2. 1949–1978: Social System Reform and Relief-Oriented Poverty Alleviation

After the founding of the People's Republic of China, the CPC first led the Chinese people to implement a great land reform, and then carried out socialist transformation of agriculture, handicrafts and the capitalist industry and commerce, thus advancing large-scale socialist construction. The establishment of the socialist system and the national economic development provide the most basic institutional and material guarantees for fundamentally solving the poverty problem in China.

The land reform after the founding of the People's Republic of China allocated about 46.67 million hectares of land to 300 million landless farmers or farmers with just a little land, besides exempting the rent of more than 30 million tons of grains that the farmers were supposed to give the landlords every year before the land reform. The feudal land ownership lasting for more than two thousand years was abolished, and the ideal of "Land-to-the-Tiller" was turned into a reality. Chinese farmers finally took the first step of raising themselves out of poverty. The establishment of the Chinese socialist system first eliminated poverty caused by the unequal fabric of society. The socialist system freed the people from outmoded production relations, fundamentally achieving equality among people. Both poor farmers and exploited workers were builders of the new social system entitled to equal rights. After the establishment of the socialist system, China relatively lagged behind in national economic development and the overall material living standards of the people were still low, but the gap between rich and poor at this stage, however, was extremely narrow. Secondly, the establishment of the Chinese socialist system laid the institutional foundation for poverty elimination. Through large-scale infrastructure construction, China managed to establish rural supply & marketing and credit cooperation systems, thus forming a basic social security system based on the "five guarantees" system and relief for destitute groups. For the first time, the People's Republic of China succeeded in alleviating rural poverty across China.

However, due to factors like flimsy foundations, as of the launch of reform and opening up in 1978, 250 million poor people in rural areas still had no visible means of subsistence according to the poverty standards of the Chinese government, with the incidence of poverty standing at over 30%. It was still an arduous task to carry out poverty elimination measures.