Global Policy Forum

China's rural poor have suffered a "sharp" six percent decline in living standards since Beijing's accession to the World Trade Organization in 2001, a World Bank study revealed Monday. The study consequently urged Chinese authorities to take steps to correct what it said has been an uneven distribution of benefits from WTO membership between rural and urban areas.

It found that market opening measures and other economic reforms that came with WTO accession have been worth more than 40 billion dollars a year to the Chinese economy and have added about 75 billion dollars a year to real incomes worldwide. "While China has experienced remarkable growth in its trade as a result of its WTO accession, it now faces the challenge of adjusting labor market policies to improve productivity in the rural sector and to allow workers to move to more competitive sectors," said Will Martin, an editor of the study. Its findings were based on a survey of 84,000 Chinese households.

While nearly 90 percent of urban households reported income and consumption gains, rural households overall sustained an average income loss of 0.7 percent. "The poorest rural households... suffered a sharp six percent drop in their living standards, as measured by consumption, due to the combined effect of a drop in real wages and an increase in the prices of consumer goods," the World Bank said in a statement received here.

The report called for reforms to China's hukou system, which governs the movement of people from rural to urban regions. It said its proposed reforms could boost rural wages by 17 percent and allow about 28 million people to leave the agricultural sector. In addition, the World Bank study urged increased education and stepped-up delivery of agricultural technology to help farmers increase their productivity and competitiveness as well as an extension of the country's urban unemployment benefits to village workers.

Elsewhere the study noted that in joining the WTO, China reduced tariffs, abolished non-tariff trade barriers and opened up to foreign investment in the services sector, measures that it said had contributed to a doubling in China's trade since 2001. It also expressed concern at anti-dumping and safeguard measures that Chinese exporters face abroad, some of which will be in effect for 12 years after accession. The Bank, finally, suggested that China press for improved access for its agricultural products in the leading industrialized countries, which would boost exports of labor-intensive goods and help reduce rural poverty.

The World Bank study, entitled "China and the WTO: Accession, Policy Reform and Poverty Reducation Strategies," is to be presented Tuesday at a conference on China and the WTO at Hong Kong University.

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