How China is coping with the financial crisis and the economic slowdown that comes on its heel is a major talking point these days. Radio86 interviewed David Dole, senior economist for the Asian Development Bank office in Beijing.

In the second part of our interview, he discusses the impact the economic slowdown would have on migrant workers and other sectors of society.

Radio86: When times are hard, people don't want to spend yet the government is saying that the way to get through this crisis is to spend. How do you reconcile that?

Dole: I agree that there are some barriers to boosting the economy through consumption. But I think the difference is that in the short-term, China can use an economic boost and can do that through, as it's planning to do, by raising investment spending. Shifting more to consumption is also important although that is more of a long-term economic re-balancing. I think China can raise consumption spending but I don't see that as really the solution to the current problem of how to boost current economic activity.

What do you think the solution would be?

In the short-term, I think what the government is doing now is pretty good, but again we don't know too much of the details of the stimulus package except that it's focused on investment and on spending on public services, such as transport, education and health.

Who will be most affected by this economic slowdown? You already mentioned that the hardest-hit will be those who have lower income.

We think that the impact on the Chinese economy is going to come first through exporters and that workers in manufacturing firms that are exporting will be affected. We've seen plenty of stories about the thousands of smaller firms that have closed in the southeastern part of the country with many of the workers, who have not been paid, protesting outside the gates of the factory. These hordes of workers are going back early to their provinces for the Spring Festival. It looks like they're going to see the first and probably the highest impact.

Most of those workers are migrants, like you said. How would it affect the provinces they come from?

For the migrants who go back to their home provinces, I think maybe it's good news that Spring Festival comes early this year. They were going home anyway, so now they're going home earlier, although with less money and probably with uncertain prospects about where they will go next. Of course they'll go back to work in urban areas. Probably they'll end up staying longer in their home provinces. You can imagine the good things and the bad things about that. Many of these people have been separated the past year year or even longer from their families, so there is that side benefit.

Do you think these migrants will seriously stress the structure in the poor areas? Much has been said about income disparity and the development gap between the urban and the poor areas of China. How serious is the gap?

There is a large disparity between average incomes in urban areas and rural areas. Not just urban-rural but also across the country, there are big disparities in average incomes between the east and the west and the central provinces. I think that's also a problem of these relative comparisons rather than absolutes. Average incomes in the rural areas have been growing strong – at around 6 percent a year, which is very good. The problem, though, of course is 6 percent is not as good as the income growth in urban areas. While rural areas in China have indeed been benefiting from economic growth, and have really had very good, very impressive economic growth, it's just that the urban areas have been growing so much faster.

China has made a lot of headway with poverty reduction. Will the economic slowdown affect its Ten-Year Poverty Reduction Plan?

There are two sides to China's poverty reduction. That is, reducing poverty through urban migration, people finding better jobs in urban areas and in helping the poor people that stay in rural areas. You can see how the slowdown will affect poverty reduction in China. Because of the slowdown, we're going to see more people going back earlier to rural areas. There's going to be this reverse urban migration and that then is going to affect what has been the biggest contributor to China's poverty reduction. How soon those people be able to migrate back to urban areas, find good jobs, I can't really say right now. But you can see that puts a big question mark over China's richer potential to continue reducing poverty.

For helping the poor in rural areas, of course, they may also be affected by the economic slowdown so the Chinese government needs to continue raising funding and improving services to help the poor that stay in rural areas. Those are the people in geographically-disadvantaged rural areas, some ethnic minorities, and also the aged and people with poor health. As long as services for those people can continue to be financed and to improve, then at least there's a way to stop them from falling further into poverty and to help people who maybe are not poor now, but could fall back into poverty because of the slowdown.