Sichuan Poverty Alleviation Incentive Scheme

The chapter examines how the challenges of a welfare-dependent mindset in Sichuan were addressed through a multi-layered approach. The Sichuan Poverty Alleviation Incentive Scheme aimed to replace unconditional government subsidies with conditional cash rewards to incentivize excellent performance in production, increased labor income, and adherence to proper social etiquette. It was expanded to involve business entities in creating job opportunities for villagers, offering job matching and job-specific training services to enhance rural productivity. Additionally, the scheme was integrated with the Key Performance Indicators of government officials’ work to promote incentives for improved governance. In the chapter, this scheme was compared to the Earned Income Tax Credit program in the United States, which provides incentives to low-income households to increase their earnings. Furthermore, the chapter discusses a case study on grassroots governance in Shanxi Province.