China's progress in povertyreduction over the last 25 years is enviable. One cannotfail to be impressed by what this vast nation of 1.3 billionpeople has achieved in so little time. In terms of a widerange of indicators, the progress has been remarkable.Poverty in terms of income and consumption has beendramatically reduced. Progress has also been substantial interms of human development indicators. Most of themillennium development goals have either already beenachieved or the country is well on the way to achievingthem. As a result of this progress, the country is now at avery different stage of development than it was at the dawnof the economic reforms at the beginning of the 1980s.China's poverty reduction performance has been evenmore striking. Between 1981 and 2004, the fraction of thepopulation consuming below this poverty line fell from 65percent to 10 percent, and the absolute number of poor fellfrom 652 million to 135 million, a decline of over half abillion people. The most rapid declines in poverty, in boththe poverty rate and the number of poor, occurred during the6th, 8th, and 10th plans. During the 7th plan period thenumber of poor actually rose, while in the 9th plan period,the poverty rate declined only marginally. But the pace ofpoverty reduction resumed between 2001 and 2004 and thereare indications that during the first couple of years of the11th plan poverty has continued to decline rapidly. The mostrecent official estimate of rural poverty in China for 2007puts the number of poor at 14.79 million, or less than 2percent of the rural population. While there is no officialurban poverty line, estimates by others have found povertylevels in urban areas to be negligible using an urbanpoverty line that is comparable to the official poverty linefor rural areas. These estimates thus suggest that onlyabout 1 percent of China's population is currently inextreme poverty. Notwithstanding this tremendous success,the central thesis of this report is that the task ofpoverty reduction in many ways continues and in somerespects has become more demanding.