A Study Of Trade Openness On Poverty Reduction In Rural China

Since the Economic Reform and open up,China’s trade penness process develops rapidly.Import tariffs and non-tariff barriers have continued to decline.Meanwhile,the import and export trade volume have also increased rapidly,total imports and exports jumped from 20.6 billion dollar in 1978 to 407.1 billion dollar in 2017.During the time,poverty rate fell from 97.5% to 3.1%,the number of poor population decreased 740 million.China’s foreign trade development and poverty reduction have made great achievements.However,does foreign trade have an impact on poverty? Due to the differences in economic policies and market conditions in various countries and regions,there has been no consistent conclusion on this issue.For China,how does trade openness affect rural poverty? Is there any difference in the impact on different regions and different populations? Moreover,in the current complicated and changeable international trade environment,this issue has important significance for future trade policy adjustment and in-depth reform.Based on the above realistic background,this paper uses micro data of the National Fixed Point Survey(NFP)and Chinese manufacturing firms with sales above 5 million RMB to examine the impact of trade openness on rural poverty in China.Specifically,this paper focus on the out-migration employment of rural households.First,this paper briefly reviews the trade openness process and trade policy evolution in China,then construct the index of trade openness on manufacturing and agricultural.Second,this paper uses linear programming and Engel coefficient method to formulate differentiated regional absolute poverty standards,meanwhile,it also use the income ratio method to get the relative poverty standard;then measures the evolution of China’s poverty rate.Third,this paper establishes empirical models to examine the trade openness effects on poverty and rural household income,and analyzes the mechanism from the labor force employment.Finally,we get the conclusion of this dissertation,and give corresponding policy implications.The main conclusions are as follows: First,both the food poverty line and the total poverty line reflect huge regional differences.With the regional poverty line calculated in this paper and the national standard poverty line for price adjustment,we find that the absolute poverty rate in China shows a rapid downward trend,although there is a big difference across provinces.Overall,the east is faster than the middle,and the west is the slowest.Second,tariff reductions on manufacturing have significantly reduced the absolute and relative poverty rate of rural household.Agricultural tariff reductions are conducive to the reduction of absolute poverty,while it aggravate relative poverty.Third,the reduction of agricultural product tariffs is beneficial to the increase in agricultural product production and sales revenue in southern and coastal provinces,while has the opposite impact on inland provinces.Manufacturing tariff has a significant negative impact on agricultural products production in inland provinces.Moreover,it also significantly reduce agricultural products sales of these provinces,which shows that the manufacturing tariff reduces poverty through the mechanism of employment.In addition,trade openness is more conducive to the southern and coastal provinces to increase the cultivation of labor-intensive agricultural products,so that these farmers benefit more.Fourth,tariff reductions on manufacturing and agricultural have significantly reduced the income of rural household.Through the employment mechanism analysis,it is found that agricultural product tariffs affect the out-employment income by time;the manufacturing tariff increases the demand for labor and wages then increases migrant workers’ income,which only affects low-skilled workers.Based on the research conclusion,this paper puts forward following policy suggestions.First,it is necessary to formulate differentiated regional poverty standards to identify real poverty and facilitate the implementation of poverty alleviation policies.Second,we should further reduce tariffs on manufacturing products,especially those closely related to poor people’s lives,so as to increase their consumption selectivity and reduce their consumption costs.At the same time,we should pay attention to the negative effects of tariff cuts on agricultural products to avoid aggravating relative poverty.Third,in order to alleviate the substitute effect of agricultural products import,we should provide production subsidies to farmers with high proportion of land intensive agricultural products.Fourth,the government should strengthen the employment support for rural labor force and promote them to go out for employment.In order to cope with industrial upgrading and structural transformation,we should strengthen the vocational training and improve their professional ability.In the future,employment should continue to play an important role in poverty alleviation.