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Abstract
In 2013, China launched her targeted poverty alleviation, and a large amount of fiscal anti-poverty funds have been invested. However, whether the enormous fiscal anti-poverty funds have had a positive impact on the local economy has been ambiguous. This study investigates the impact of fiscal anti-poverty funds on local economic growth, drawing on Chinese fiscal data at the county level. Our results indicate that fiscal anti-poverty funds are not conducive to local economic growth. Further analysis reveals that anti-poverty funds reduce fiscal support for the service industry, manufacturing industry, enterprise development, and technical innovation. This is because impoverished counties are forced to supply extra fiscal anti-poverty funds, which leads to compression of fiscal expenditures in other areas due to local deficient finance.
Acknowledgements
The authors thank the Editor and two anonymous referees for their valuable comments on the earlier version of this paper.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
2 The Measures for the Management of Central Financial Special Poverty Alleviation Funds enacted in 2017 stated that fiscal anti-poverty funds should be invested in the fields of poverty alleviation development, work as a means of relief, ethnic minority development, “Three Western” agricultural construction, poverty alleviation by state-owned impoverished farms, and poverty alleviation by state-owned impoverished forest farms. In the Government Revenue and Expenditure Ledger, fiscal anti-poverty funds are incorporated within the general budget expenditure and organized by different purposes, including administrative operations (code: 2130501), general administrative services (code: 2130502), rural infrastructure construction (code: 2130503), production development (code: 2130504), social development (code: 2130505), subsidies and discounts for poverty alleviation loans (code: 2130506), special subsidies for agricultural construction in “san xi” regions (code: 2130507), poverty alleviation institutions (code: 2130550), and other poverty alleviation expenditures (code: 2130599).
3 Industrial poverty alleviation is a poverty alleviation and development process that depends on industrial development. It is an effective way to promote the development of impoverished areas and increase the income of impoverished farmers, and is also a strategic focus and main task of poverty alleviation and development. The anti-poverty funds for industrial poverty alleviation are defined as industrial poverty alleviation funds, and it refers to funds specifically used to directly promote the development, production, income increase, and poverty alleviation of poverty alleviation and development targets. In other words, part of the fiscal anti-poverty funds are used to support anti-poverty industries. According to the Management Measures for Financial Special Anti-Poverty Funds, cultivating and strengthening characteristic industries in poverty-stricken areas is one of the most important directions for the use of fiscal anti-poverty funds.
5 The concept of targeted poverty alleviation was proposed by President Xi Jinping in 2013. Targeted poverty alleviation refers to the use of scientific and effective procedures to accurately identify, assist, and manage poverty alleviation targets in different poverty-stricken areas, environments, and farmers’ conditions. In January 2014, the General Office of the CPC Central Committee and the State Council issued the Opinions on Innovating Mechanisms to Solidly Promote Rural Poverty Alleviation and Development Work, which proposed the establishment of a targeted poverty alleviation work mechanism and accelerated the process of accurately identifying poverty alleviation targets. In 2015, the 5th Plenary Session of the 18th CPC Central Committee planned to lift all the poor residents living below the current poverty line by 2020. For more information about China’s targeted poverty alleviation, please refer to the study of Liu et al. (Citation2017a).
6 This document was enacted by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council of the People’s Republic of China, which is the highest level of government document in China.
9 The statistics from the Ministry of Finance of the People’s Republic of China showed that by the end of 2020, the explicit debt of Chinese government was up to RMB 46.55 trillion, but the implicit debt of Chinese government may exceed RMB 65 trillion.
11 Production development refers to the development of projects such as planting, aquaculture, animal husbandry, agricultural and sideline product processing, forest and fruit land construction, and related technology promotion in impoverished rural areas, as reflected in the general public budget expenditure. Expenditures for anti-poverty industries include those for agricultural and forestry industry poverty alleviation programs, e-commerce, asset income, and rural technology. In other words, fiscal support for anti-poverty industries is included in production development expenditures.
16 Expenditures for commercial service industry encompass professional services, computer and related services, research and development services, real estate services, leasing services without broker intervention, and other commercial services.
17 Expenditures for manufacturing industry cover manufacturing costs for textiles, light industry, chemicals, pharmaceuticals, machinery, smelting, building materials, transportation equipment, tobacco, weapons, nuclear industry, aviation, shipbuilding, electronic and communication equipment, etc.
18 Expenditures for enterprise development include administrative operations, general administrative affairs, agency services, SME technology innovation funds, special projects for SME development, and other support for SME management and development.
19 Due to the missing observations of variables such as fiscal funds for service industry, fiscal anti-poverty funds for rural infrastructure and etc, the number of observations in the later estimations may be different.
20 According to the Regulations on the Classification of Three Industries, the primary industry refers to agriculture, forestry, animal husbandry, and fisheries; the secondary industry refers to mining, manufacturing, production and supply of electricity, gas, and water, and construction; The tertiary industry refers to industries other than the primary and secondary industries. (https://www.gov.cn/gongbao/content/2003/content_62360.htm.)
22 According to the data used in this paper, the average size of general financial transfer payment obtained by impoverished counties and non-impoverished counties was RMB 3.552 billion and RMB 18.22 billion in 2016, respectively. In 2017, the figures were RMB 4.78 billion and RMB 1.611 billion, respectively; in 2018, the figures were RMB 4.452 billion and RMB 3.114 billion, respectively.
23 We collected the documents of each province. Taking Hebei province for example, the poverty situation, policy task and the performance of overcoming poverty are also the main determinants of anti-poverty funds’ distribution. (http://www.chinayanshan.gov.cn/chinayanshan/zcfg2/202105/c5a3d70904a44aa7a501d0596cbbc172.shtml.)
24 The severely impoverished areas were defined in 2017 by the Implementation Opinions on Supporting Poverty Alleviation in Severely Impoverished Areas (guanyu zhichi shendu pingkun diqu tuoping gongjian de shishi yijian). (http://www.gov.cn/zhengce/2017-11/21/content_5241334.htm).
25 During this period, 592 state-designated impoverished counties were listed.
26 Some researchers may be concerned about that the aim of fiscal expenditures for anti-poverty industries is to alleviate poverty rather than develop economy. However, a study by the Office of the Leading Group for Poverty Alleviation and Development of the State Council in China suggests that participation in poverty-alleviating industries has minimal impacts on poverty alleviation (http://www.zgxczxzz.com/upload/other/file/20200225158263392810.pdf.). This is attributed to the weak foundation of anti-poverty industries, coupled with market, fund, technology, and talent constraints. In the short term, it is challenging to form a complete industrial chain, and the effects of income-increasing measures for the poor are unstable, hindering the effectiveness of income-generated industries in the short term.