China has invested intensively in public infrastructure during the last 20 years. In the
transportation sector, such investment has provided access to markets, facilitated domestic market
integration, lowered costs of production and transportation, and allowed China to compete both
domestically and internationally. Besides contributing to growth, this investment has directly
helped reduce poverty by increasing access to services and economic opportunities.
Targeted infrastructure spending also has been part of national poverty-alleviation
programs. Since the 1990sóand especially since the tenth five-year plan, with its proactive fiscal
policy to spur economic growth and reduce poverty through better transportationóthe Chinese
governmentís investment in transportation infrastructure has increased sharply. Great progress has
been made in raising both the quantity and the quality of rural highways. Almost all areas in China
can accommodate highways, which means that highways are more accessible than other transport
modalities and thus play an important role in economic development and poverty reduction in rural
areas.
In 1984, the Chinese government began to construct irrigation, water conservation
projects, and county and township highways through the Food-for-Work program. The
Food-for-Work Program supplies necessary infrastructure in poor areas and short-term jobs for
poor populations. The central government provides food, cotton, and industrial products at no cost.
Those products are used to pay rural highway workers. Local governments are required to provide
matching funds to pay for materials and equipment.
During the 8-7 National Poverty Reduction Program (which aimed to lift 80 million people
out of poverty in the seven years from 1994 to 2000), the Chinese government spent 0.92 billion
yuan every year building rural highways in 529 poor counties in 21 provinces. During the plan
period, 42,000 kilometers of new rural highways were built each year, and the quality of rural
highways improved greatly. In 1998, the Chinese government decided to accelerate construction of
infrastructure further, and one of its priorities was county and township highway networks. By the
end of 2002, the extent of county and township highways was 1.065 million kilometersó244,000
kilometers more than in 1995.
In 2002, China began to implement a highway construction program to reach counties in
the western areas. The new program, an important part of the Chinese governmentís campaign to
improve transportation and promote economic development in the west, covers 17 provinces and INFRASTRUCTURE, GROWTH, AND POVERTY REDUCTION IN CHINA
3
252 construction projects that will result in 26,098 kilometers of roads. The total investment is
projected to reach 31 billion yuanó16.7 billion invested by the central government and 14.3 billion
by local governments.