Regional Public Social Capital and Poverty Reduction in Four Direct-Controlled Municipalities of China, 2011-2016: A Perspective from Comprehensive Wealth Framework

This study identifies physical and social assets developed with local government’s investment that can contribute to facilitating interactions among residents in four direct-controlled municipalities of China; these assets are defined as a part of regional social capital. The public investment in physical and social assets can have both private and social benefits, and residents’ access to the assets is considered a component of comprehensive wealth. Those types of public investment are crucial for China to achieve a harmonious socialist society. With regard to increases in the identified public social capital of a region, this study finds that increases narrow the gap between urban and rural poverty. In particular, the selected indicators for public social capital are related to a group of vulnerable residents who are receiving minimum living allowance, rather than to overall residents. More dense coverage of public community services facilities in urban areas narrowed the gap between urban and rural poverty except in Chongqing. Local bureaucratic rent-seeking and the central-local relation are identified as China-specificity to understand local development processes. Identified negative correlation between regional social capital and the poverty gap can have implications for poverty reduction-related policy, increasing possibilities to decrease societal opportunity costs in the long run. Given a national priority to alleviate inequalities between and within regions and individuals, this study suggests that it is time for China’s government to consider regional social capital to enjoy positive externalities of those types of place-based assets.