China's Trapped Transition_ The Limits of Developmental Autocracy - Minxin Pei [104]
The insufficient supply of public goods may have contributed to a slowdown in poverty reduction since the mid-1980s.39 One study shows that although the poverty rate fell 22 percent from 1978 to 1984, progress since then was virtually stagnant; between 1985 and 1995, despite strong economic growth, the poverty rate fell only 2.58 percent.40 The pace of poverty reduction slowed even further during 2001-2002, with fewer than 2 million people lifted out of poverty each year. In 2003, for the first time since reform began, the number of people living in poverty actually rose by 800,000.41 Based on the World Bank’s definition of “extreme poverty” (per capita income of $1.08 a day, compared to the official Chinese standard of $0.21 a day), a Chinese researcher concluded that in the late 1990s China had 120 million people in the rural areas who lived below the poverty line; half of them were concentrated in the western region. In urban areas, about 20 million people were classified as poor in 2002.42 This implies that China’s real poverty rate is about 10 percent, about five times the official rate. Even this high figure may understate the poverty rate. In the World Bank’s World Development Indicators2003, the number of people living in “extreme poverty” was estimated to be 222 million, or about 18 percent of the Chinese population.43
Environmental Degradation
State incapacitation in China is reflected in the worsening environmental degradation that threatens the sustainability of economic development. 44 Official reports admit that a third of China’s land suffers from severe soil erosion. As a result, about 67,000 hectares of farmland are lost each year. Major waterways have also become clogged with silt. About 1.5 billion tons of soil, sand, and gravel are washed into the upper reaches of the Yangtze, for example. The authorities blamed the buildup of such silt in the Yangtze on the devastating floods along the river in 1998. Soil erosion has endangered China’s reservoirs, where more than 20 billion tons of silt have accumulated. Each year about 2,500 square kilometers of land are turned into desert, resulting in 54 billion yuan in direct economic losses. The expansion of the desert has also led to a large increase in the frequency and magnitude of sandstorms that hit the northern parts of the country. Acid rain has polluted 30 percent of the country.45
With 80 percent of wastewater discharged untreated, three quarters of the lakes and about half of the rivers (measured in length) have been polluted. The head of China’s State Environmental Protection Administration admitted in early 2003 that checks conducted in 740 sections of the country’s major rivers found water to be of drinkable quality in only 29 percent of them.46 Sixty percent of the water in the Yangtze, China’s most important river, was found to be polluted to varying degrees in 2003. Each year, 20 billion tons of polluted water, or 40 percent of China’s total, are discharged into the Yangtze.47 In addition, two-thirds of the underground water in the 118 major cities is rated as “severely polluted.” Water pollution alone costs China 1.46-2.84 percent of GDP each year. By international standards, China’s use of water is among the most inefficient. For each unit of GDP, China’s water usage is 15 times higher than the average of developed countries—35 times higher than Japan and 25 times higher than France. It is also higher than India and Pakistan.48
Environmental degradation incurs huge direct economic losses. The World Bank estimated in the mid-1990s that major forms of pollution in China cost 7.7 percent of GDP.49 More than 20 million tons of SO2 (a product of burning coal) is released into the air each year (the largest in the world); this emission alone cost China about 2 percent of GDP.50 China’s State Environmental Protection Administration reported that tests of air quality