Food for Thought

Nouriel Roubini - 4 scenarios for global economy, Seun Sam - Cambodia's academic crisis, Wang Xiaoyi (王晓毅) - China's targeted poverty alleviation

Jun 29, 2023

UPDATE: There are currently four scenarios for the global economic outlook. Three of these entail potentially serious risks with far-reaching implications for markets. The most positive is a “soft landing,” where central banks in the advanced economies manage to bring inflation back down to their 2% targets without triggering a recession. There is also the possibility of a softish landing. Here the inflation target is achieved, but through a relatively mild (short and shallow) recession.

Cambodia has a long history of academic excellence and a rich cultural legacy. The nation's academic community has, however, been dealing with an unparalleled problem in recent years. With decreasing student enrollment, a dearth of skilled teachers, and significant financial struggles at many universities and colleges, the situation is grim. The quality of education has significantly decreased as a result of this problem, endangering the future of the nation's youth.

Unlike the Chinese government’s conventional poverty alleviation efforts, the targeted poverty alleviation (精准扶贫, jīngzhǔn fúpín) program, launched in 2013, has exhibited the distinct characteristics of campaign-style governance. This program set the eradication of extreme poverty as the central objective around which socioeconomic policy was coordinated in poor, rural areas. At the end of 2020, after eight years of arduous work, this goal was achieved.

A Mild Global Contraction Is Coming

By Nouriel Roubini

There are currently four scenarios for the global economic outlook. Three of these entail potentially serious risks with far-reaching implications for markets. The most positive is a “soft landing,” where central banks in the advanced economies manage to bring inflation back down to their 2% targets without triggering a recession. There is also the possibility of a softish landing. Here the inflation target is achieved, but through a relatively mild (short and shallow) recession.

The third scenario is a hard landing, where returning to 2% inflation requires a protracted recession with potentially severe financial instability (such as more bank distress and highly leveraged agents suffering serious debt-servicing difficulties). If the effort to tame inflation triggers severe economic and financial instability, a fourth scenario becomes possible: central banks wimp out and decide to allow for above-target inflation, risking a de-anchoring of inflation expectations and a persistent wage-price spiral.

As matters stand, the eurozone is already in a technical recession, with GDP having fallen in the fourth quarter of 2022 and the first quarter of 2023, and with inflation still well above target (despite its recent decline). The United Kingdom is not yet in a recession, but growth has slowed sharply and inflation remains stubbornly high (above the OECD average). And the United States suffered a sharp slowdown in the first quarter even as core inflation (which excludes food and energy prices) remained high (though it is falling, it remainsabove 5%).

Meanwhile, China’s post-COVID recovery seems to have stalled, calling into question the government’s relatively modest 5% growth target for 2023. And other emerging-market and frontier economies are exhibiting relatively anemic growth relative to their potential (with the exception of India), with many still suffering from very high inflation.

Which of the four scenarios is most likely? Although inflation has fallen in most advanced economies, it has not done so as fast as central banks hoped, partly because labor-market tightness and rapid wage growth have added to the inflationary pressure in labor- intensive services sectors. Moreover, expansionary fiscal policies are still feeding demand and contributing to the persistence of inflation.

Crisis in Cambodian Academics

By Dr. Seun Sam

Many individuals are concerned about the quality of the educational system in Cambodia today. Many obstacles still exist despite government efforts to raise educational standards. The lack of resources is one of the main issues facing the Cambodian educational system. Many educational institutions are underfunded and lack essential resources like textbooks, computers, and classrooms. This makes it challenging for teachers to provide their students with a high-quality education.

The lack of skilled teachers is another problem. There is a significant turnover rate among teachers in Cambodia because they are frequently underpaid and inadequately qualified. Students aren't getting the education they need to succeed in life because there aren't enough skilled teachers teaching them.

In addition, the central government controls a significant amount of the education system in Cambodia. This has led to a lack of adaptation and flexibility in the system, making it challenging to meet the shifting demands of students and society.

Despite these difficulties, the educational system in Cambodia has made some progress. The government has started a number of programs to raise the standard of education, such as raising teacher pay, constructing new schools, and offering scholarships to kids from underprivileged backgrounds.

The educational system in Cambodia is currently in a mixed situation. Although there are many obstacles to overcome, certain encouraging developments offer optimism for the future. It is possible to raise the standard of instruction and provide Cambodian students the resources they need to be successful in life by addressing the root causes of the educational system's problems and putting sensible remedies in place.

The lack of finance for education in Cambodia is yet another significant problem. The government only devotes a small fraction of its budget to education, which leaves colleges and universities with inadequate funding, and the underpaid professors.

A brain drain has also resulted from the lack of academic independence in Cambodia, with many of the nation's top scholars and researchers leaving for better chances elsewhere. This has exacerbated the academic problem in Cambodia by creating a shortage of qualified teachers and researchers.

It is obvious that a variety of intricate and interconnected elements are at play in the academic crisis in Cambodia. The solution to these problems will include a multifaceted strategy that includes governmental reform, improved educational funding, and a dedication to academic freedom and human rights. Only then will the school system in Cambodia be able to reach its full potential and help the nation advance.

Proposed solutions for the crisis

The current academic crisis in Cambodia has raised concerns throughout the academic world. Policymakers, academic institutions, and other stakeholders must pay immediate attention to the crisis and take immediate action. Here are some suggestions for how to deal with the crisis:

1. Increase money: Increasing money for universities and research institutions is one of the most important remedies to the academic crisis in Cambodia. Increased money may contribute to higher-quality infrastructure, research facilities, and educational programs.

2. Encourage Collaboration: Encouraging collaboration between universities and research institutions can help in sharing resources, knowledge, and expertise. Collaboration can help in improving the quality of research and education in the country.

3. Improve Teacher Training: Improving teacher training is critical to improving the quality of education in Cambodia. Providing teachers with the necessary skills, knowledge, and resources can help in improving their teaching effectiveness and student learning outcomes.

4. Enhance Curriculum: Enhancing the curriculum to meet the current needs of the job market can help in improving the employability of graduates. The curriculum should be designed to provide students with the necessary skills and knowledge required to succeed in their future careers.

5. Address Corruption: Addressing corruption in the education system is critical to improving the quality of education in Cambodia. Measures should be taken to ensure that corruption is eliminated and that academic institutions are run transparently and efficiently.

By implementing these proposed solutions, the crisis in Cambodian academics can be addressed, and the academic community can work towards rebuilding the education system for a better future.

Targeted Poverty Alleviation

By Wang Xiaoyi (王晓毅) (edited)

‘How Targeted Poverty Alleviation Has Changed the Structure of Rural Governance in China’ (精准扶贫如何改变乡村治理结构) was originally published in Wenhua Zongheng (文化纵横), issue no. 3 (June 2020).

To fulfil the designated aims of targeted poverty alleviation within the established deadlines, local governments vigorously mobilised human and material resources and implemented exceptional measures.^[1] In many localities, governments employed quasi-military methods to advance targeted poverty alleviation efforts, disrupting many existing conventions. Although campaign-style governance often features extraordinary measures and can yield extraordinary results, some research suggests that this style of governance is difficult to sustain into regular periods of governance. Regardless, campaign-style governance can still have an important impact on conventional governance structures.

This article will examine the impact that targeted poverty alleviation’s campaign-style governance has had and will have on rural governance. First, the article provides an overview of the existing problems in rural governance. Second, the article analyses the extent to which the campaign has changed the existing structure of rural governance. Finally, the article assesses whether the mechanisms of governance adopted under targeted poverty alleviation will be able to adapt to normal conditions after the campaign ends and have a lasting impact on rural governance. This article argues that, due to the success of targeted poverty alleviation in addressing weaknesses in rural governance and achieving its objectives, the campaign has the potential to effect long-term changes through institutionalisation of its practices and methodologies.

The Dilemmas of Rural Governance

Before the implementation of the targeted poverty alleviation strategy, both rural governance and poverty alleviation policies faced serious dilemmas. The repeal of agricultural taxes in 2006 led to the disintegration of rural society, numerous difficulties in the traditional systems of rural governance, and the detachment between the power and resources of community-level governments and their social responsibility.^[2] The distribution of poverty alleviation resources targeted primarily at counties and villages that were designated as poverty-stricken or poor produced awkward dynamics where local governments and village organisations vied for such designations to gain access to resources as well as imbalances in resource allocation, where poor households in undesignated villages were overlooked. As a result, tensions have existed to varying degrees between rural villages and between rural villages and the state.

Rural villages are often thought of as living communities, where rural residents maintain the village through practices based on shared values and reciprocity as well as strong local institutions. In the Chinese sociologist and anthropologist Fei Xiaotong’s (费孝通) conception of rural China and US political scientist and anthropologist James C. Scott’s depiction of the moral economy of the peasant, rural life is represented as largely distanced from the state. However, in reality, China’s villages have not been so distant from the state. While villages have featured characteristics of living communities, they have also existed under the rule of the state. Moreover, as the state’s governance capabilities have improved, it has tended to increasingly govern villages directly. The strength of the state’s rural governance has largely been determined by its ability to administer its rules and authority on the villages.

Small and large communities are often thought of as being in a zero-sum relationship, where state intervention reduces the autonomy of small communities and the autonomy of small communities minimises the state’s influence on villages. However, thus far in the twenty-first century, the relationship has not been so clear in China, as both small and large communities have struggled in rural governance.

As living communities, China’s villages weakened and even disintegrated in the decades following the rural reform initiated in the 1980s. The rural reform had two key elements: the implementation of the household responsibility system (包产到户, bāochǎn dào hù) in agricultural production and the establishment of village committees (村民委员会, cūnmín wěiyuánhuì). The first measure replaced the collective farming system implemented during the land reform process of the 1950s and allowed individual households to contract land and have greater autonomy over their agricultural production, laying the foundation for the market economy in rural areas. Meanwhile, the second measure aimed to rebuild the village community through villagers’ self-governance. However, the success of these two measures diverged significantly. On the one hand, land contracting and household production advanced continuously, with farmers’ individualisation being driven by the market economy and the greater autonomy and social mobility of village members; on the other hand, numerous difficulties were encountered with the village committees. These bodies were created to protect villagers, but amid the disintegration of village communities, village leaders in most areas either stopped serving as village organisers or took advantage of their positions to secure private benefits. The number of village organisations capable of providing leadership decreased significantly and villagers were often unable to hold village officials accountable; meanwhile, village officials also struggled to serve villagers and to effectively implement government policies intended to benefit farmers at the community level.

At the same time that small communities grew weaker, the state’s effectiveness in rural governance also decreased during the three decades following the rural reform, reaching a low point in the early twenty-first century. The repeal of agricultural tax collection in 2006 marked the beginning of the policy of ‘industry nurturing agriculture, cities supporting rural areas’ (工业反哺农业、城市反哺农村, gōngyè fǎnbǔ nóngyè, chéngshì fǎnbǔ nóngcūn), intended to direct more resources from the urban centres into rural areas to both advance their development and infrastructure as well as improve social welfare, through the implementation of various protections, subsidies, and grants for rural communities and individuals. In practice, however, the state struggled to realise these aims. Although transfer payments from the central government to poverty-stricken areas greatly increased and the state improved its provision of social welfare, the state struggled to define clear policy goals and to develop effective mechanisms to allocate resources to target populations. For example, subsidies aimed at encouraging grain production had a limited impact on farmers’ enthusiasm as the central government struggled to define grain-producing farmers and only granted subsidies according to the size of farmers’ contracted land. Similarly, the rural subsistence allowance system, intended to meet the basic living needs of low-income households, encountered several obstacles, including difficulties in collecting data on household income and identifying eligible households, along with corruption, with rural officials providing preferential treatment towards family members and friends and even using the allowance as a bargaining tool against farmers. As a result, the rural subsistence allowance was not efficient in being directed to those most in need. To put it simply, it was difficult for the state to realise its rural development and welfare goals through the existing administrative system.

The allocation of poverty alleviation resources should have been guided by precision and fairness, however, in practice, the allocation was influenced by many other factors. The central government focused on providing support to poverty-stricken areas, issuing special poverty alleviation funding to adjacent poor areas and those counties, villages, and households designated as key poverty-stricken targets. Following the Seven-Year Priority Poverty Alleviation Program, which aimed to lift 80 million people out of absolute poverty from 1994 to 2000, poverty alleviation resources were mainly channelled to the designated key poverty-stricken counties. This produced an adverse consequence, where rural counties competed against each other to be designated as poverty-stricken, a phenomenon referred to in China as ‘fighting to wear the “poverty hat”’ (争戴贫困帽子, zhēng dài pínkùn màozi); a few county governments even celebrated their entry into the list of poverty-stricken counties. Unfortunately, it was often the case that the identification of poverty-stricken counties or villages was not only a matter of low income or lagging development, but was also influenced by pressures from various and, at times, rival interest groups. With various interest groups and parties vying for resources, it was difficult to effectively realise poverty alleviation goals.

After completing its first ten-year plan for poverty alleviation from 2001 to 2010, the approach of the central government shifted, as it raised the poverty line significantly, first in 2010 and then again in 2013, and set a clear timetable to eradicate absolute poverty and complete the building of a moderately prosperous society in all respects by 2020.^[4] Under the new standard, the scope of poverty alleviation expanded greatly as the population considered impoverished increased more than five-fold, from less than 30 million people to 160 million people; the incidence of rural poverty similarly increased from less than 3 percent to over 17 percent; and the number of poverty-stricken counties increased to 832. In addition, the qualitative standard for poverty alleviation was also raised, now aiming for ‘two assurances and three guarantees’ (两不愁三保障, liǎng bù chóu sān bǎozhàng), meaning that, by 2020, the rural poor would be assured adequate food and clothing, and guaranteed access to the public education system, basic medical services, and safe housing, including running water and electricity (some localities also developed specific guarantees based on local conditions, such as a guaranteed supply of safe drinking water in arid areas). To lift such a large number of poor people out of poverty in a short amount of time, the state had to greatly increase the amount of resources that it allocated to the task. From 2015 to 2020, poverty alleviation funding from the central government increased on average by 20 billion yuan (approximately $2.8 billion) per year. More importantly, the types of poverty alleviation funding were diversified, including integrated funds, social funds, and various financial instruments. The total amount of resources invested by the state in poverty alleviation was unprecedented, although it generated new challenges for rural governance. However, realising the poverty alleviation goals was more complex and difficult than simply increasing incomes, and required fundamental changes to the system of rural governance in poor areas.

Rural Governance under Targeted Poverty Alleviation

In 2013, Communist Party of China (CPC) General Secretary Xi Jinping proposed the concept of targeted poverty alleviation. Shortly thereafter, in 2015, he specified that this policy required precision in the following six areas: first, in the identification of the poor, ensuring that the recipients of support were, in fact, those in need; second, in the alignment of projects and aid to the needs of the poor; third, in the provision and use of funding; fourth, in the implementation of measures appropriate for each household; fifth, in the dispatching of party officials to carry out poverty alleviation measures in individual villages; and, sixth, in the evaluations of whether poverty alleviation had met expectations. To ensure that targeted poverty alleviation was successful, a number of fundamental changes had to be made to the existing system of rural governance, including the creation of new system for information collection and analysis that was more transparent for villages and farmers; the establishment of a mechanism for direct governance by the state in villages, with a large number of officials assigned to be directly involved in the daily governance of villages; and the institutionalisation of mechanisms for villagers’ participation in public affairs. These changes have improved the state’s governance and provision of social welfare in rural areas.

The strategy of targeted poverty alleviation depended upon high-quality data collection. Beginning in 2014, detailed investigations were conducted to identify each poor household, their specific causes of poverty, and the specific poverty alleviated measures to implement; the information gathered was used to generate an electronic database with files on each poor household, village, county, and region across the country. Poor households were individually registered in the database and provided with a poverty alleviation handbook, containing a summary of their basic conditions and causes of poverty, their poverty alleviation plan, and the contact information for the official responsible for their household. The central government had previously tried to develop a poverty alleviation registration system, including a trial program in eight provinces in 2005, however, due to limitations in human and material resources as well as the state’s investigative capacity, these efforts were not successful. The large-scale administrative mobilisation under targeted poverty alleviation allowed this task to finally be completed.

The electronic registration system improved China’s poverty alleviation efforts in two ways. First, the more accurate identification of poor households and villages allowed resources to be better directed to the appropriate recipients and measures to be specifically targeted to recipients’ needs. Second, the data collected provided the central government with a more up-to-date picture of conditions at the community-level and, consequently, a better understanding of rural areas, helping its decision-making, formulation of specific policies, and evaluation of poverty alleviation efforts.

Some critics have argued that the digitisation of poverty alleviation governance has detached the process from village life and community-level governance, while others have pointed out that digitisation and technological mechanisms cannot address issues of community-level governance.^[5] In addition, due to the central government’s strong reliance on data in their decision-making, community-level poverty alleviation workers spent a significant amount of time engaged in administrative tasks related to data collection, such as filling in forms, which took away from their actual anti-poverty work and, in some areas, resulted in excessive formalism; this eventually prompted the central government to issue directives to reduce unnecessary data collection.

As targeted poverty alleviation progressed, however, the process of data collection, quality of the data obtained, and implementation of the data into governance all improved. First, by implementing procedural reviews to verify data after its initial collection, the data gradually became more accurate and objective. Second, the dynamic updating of data has also improved information quality. The goal of the registration system was to verify the general statistical estimates of the number of poor households, by conducting investigations on the ground. As targeted poverty alleviation advanced and the number of poor households decreased, the statistical estimates became less reliable, and the importance of precise household-to-household data increased. Since 2017, the poverty registration database has no longer been limited by the general statistical estimates and has been dynamically adjusted based on the findings of on-the-ground investigations. Third, the poverty alleviation registration system laid the foundation for information-based rural governance; going forward, as community-level governments gain further experience in data collection and are able to integrate data from different governmental departments and levels, information will play an increasingly important role in rural governance.

Information-based governance increased public transparency in rural areas, but was not able to improve the effectiveness of targeted poverty alleviation on its own; it was supported by a shift in the priorities of local governments and a greater distribution of resources to the community level. Following the rural reform of the 1980s that spurred China’s rapid economic development, local governments prioritised economic efficiency and focused their resources on rapidly developing sectors; meanwhile, the central government prioritised the development of urban areas and generally focused on the maximisation of Gross Domestic Product (GDP). The targeted poverty alleviation campaign sought to reorient governmental priorities, at both central and local levels, placing the eradication of poverty in poor areas at the top of the agenda. From the top down, local government and CPC leaders were directed to regard poverty alleviation as their principal task, which led to a shift in the aims, resource allocation, and work of local governments and party committees. With poverty alleviation being made the first priority in poor areas, economic development had to serve this end, rather than narrowly pursue growth.

Along with this reprioritisation, the central government increased its distribution of resources to lower levels of government. These resources have not only included funds and supplies, but more importantly, human resources. Greater numbers of personnel have been required to address the weak administrative organisation of poor villages and advance targeted poverty alleviation, as traditional local institutions lacked the capacity both to distribute large amounts of resources to households and villages and to implement the new methods of governance associated with the campaign. Village organisations in poor areas were severely understaffed, often with three officials at most, and thus, were incapable of managing large amounts of resources or administering complex procedures. Related to this, these organisations had a very deficient knowledge base, and were overwhelmed by the influx of new poverty alleviation concepts, methods, and technological processes, such as the large-scale data collection about poor households and the selection of industries and markets to invest in. In addition, most village officials were enmeshed in their community’s social relationships, resulting in biases which undermined objective decision-making; to fairly distribute the large amounts of poverty alleviation resources that poor villages received from the central government, external support was necessary.

To address the shortage of human resources in rural areas, increase the administrative capacity in lower levels, and strengthen rural governance, the CPC dispatched resident work teams (驻村工作队, zhù cūn gōngzuò duì) and first party secretaries (the lead party official in an area) to live in and assist poor villages. Since 2013, more than three million officials from higher levels of government, state-owned enterprises, and other public institutions, have been dispatched as part of 255,000 resident work teams to live in villages for at least two years and work on targeted poverty alleviation.^[6] Some researchers have questioned the impact of resident work teams, contending that they have lacked sufficient understanding of local situations and experience in agricultural production, and also faced resistance from local authorities; however, on the whole, the research indicates that resident work teams have brought more poverty alleviation resources into rural areas and gradually played a steering role in targeted poverty alleviation efforts.^[7]

The dispatching of resident work teams to poor villages under targeted poverty alleviation was a continuation of the existing policy of pairing assistance (对口帮扶, duìkǒu bang fú), under which lower levels of governments support each other. Rather than being tasked with merely providing assistance, the resident work teams were given the responsibility of realising poverty alleviation in their villages, including managing poverty alleviation resources, visiting poor households, carrying out registration and data collection, and implementing anti-poverty measures. Resident work teams were generally required to stay in their assigned village for more than twenty days each month, and therefore, participated in the entire process of poverty alleviation. To address initial difficulties that resident work teams faced in carrying out poverty alleviation governance, in 2015, the CPC began to assign first party secretaries in most poor villages to concurrently serve as the heads of their village’s resident work team. This measure ironed out the institutional difficulty of integrating resident work teams into village decision-making. Improving the social governance of villages became a critical responsibility of first party secretaries, perhaps even more important than their duty to promote the economic development of villages.^[8]

The large-scale movement of personnel to poverty-stricken villages exemplified the campaign-style governance of targeted poverty alleviation. While resident work teams differed in terms of their work, methods, and involvement in village affairs, from a broader, institutional perspective, through this mechanism the state was able to directly influence village-level governance. As such, targeted poverty alleviation did not merely consist of the central government channelling resources to rural areas, but rather was an extension of state power to the village level. From the identification of poor households to the setting of poverty alleviation standards, numerous measures formulated by the state were implemented at the village level.

Alongside greater state involvement in village administration, greater emphasis was also placed on villager participation. In theory, villagers’ self-governance was supposed to be the foundation of rural communities, from the establishment of village committees, elected and supervised by villagers, in the 1980s, to the central government’s promotion of community participation in poverty alleviation in the 1990s. In practice, however, many obstacles impeded the realisation of self-governance. For example, although village governance is based on a system of one person, one vote, political decisions were often intertwined with and influenced by the interests of families, factions, and other powers. Furthermore, due to the deterioration of rural communities as well as the lack of resources and supportive social environment, it was difficult to promote and safeguard democracy within villages. As a result, public participation in poverty alleviation was little more than a formality.

Targeted poverty alleviation strengthened the voices to villagers, especially those from poor households. First, enhanced public transparency and openness improved villagers’ participation, mainly through the identification of poverty-stricken households and the evaluation of poverty alleviation efforts. Designated poor households were given more poverty alleviation resources; although this has provoked disputes among villagers, especially when income differences were not evident, public transparency proved to be an effective remedy to these conflicts. Under targeted poverty alleviation, the confirmation of poor households required a public announcement and was subject to villagers’ approval. Villagers’ satisfaction was also an important factor in the evaluation of poverty alleviation efforts; here, villager participation was not abstract, but had a precise scope and form, encouraging high levels of participation. Second, and more importantly, the strict top-down inspections of poverty alleviation efforts created a channel for villagers’ opinions to reach upper levels of government, promoting accountability through the application of pressure from upper-level officials on lower-level officials (a mechanism of villager participation that differed from traditional models and conceptions). In the period of targeted poverty alleviation, villager participation and centralised authority were mutually reinforcing; the centralised authority strengthened the voice and participation of villagers through the application of pressure on local officials, while villager participation allowed the central government to evaluate local officials and ensure their aims were pursued at the community level.

Ultimately, targeted poverty alleviation established a new mechanism of rural governance in poverty-stricken rural areas, bridging the gap between official policy makers and the subjects of poverty alleviation policies. This mechanism led to the central government being better informed on conditions at the community level and, through top-down pressure, to greater participation for villagers, resulting in governmental policies being more thoroughly translated into grassroots actions and results.

The Potential for Lasting Changes in Rural Governance

The new mechanism of rural governance developed in the process of targeted poverty alleviation, played a crucial role in achieving the eradication of extreme poverty at the end of 2020 and effectively addressed long-standing rural political issues. However, whether these changes can be carried over from the targeted poverty alleviation campaign to conventional periods of governance and have a lasting impact on rural areas, depends on whether this mechanism can adapt to changing circumstances. There are three important factors that indicate that the structural changes in rural governance will endure.

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