<p>This study examines the welfare consequences of cash gift expenditure for the poor in rural China. Based on household panel data from the China Family Panel Studies (CFPS), we find that cash gift expenditure plays a pivotal role in enhancing the welfare of poor households. Specifically, it significantly improves both the income and subjective happiness of the poor. Nevertheless, a noteworthy observation is that excessive cash gift expenditure can adversely affect income growth. Further mechanism analysis unveils that cash gift expenditure contributes to income growth among poor households by promoting non-farm employment, entrepreneurship, and alleviating credit constraints. Additionally, cash gift expenditure is found to boost the subjective happiness of poor households by fostering improvements in social trust and social relations. Overall, these findings provide a new perspective on comprehending the motivations behind the inclination of poor households toward cash gift expenditure.</p>