official state media reports in china frequently speak of how the communist party-led government has “lifted 700 million people out of poverty” since implementing economic reforms in the late 1970s. yet there are still millions of people in the country who struggle to maintain long-term employment and constantly teeter on the edge of a financial cliff.
dibao, or the minimum livelihood guarantee, is a government program intended to help its recipients step back from the edge of that cliff. by distributing cash payments to those who qualify, dibao is meant to provide china’s poorest citizens with the funds to cover their basic expenses during periods of un- or under-employment. first implemented in shanghai in 1993, dibao was expanded to all urban areas in 1999 but has only been available to rural residents since 2007; there are now approximately 60 million people receiving welfare payments through the program.
aas member qin gao, a professor at the columbia university school of social work, has recently published the first large-scale study of dibao’s reach and effectiveness. in welfare, work, and poverty: social assistance in china (oxford university press, 2017), gao explains the program’s objectives and how it is carried out. she also examines the ways in which it falls short and offers policy solutions designed to ensure dibao can truly provide china’s poor with the “minimum livelihood guarantee” that its name promises.
i interviewed qin gao by email about welfare, work, and poverty.
mec: first of all, how do people qualify and apply for dibao, and what’s the profile of a typical dibao recipient?
qg: thank you, maura. dibao is a means-tested program. people need to apply, report their income, and get screened for eligibility. each city (for urban dibao) and county (for rural dibao) has their own assistance standards; if one’s income is below the local standard, then typically one is entitled the amount of benefits equal to the income shortfall. in other words, dibao is intended to lift one’s income to the local dibao line level. one crucial step of screening is the public display of applicant names and financial situations, so that community members can give input and feedback about their eligibility.
many dibao recipients are working-age adults: about two-thirds in urban areas and half in rural areas. most of these recipients have health problems that limit their work capabilities or have to be caretakers for family members. the others are children and older people: there are more older adults receiving dibao in rural areas (about 40%) than in urban areas (about 16%) due to the lack of sufficient pensions in rural areas; children make up a greater proportion of urban dibao recipients (22%) than in rural areas (11%).
mec: how effective is the program in alleviating poverty?
qg: dibao has had a modest impact in alleviating poverty. it has been more effective in reducing the poverty depth and severity than lowering the poverty rate, indicating that dibao has had some success in reaching the most vulnerable among the poor population. when a relative poverty line is used, however, these effects tend to be smaller, because the relative poverty line is usually set as a percentage of the medium income in the society and is often higher than the typical absolute poverty lines used. in other words, dibao’s poverty reduction effects are smaller when considering the overall income distribution in the society than focusing only on the poor population. the main reasons for the limited anti-poverty effectiveness of dibao are its targeting errors and gaps in benefit delivery.
mec: although your book is titled welfare, work, and poverty, there’s actually not much work going on among dibao recipients. how does the program discourage and/or impede people from seeking employment and moving off the dibao rolls?
qg: you are correct: work is scarce among dibao recipients. that is actually why i devoted one chapter to this matter. there are many local initiatives that aim to promote welfare-to-work transition. these range from punitive approaches such as requiring “mandatory voluntary work” or else one would lose dibao eligibility, to offering incentives that permit gradual reduction in benefits after one finds a job. these initiatives, however, have not been systematically evalsuated. the limited existing evidence shows that they are not very effective in helping dibao recipients move from welfare to work.
the fact is that most dibao recipients face various barriers that deter them from finding sustainable jobs. these include individual and family-level factors such as poor health, a long history of unemployment, lack of financial or social capital, and family care responsibilities. there are also community-level factors such as lack of child and senior care services and policy-level factors such as restrictions on asset ownership and lifestyle choices that limit upward mobility. one additional barrier is that dibao currently serves as a “gate keeper” for a set of other social assistance benefits such as education and medical assistances, so dibao recipients are often reluctant to leave the welfare roll, sometimes more worried about losing these other benefits rather than losing dibao itself.
mec: how big a problem is corruption in dibao, both among recipients and the government employees who administer the program?
qg: there has been corruption in dibao among both recipients and program administrators. some dibao recipients withhold income information in order to qualify for benefits; this is often cited in the justification of the stringent screening process for dibao eligibility and the public display of applicant names and financial situations. meanwhile, because of dibao’s decentralized implementation, local officials have quite a bit of autonomy in administering it. there have been news reports on renqing bao, or receiving dibao because of having personal connections with local officials.
in september 2012, the state council issued the “opinion about further strengthening and enhancing dibao implementation”, which emphasized the importance of monitoring, auditing, and public reporting of corruption, embezzlement, mis-targeting, and other misconduct in dibao implementation. however, as you can imagine, empirical research on this topic is difficult. currently, my collaborators and i are conducting research on elite capture in rural dibao. we would like to understand whether, and to what extent, having political connections might help increase one’s access to dibao.
mec: how does china’s dibao compare to poverty-reduction programs in other countries? what are some of its comparative strengths and weaknesses?
qg: like many other safety net programs around the world, dibao is an unconditional cash transfer (uct) program. its eligibility and benefit level mainly depend on one’s income, but are not conditional on any behavioral changes or actions. in contrast, conditional cash transfer (cct) programs have expanded rapidly in latin america and the caribbean during the recent decades. such programs make welfare receipt conditional on recipients’ actions in human capital investment, such as school enrollment for children and regular doctor’s visits.
in this broad context, dibao’s comparative strengths include its poverty-reduction effects, despite being modest, and enabling effect for families to increase spending on health care and education. dibao’s challenges include its mis-targeting errors, lack of a built-in mechanism for escaping the intergenerational poverty trap, and its stigmatizing and isolating effect. there is some evidence that dibao does not provide strong work disincentives, though as mentioned above, it does not seem to have an effective welfare-to-work transition channel either. this is a common challenge faced by most safety net programs, ucts and ccts alike.
mec: is dibao enough to change a family’s economic future, or are the children of dibao recipients likely to become recipients themselves? what are some of the actions—whether by individuals or the government—that could prevent the creation of a multi-generational dibao-dependent population in china?
qg: dibao’s name in english is minimum livelihood guarantee, so by design, it is meant to serve as a last resort to support subsistence rather than enable development or provide better life opportunities. children of dibao families are often trapped in poverty, unfortunately. only a small proportion of dibao children receive education assistance, and the amount they receive is often low. some low-income families choose not to apply for dibao to avoid their children being looked down upon at school as such information would inevitably be exposed. this should be a major policy concern. after all, children are the future of the society, and if a subgroup of children are systematically left behind and have little to aspire for, then it could lead to not only a missed pool of human capital, but also potential for discontent and revolt.
there have been various governmental and non-governmental initiatives to address this problem, at least partially. one example is the early childhood education and nutrition program focusing on children in low-income rural areas led by the china development research foundation (cdrf), a public foundation initiated by the development research center of the state council. another is the china rural kids care program initiated by a group of philanthropists to meet the health care needs of rural children in poor counties. recently, the united nations development programme (undp) held a roundtable to discuss universal basic income as a potential poverty-alleviation policy tool for china. children of low-income families would undoubtedly benefit the most from such a universal program focusing on human investment.
mec: finally, what other projects or activities are filling your workdays now that welfare, work, and poverty has been published?
qg: i’m working on several new papers to continue the evalsuation of dibao’s performance and impacts, with a particular focus on rural dibao, as this year marks the ten-year anniversary of rural dibao’s nationwide implementation. i’m also writing a new book on the chinese welfare state. using various national household survey datasets as well as administrative data and a cross-national comparative perspective, this book addresses a series of questions concerning the chinese welfare system: is china a welfare state? if so, what does it look like and how has it evolved? is it progressive or regressive? how has it affected poverty and income inequality? how has it affected citizens’ assessment of government performance? and, how does it compare with other welfare states around the world? the book addresses these questions both conceptually and empirically and places the chinese case in the global context.