China Announces One-Time Cash Allowance for Extreme Poverty on 75th Anniversary of New China

In a strategic move to coincide with the upcoming 75th anniversary of the founding of New China, the Chinese government has unveiled a plan to extend a one-time cash allowance to individuals facing extreme poverty, as reported on Wednesday by China's Ministry of Civil Affairs.

Timing and Purpose of the Cash Handout

The announcement comes just a day after the central bank of China initiated a series of stimulus measures aimed at bolstering the economy. The cash handout is intended to provide support to the "extremely poor people, orphans, and other needy individuals" within the nation. This initiative aims to reflect the government's commitment to assist those in dire circumstances, as emphasized in the Ministry's statement.

Furthermore, the government has designated the period leading up to China's National Day on October 1 as the timeframe for distributing these subsidies. The intention is to swiftly convey the Party and government's care and concern for the vulnerable segments of society, as articulated in the report. However, specific details regarding the size of the allowance and other pertinent information have not been disclosed.

Focus on Common Prosperity

Shaun Rein, the founder of China Market Research Group, highlighted President Xi Jinping and the Communist Party of China (CPC) as being resolutely dedicated to providing assistance to low- and middle-income individuals through the common prosperity initiative. This concept, initially introduced by Mao Zedong in the 1950s and reintroduced by the government in 2021, aims to promote moderate wealth distribution for all citizens.

Welfare Coverage and Social Security

As of the previous November, approximately 40.4 million individuals in China were beneficiaries of subsistence allowances. On average, urban residents received an allowance of about 779 yuan ($110.80) per month, while those in rural areas received 615 yuan per person. Additionally, China's Vice Minister of Human Resources and Social Security claimed that the country has established the world's largest social security network, with enrollment figures reaching 1.07 billion for basic old-age insurance, 245 million for unemployment insurance, and 301 million for work-related injury insurance.

Unprecedented Timing for Cash Handouts

While Chinese President Xi Jinping advocates for common prosperity, the implementation of one-time cash handouts within a short timeframe is a notable departure from conventional practices. Even during the Covid pandemic, the Chinese government refrained from distributing cash subsidies to households and enterprises, in contrast to the approaches taken by other nations such as the United States and various European countries, as highlighted by Huang Yiping, a key member of the Chinese central bank.

Addressing Economic Challenges

The announcement of the cash allowances comes in the wake of a series of unimpressive economic indicators, which have prompted a shift in consumer behavior towards saving rather than spending. This trend has contributed to lackluster consumption and retail sales figures, underscoring the need for targeted interventions to stimulate economic activity.