Poverty reduction is a systematic project entailing a set of supporting policies and mechanisms as well as full participation of the entire society. Since 2012 the Chinese government has kept up funding for poverty alleviation and reduction, implemented reforms and innovations to the working mechanism, encouraged all sectors of society to participate in poverty alleviation efforts, and improved the democratic supervision mechanism to ensure the effectiveness of poverty reduction.

Government funding for poverty alleviation keeps increasing. Since 2012 the government has proactively adjusted its fiscal expenditure structure to increase funding for poverty reduction and worked to improve the fiscal policy system for poverty alleviation funding. From 2011 to 2015, the government assigned special poverty alleviation funds amounting to RMB189.84 billion, with an average annual growth rate of 14.5 percent; it also assigned RMB5.03 billion from public lottery welfare funds to support anti-poverty development in disadvantaged former revolutionary base areas. Moreover, the government has created innovative fiscal systems and mechanisms for poverty alleviation, strengthened management of government funds for poverty alleviation, and through government funding and the market system leveraged financial capital in support of population relocation projects for poverty alleviation.

Chart: Central government's special Fund for poverty alleviation from 2010 to 2016

Poverty alleviation funding methods have been innovated. The government has taken targeted funding measures to meet both specific financing needs for poverty alleviation and the specific requirements of development programs in impoverished areas. It has also worked to meet the financial needs of poverty alleviation through developing local industries with special characteristics, relocating people from impoverished areas, and providing employment and schooling for the impoverished population. To support the poor in developing their businesses and increasing incomes, the government has developed innovative methods of microfinance that provide registered poor households with collateral-free small loans, up to RMB50,000 on a three-year term, at benchmark interest rates, with interest rates subsidy from government poverty alleviation funds and risk compensation from county-level funds. Poor households had received small loans of RMB120 billion by the end of 2015. China has endeavored to promote inclusive finance in impoverished areas and improve the payment service systems in rural areas to reach out to villages and households. The government has improved targeted financial measures for poverty alleviation, set up a poverty alleviation relending program, which offers loans to the poor at even lower interest rates than those of the agricultural relending program, leveraged multiple financial policy tools, and directed more financial resources to the impoverished areas and people. The government has also explored methods to alleviate poverty through insurance.

Land use policy toward development for poverty alleviation has been further improved. The state has adjusted and improved overall land use planning, taking into full account the need for development-oriented poverty alleviation and the need for population relocation as a method of poverty alleviation, and has taken a holistic approach to planning the scale, structure and distribution of land used for construction, giving priority to land used for poverty alleviation. More flexible policies toward the administration of land resources have been adopted. To ensure all needs relating to poverty alleviation are covered, in the process of development-oriented poverty alleviation and population relocation the government has reinforced support for linking the increase in land quota for urban construction with the decrease in land quota for rural construction, allowing any valid surplus quota to circulate within each province. According to the principle of industry nurturing agriculture and cities supporting rural areas, the benefits from the linking have been promptly returned to impoverished areas. The state has given policy support in terms of construction land quotas to areas in western and central China inhabited by ethnic minorities, and to contiguous impoverished areas with serious difficulties, in order to use unproductive hills, valleys, mounds and wasteland to develop agritourism.

Targeted poverty alleviation policy has been effectively implemented. A total of 320 units of the central government and the Party have taken responsibility for helping to lift their targeted areas out of poverty, and 592 counties that are key targets in the state poverty alleviation development program have received help from units with which they are paired. The Party and government has improved the leading unit contact mechanism and designated nine units as the leading units responsible for contacts in poverty alleviation pair work. A total of 68 central government-owned enterprises have carried out a campaign in the 108 counties in the disadvantaged former revolutionary base areas with which they are paired, helping more than 10,000 poor villages address water, electricity, road and other infrastructure problems. During the 12th Five-Year Plan period (2011-2015), the Party and government units appointed a total of 1,670 personnel to temporary posts working on poverty alleviation in the aforementioned 592 key counties, sent RMB11.86 billion in poverty alleviation funds and materials into these counties, helped them absorb investments totaling RMB69.58 billion, and organized the export of 310,000 workers from these counties. The People's Liberation Army and the Chinese People's Armed Police Force have set up over 26,000 contact outposts in 401 townships of 35 counties with which they are paired, and helped 3,618 poor villages there.

The eastern region intensifies its assistance in the alleviation of poverty in the western region. Nine provinces (municipalities directly under the central government) and nine cities in eastern China have given support to 207 key counties in ten provinces and equivalent units in western China. Beijing, Shanghai, Tianjin, Liaoning and Shandong have established a mechanism of steadily increasing assistance funds to their target areas in western China, at an annual rate of 8 percent to 10 percent. During the 12th Five-Year Plan period, eastern provinces provided disadvantaged western areas with assistance funds of RMB5.69 billion, donations of RMB380 million from all sectors of society, and investments of RMB1.2 trillion from enterprises. A total of 684 Party and government officials from the east were assigned to temporary posts related to poverty alleviation in the west while 1,150 personnel from the west were assigned to temporary posts in the east; eastern provinces conducted training for 778,000 people from the west on exporting labor services and helped the west export 2.403 million workers.

Private enterprises, social organizations and individuals participate in poverty alleviation. In 2014 the state set October 17 as the annual Day for the Eradication of Poverty and has since carried out relevant activities to mark the date, raising funds amounting to RMB15 billion in 2014 and 2015. Campaigns to nominate advanced collectives and individuals for Social Poverty Alleviation Awards and announce the China Poverty Eradication Award have been implemented. The "10,000 enterprises assisting 10,000 villages" campaign was launched, in which private enterprises help targeted poor villages, with Wanda, Evergrande, and some other private enterprises taking the lead in pairing up with poor counties to engage in poverty alleviation actions, and Suning and Jingdong and other E-commerce enterprises becoming actively involved in poverty alleviation. The China Foundation for Poverty Alleviation and other social organizations have raised large amounts of funds for targeted poverty alleviation. The China Association for the Promotion of Poverty Alleviation Volunteer Services and the website of China Social Participation in Poverty Alleviation and Development were founded, aimed at building platforms for the entire society to participate in poverty alleviation.

Poverty alleviation working mechanism has been improved. China has adopted a leadership responsibility system with the Central Authorities making integrated planning, governments of provinces and equivalent units taking overall responsibilities, and governments of cities (prefectures) and counties responsible for implementation. The system is characterized by clear roles and responsibilities specific to each individual, and an effective performance review system is in place. Party committees and governments at every level have signed letters of commitment on poverty alleviation, and performance in poverty alleviation has been included as a major criterion in the assessment of leaders in impoverished counties. The state has implemented an annual report and supervision system on poverty alleviation and a level-by-level inspection and accountability mechanism, strictly investigating any ineffective performance of departments and areas at all levels from province, city, county, township to village, and enforcing accountability. The mechanism of stationing officials in villages to work on poverty alleviation has been improved, and 188,000 outstanding officials have been selected from all over the country and sent to serve as first secretaries of Party committees of poor villages. In total 128,000 work teams and 530,000 personnel are involved, covering all poor villages across the country. The state has adopted a poverty exit mechanism that applies strict, standardized and transparent criteria, procedures and verification methods to deregister from the poverty alleviation list all households, villages, and counties that have been lifted out of poverty. The incidence of poverty is the main criterion for this deregistration process, with a threshold set at 2 percent for the central region and 3 percent for the western region.

Democratic supervision mechanism has been continuously enhanced. A nationwide information network for poverty alleviation has been set up and each poor household and poor village has been identified and registered through a process of application, appraisal, announcement to the public, and level-by-level approval, to ensure the public's right to know and to participate. The state has applied democratic and scientific decision making, given full respect to the development interests of people in need, and invited them to participate in decision-making concerning poverty alleviation, and the implementation, management and supervision of programs. The government publicizes funding arrangements and program updates to ensure transparent operation and institutionalize access to information as a regular practice. The state has entrusted relevant scientific institutions, social organizations and other independent third parties to assess the accuracy of processes to identify and to deregister the poor population, to measure the satisfaction of those receiving assistance tailored to the conditions of their own household or village, and other indexes. Other political parties have been encouraged to exercise supervision over poverty alleviation work. The central committees of China's eight non-CPC parties have been paired up with the eight poorest provinces and equivalent units in central and western China, their main role being to supervise the activities for identifying the poor, and lifting them out of poverty. The state has strengthened supervision over disciplined execution and auditing in poverty alleviation, and launched a special campaign to prevent and address abuses of power in this field. The government has improved the information disclosure mechanism, and set up the hotline "12317" to allow the reporting of misconduct in poverty alleviation work, giving full play to the role of the public in supervision.