The Impacts of COVID‐19 on Migrants, Remittances, and Poverty in China: A Microsimulation Analysis

• Published date: 01 November 2021
• Author: Yumei Zhang,Yue Zhan,Xinshen Diao,Kevin Z. Chen,Sherman Robinson
• Date: 01 November 2021
• DOI: http://doi.org/10.1111/cwe.12392

©2021 Institute of World Economics and Politics, Chinese Academy of Social Sciences

China & World Economy / 4–33, Vol. 29, No. 6, 2021

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*Yumei Zhang, Senior Research Fellow, Institute of Agricultural Economics and Development, Chinese

Academy of Agricultural Sciences, China. Email: zhangyumei@caas.cn; Yue Zhan, Research Analyst,

International Food Policy Research Institute (IFPRI), China. Email: y.zhan@cgiar.org; Xinshen Diao, Senior

Research Fellow, IFPRI, USA. Email: x.diao@cgiar.org; Kevin Z. Chen (corresponding author), Professor, China

Academy for Rural Development, Zhejiang University, China; International Food Policy Research Institute

(IFPRI), USA. Email: kzchen@zju.edu.cn; Sherman Robinson, Research Fellow Emeritus, IFPRI, USA. Email:

s.robinson@cgiar.org. The authors acknowledge supports from the National Natural Science Foundation of China

(No. 71761147004), the Agricultural Science and Technology Innovation Program (No. 2021-RY-01); Zhejiang

University-IFPRI Center for International Development Studies; and the Consultative Group on International

Agricultural Research (CGIAR) Program on Policies, Institutions, and Markets (PIM) led by IFPRI.

The Impacts of COVID-19 on Migrants, Remittances,

and Poverty in China: A Microsimulation Analysis

Yumei Zhang, Yue Zhan, Xinshen Diao, Kevin Z. Chen, Sherman Robinson*

Abstract

Chinese migrant workers are very exposed to the shocks caused by the COVID-19

pandemic. Falling remittances adversely affect their families who rely on remittance

incomes. The impacts of COVID-19 on migrants and remittance-receiving households are

assessed using a nationally representative household dataset and a microsimulation model.

We found about 70 percent of migrant workers lost part of their wage income during the

pandemic lockdown period and rural migrants working in small and medium enterprises

were affected the most. This led to about 50 percent of remittance-receiving households

being affected adversely by falling remittances, and the average decline in such income

was more than 45 percent. Nearly 13 percent of pre-pandemic nonpoor remittance-

receiving households could fall into poverty, raising the poverty rate among remittance-

receiving households by 4 percentage points. Many households that were poor prior to the

pandemic became more impoverished. The results indicate that social protection programs

targeting vulnerable migrants and their families at home are important.

Keywords: China, COVID-19, microsimulation, migrants and remittances, poverty

JEL Codes: O15, O53, P25

I. Introduction

The COVID-19 pandemic has had an unprecedented impact on many countries’

economies, businesses, households, and livelihoods, and China was the fi rst country

©2021 Institute of World Economics and Politics, Chinese Academy of Social Sciences

Impacts of COVID-19 on Migrants, Remittances, and Poverty 5

affected by the pandemic. Chinese state and local governments adopted a series of

stringent policies to contain the spread of the virus, including a mandatory lockdown

in late January 2020, the suspension of public transport nationwide, and travel

restrictions, particularly in cities. Many factories were shut down, nonessential

businesses were closed in most cities, and market activities were restricted in rural

areas. These policies successfully contained the spread of the virus (Tian et al., 2020),

but the closure of businesses and restrictions on the mobility of people and goods

largely shut down much of the Chinese economy in late January and February 2020.

China’s GDP dropped sharply, by 6.8 percent in the fi rst quarter of 2020 compared

with the same period of 2019 (NBS, 2020a). Many industries, including construction,

manufacturing, trade, transportation, and hotel and catering services, were more

negatively impacted. Starting in early March 2020, with the spread of COVID-19

largely under control, China gradually reopened the economy. The GDP grew by

3.2 percent, 4.9 percent, and 6.5 percent in the second, third, and fourth quarters of

2020, respectively, and the annual GDP growth rate was 2.3 percent in 2020 (NBS,

2021a). China’s economy continued a steady recovery in the fi rst six months of 2021,

with a year-on-year increase of 12.7 percent in this period using constant prices, with

a two-year average growth rate of 5.3 percent (NBS, 2021b).

The disruption to economic activity in the early months of 2020 affected

household incomes but on a smaller scale than its effect on GDP, given that

employees in the public sector and large state-owned enterprises continued to be

paid during the lockdown. According to the NBS, The average per capita disposable

income fell by 3.9 percent nationwide in the first quarter of 2020 (NBS, 2020a).

The recovery in the growth in residents’ income correlated with the broad economic

recovery from the second quarter of 2020, and per capita disposable income grew

at 2.1 percent annually in 2020. Urban residents’ per capita disposable income grew

more slowly than that of rural residents in 2020, with annual real growth rates of

1.2 percent in urban areas and 3.8 percent in rural areas, respectively. This was

mainly because rural households’ business income increased in 2020, while it fell

among urban households (NBS, 2021c). In the first six months of 2021, Chinese

residents’ per capita disposable income increased by 12.6 percent compared with

that in 2019, and the average 2-year growth in 2020 and 2021 was 5.2 percent in

this period (NBS, 2021b). However, these averages do not refl ect the heterogeneous

impact of the economic lockdown on individual households, and income losses for

the households working in non-public sector, and non-state-owned enterprises can be

much larger than the national average.