Rural

Approaching the mountains from the Chengdu plain along the main road to Beichuan County, red banners with large white characters expressing support for the earthquake victims and thanks to the rescuers, are strung across the road, as if creating an arbor for all to pass through.  Driving up this road doesn’t feel safe, even now, six weeks after the quake.  The steep slopes of the mountains on both sides of our vehicle loom above us.  Huge boulders are scattered everywhere on the mountain sides, landslides are all around, and I cannot stop thinking about the description given by a group of tourists of the moment the quake struck: “the mountains exploded as if hit by a megaton bomb”. 

In Qingshen village, with some of the grandparents taking care of left-behind children and the NGO members who help them out.

One of the heart-breaking stories that I read in the aftermath of the Sichuan earthquake was of a grandfather who rushed to the village school only to find that its three stories had collapsed.  After tugging futilely at the giant concrete slabs for a while he realized that his grandchild and all the classmates were lost.  A careful reader looking through similar stories of personal loss would have realized that often it was a grandparent who rushed to the school.  The reason for this is that in rural Sichuan, as in much of rural China, there are many households in which both parents have gone as migrant laborers to the coast leaving children in the care of grandparents. These kids are known in Chinese as “left-behind children.”

In the Bank's recent China macro quarterly we included an appendix on the implications of the new PPP estimates for poverty analysis in China (PPP or Purchasing Power Parity).  Perhaps because it was an appendix it did not receive much attention. 

The new PPPs reveal that prices are about 40 percent higher than had been assumed under the old PPP, which was an academic guestimate.  Some researchers immediately applied the new PPP conversion factor for GDP to household data and came up with hugely higher estimates of the $1 per day poverty rate for China.  However, the World Bank does not use the GDP conversion factor in measuring poverty.  The research department of the bank will produce a conversion factor for poverty analysis that takes account of two important things:

(1) the basket actually consumed by the poor is different from the GDP basket; and

(2) the poor almost exclusively live in rural areas where prices are lower.