China's rural poverty line and the determinants of rural poverty

Purpose - The purpose of this paper is to yield more plausible rural poverty lines for China and then assess the determinants of rural poverty using these newly revised rural poverty lines. Design/methodology/approach - In this paper it is argued that the Chinese official poverty line substantially misestimates the actual rural poverty situations. The poverty lines are derived with Ravallion's method with a rural household survey data of China's two provinces, Hubei, and Inner Mongolia. Poverty determinants using the derived as well as the other rural poverty lines are compared. Findings - The results indicate that the poverty lines derived from a pan‐country level food bundle cannot fully reflect the regional poverty situation. Merely adjusting rural poverty lines at the country‐level consumer price index without fully considering changes in the structure of food consumption and food prices with respect to different regions may also lead to wrong poverty estimates. The comparisons between the model regression results using the newly derived poverty lines with the alternative rural poverty lines suggest that the current literature uses the World Bank or the Chinese official rural poverty lines to assess how the rural poverty determinants might yield implausible policy implications. Practical implications - China needs to adjust the rural poverty lines with full consideration to the structure of food consumption and food prices with respect to different regions. Originality/value - It is indicated that the Chinese official poverty line substantially misestimates the actual rural poverty situations in China and this in turn affects the associated policy implications.