China has experienced unprecedented economic growth for more than three decades now and this is presumably attributed to the reforms and openness started in 1978 by Deng Xiaoping. However, in recent times some issues have been raised by policymakers on whether the economic growth has contributed to poverty alleviation or not. This paper therefore examines how economic growth and farmer entrepreneurial activities influence rural poverty in China using national and rural household survey data. Based on capability approach and structural equation modeling, the paper identifies socio-culture, education and economic capabilities of farm entrepreneurs as key influencing factors on rural poverty. The results showed that socio-cultural capabilities (democratic decision-making, social ties, open expression of ideas) by farmers exerted greater influence on rural poverty than education (access to education, improved school conditions, higher education level) and economic (higher earnings, access to market, technology and management information) capabilities. This finding is based on the social and cultural embeddedness of Chinese business relations. We suggest government promotes inclusive and pro-poor growth in rural areas by empowering the poorest to participate in farmer entrepreneurship to alleviate rural poverty than relying merely on economic growth as a panacea.
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