alleviation and development approaches changed from the implementation of poverty alleviation and development projects by single village or scattered households to overall planning, contiguous development, scale concentration, comprehensive management and regional promotion; and the poverty alleviation and development system changed from the development-oriented poverty alleviation to the combination of development-oriented poverty alleviation and low-income group-targeted poverty reduction.

　　Gansu has explored six models for the use of anti-poverty funds: First, one-time capital investment and stage recovery for recycling support the development; Second, free pairing-off, select one from the two for supporting each other; Third, establish community breeding operations, and then rent or contract to others for continuous development; Fourth, paid fund mortgage and discount loan; Fifth, establish village-level mutual fund to issue capital for rolling development; Sixth, build partnership between each two households and return benefits to the children. Through rolling development of funds, it has maximized the benefits of the anti-poverty funds and the coverage of rural households.

　　Institutionalization and standardization of financial regulation:  Financial reimbursement system, project publicity and announcement system and inspection and acceptance system have become the conventional means for fund management of poverty alleviation departments and have been constantly improved and strengthened. Heilongjiang Province formulated and issued the "Measures for the Implementation of Anti-poverty Funds Project Publicity System" and the "Interim Procedures for Fund Management in Labor Transfer Training for Poverty Alleviation and Development"; Jilin Province formulated "Implementing Regulations on the Management of Infrastructure Projects Constructed with Anti-poverty Funds" and "Implementing Regulations on the Management of Production Projects Constructed with Anti-poverty Funds". Hebei, Henan, Jiangxi, Hubei, Chongqing and Yunnan actively promoted the financial anti-poverty funds performance evaluation, and Gansu Province extended the performance evaluation of anti-poverty funds to the performance evaluation of anti-poverty work. Many provinces have taken cross-check as a system and further standardized and strengthened the relevant measures. These measures have guaranteed the use of funds as ear-marked and the timely payment of financial anti-poverty funds.

2.Mutual funds

　　By the end of 2009, the pilot projects for mutual funds program had been launched in 9,003 villages of 940 counties, including 3108 villages in 2009, accounting for 53% of the total villages. A total of 1.7 billion Yuan had been invested (including 460 million Yuan of anti-poverty funds from the central government, 780 million Yuan from provincial government, 360 million Yuan from farmers' mutual funds and 100 million Yuan of other funds), of which 1 billion Yuan was invested in 2009, accounting for 58%. According to the statistics, in 2009, the pilot projects of mutual funds witnessed the rapidest development and the largest investment scale. By the end of 2009, 740,000 rural households had joined mutual funds, including 370,000 poor households, accounting for 50%; 310,000 loan borrowers, among which: 179,000 were poor households, accounting for 57.7%; and a total of 1.17 billion Yuan of loans were issued, of which 670 million Yuan was for poor households, accounting for 57.2%. To standardize the operating procedures of the mutual funds and strengthen the supervision and risk prevention, LGOP and the Ministry of Finance jointly issued the "Guidance for Further Promoting the Pilot Projects of Mutual Funds in Poor Villages".

3.Pro-poor discount loan management system reform

　　In 2008, based on a comprehensive poverty reduction discount loans management system reform, the government actively promoted the provinces and key counties to innovate work ideas, introduce market competition mechanism and expand the sources of loans to improve service levels. According to incomplete statistics, in 2009, a total of 25.2 billion Yuan of anti-poverty discount loans were issued, of which: 12.9 billion Yuan were provided to rural households, 12.3 billion Yuan were issued as project loans, which strongly supported the development of featured industries in poor areas and promoted the income growth of poor farmers.