Fighting poverty by building competitive industries is the key to development-based poverty alleviation. Hunan is blazing a new trail in its war against poverty with a project themed “Four Follows”. The principle behind the project is that “capital follows the poor, the poor follow the capable, the capable follow projects, and projects follow the market”. This strategy has been designated as a role model by the State Council Leading Group Office of Poverty Alleviation and Development.

In 2016, Hunan Province promoted the strategy of “Four Follows” by investing 500 million yuan (U.S. $73 million) of public finance in 86 key projects, thereby providing direct assistance to 200,000 poor people engaged in production activities. At the same time, 9.35 billion yuan (U.S. $1.4 billion) of microcredit was issued to help 230,000 poor households develop industries. Meanwhile, 30 counties in Hunan have attracted an investment of 400 million yuan (U.S. $58 million) through rural tourism, benefiting more than 60,000 poor people.

More than 60 percent of poverty alleviation funds are applied to industrial development

Shi Zhengmao is a farmer from Shuanglong Village, Shuanglong Town, Huayuan County. He succeeded in leading his family out of poverty last year with an average per capita net income of 3,400 yuan (U.S. $494). In the past, Mr. Shi often struggled to sell his watermelons and vegetables at a fair price. Now, Huatian Group approaches villagers with direct orders, and Mr. Shi’s products can reach the tables of high-end hotels at a much higher price. He said that he planned to grow more this year.

In order to root out stubborn pockets of poverty, Hunan Province has changed the past practice of giving cash and material assistance to the poor. Instead, it now dedicates more than 60 percent of poverty alleviation funds to industrial development, more than 70 percent of which is used to help rural labor improve its means of production. Each year, the government allocates 2,000 yuan (U.S. $290) to every documented poor, to encourage precisely directed poverty alleviation.

A lot of poor farmers like Shi Zhengmao have started increasing investment, improving skills and exploring more sales channels with the support of poverty alleviation policies; special farming activities and animal husbandry like organic vegetables, rice-field fish, hard-bone pigs and kiwi fruits are flourishing all over Hunan.

Meanwhile, Hunan Provincial Poverty Alleviation and Development Office has come up with measures to encourage organizations involved in poverty alleviation. The organizations are closely linked with poor households to help them achieve stable and long-term income growth. Poverty alleviation departments and organizations have signed trilateral contracts with poor households to protect the lawful rights of the poor, by specifying rights and obligations, and setting up rights protection mechanisms.

In Huayuan County alone, 142 poor villages have attracted 22 enterprises, set up 359 cooperatives and developed 648 projects, creating 36,000 jobs for impoverished villagers that show every sign of being successful.

According to the plan, Hunan Province will invest 500 million yuan (U.S. $73 million) from poverty alleviation funds and consolidate another 10 billion yuan (U.S. $1.45 billion) to launch more than 300 key projects at provincial, municipal and county level which can directly increase the incomes of more than one million poor people.

More than 85 percent of poor households are eligible for microcredit

One major barrier preventing poor households from developing production activities is lack of funding, and they have nothing to mortgage to secure loans. Now this barrier has been overcome in Hunan Province.

Staff at the provincial poverty alleviation and development office said that Hunan has set up a credit rating system for registered poor households. The new system has replaced eight indices revolving around family assets with three indices on creditworthiness, labor force and family income. These divide the poor into four categories, making sure more than 85 percent of them can obtain a microcredit ranging from 10,000 yuan (U.S. $1,453) to 50,000 yuan (U.S. $7,267). Impoverished households can obtain mortgage-free microcredits as long as they pass the credit evaluation. Loans are based on benchmark interest rates with interest subsidies shouldered by the government budget.

Microcredit issued in Hunan Province increased by 9.35 billion yuan (U.S. $1.36 billion) in 2016, benefiting 230,000 poor households.

Long Xianlan is a single man in Shibadong Village of Huayuan County. He obtained a microcredit of 50,000 yuan (U.S. $7,267) last year. He described this “huge amount of money” as 15 times the value of his total assets. He invested the loan in a bee-keeping business and earned 30,000 yuan (U.S. $4,360) that same year. This not only helped him get rid of poverty but also helped him find a partner.

But none of this can be achieved without risk. In order to guard against this, Hunan has set up microcredit risk compensation fund of no less than 3 million yuan (U.S. $436,046) in each county.

The provincial government has proposed another 6 billion yuan (U.S. $872 million) for microcredit this year so that more poverty alleviation projects can get access to targeted financial assistance.

Help favored locations to cash on their beautiful scenery in a “green” way

Many impoverished areas in Hunan are extremely beautiful, yet shockingly poor. Fenghuang County is a typical example.

It is encouraging to see that about 9,000 documented poor households escaped from poverty last year through the development of tourism. For years people have taken for granted the green mountains and waters, as well as the customs of the Miao ethnic minority that date back thousands of years. These have now become a generator of significant revenues.

Fenghuang County makes use of poverty alleviation funds to lever social investments. It has invested heavily in protecting traditional architecture, and building and renovating public service infrastructure for tourism. Last year, 523 traditional homes were placed under protection. Some ancient villages like Laodong and Feishuigu have become popular scenic spots. 

Local government also provides poor households with collective and one-on-one training sessions. Talented individuals are identified through these programs so that they can offer assistance to other households.

Yan Changwen, the party chief of Fenghuang County, said that poor households eligible for poverty alleviation support can become shareholders in a tourism company by investing their own traditional homes, that some poor people can improve their earnings by working for the scenic spots, hotels and craft industries, and that some others have escaped from poverty by selling Miao embroidery and special agriculture products. “Some families can benefit from more than one of these opportunities, which does not merely help them escape from poverty, but actually leads their way to prosperity.” 

Following the example of Fenghuan, 30 other counties in Hunan promoted poverty alleviation through tourism last year. Several beautiful villages that were not known in the past, such as Wuling Mountain and Luoxiao Mountain, have now become valuable assets in reducing poverty. 

According to the provincial poverty alleviation and development office, Hunan will develop 13 high quality tourist routes and set up a coordinated group of tourism demonstration counties and villages, so that more regions can take advantage of this trend and eradicate poverty altogether.

The article was translated by Liu Xinqing and its original unabridged version was published in Chinese.