Defining asset poverty as insufficiency of assets to satisfy household basic needs for a limited period of time, the study examines asset poverty rates in urban China using the 2002 survey data from the Chinese Household Income Project (CHIP). We find that asset poverty rates in urban China are lower than those of developed countries, in part due to Chinese households’ strong commitment to precautionary savings and the low poverty standards. However, the liquid asset poverty rate is five times that of the income poverty rate in urban China. Notably, the asset-poverty-gap ratio shows that most households in asset poverty have zero liquid assets or negative net worth. Given the increasingly common trend for lower-income individuals to experience transient poverty and income uncertainty, asset building ought to be an integral part of the anti-poverty agenda to protect the poor from economic hardship and provide them with opportunities for economic growth.
Project: China: Inclusive Asset-Based Policy