China has made remarkable success in poverty reduction despite challenges ahead, according to a report released by the World Bank recently.

In a new paper, "The developing world is poorer than we thought but no less successful in the fight against poverty," the Bank revised estimates of poverty since 1981, finding that 1.4 billion people in the developing world were living on below 1.25 U.S. dollars a day in 2005, down from 1.9 billion in 1981.

In China, the number of people living on less than 1.25 dollars a day in 2005 prices has dropped from 835 million in 1981 to 207 million in 2005.

The World Bank's earlier 2004 estimate had 130 million people in China living on below 1 dollar a day based on the 1993 consumption purchasing power parity (PPP). Thus, the new calculations reveal more poor people than assumed earlier, "but China's remarkable success in reducing poverty still stands," said the report.

The new estimates, which reflect improvements in internationally comparable price data, offer a much more accurate picture of the cost of living in developing countries and set a new poverty line of 1.25 dollars a day.

They are based on the results of the 2005 International Comparison Program (ICP), released earlier this year.

Martin Ravallion, director of the World Bank's Development Research Group, hailed China's progress in reducing poverty.

"China's been enormously successful against poverty," he said. "I don't think we've ever seen anything in human history that's comparable."

"In our numbers it's quite striking, we estimate that 84 percent of the population of China was living on below 1.25 dollars a day in 1981," he said.

"If you'd have gone to China at that time or maybe in the late 1970s, you would have been in one of the poorest countries, particularly in rural areas, in the world. There's no question," he noted.

China's success against absolute poverty "has clearly played a major role in this overall progress," said his report, noting "the developing world outside China is not on track to reaching the Millennium Development Goals for poverty reduction."

The overall numbers of poor people outside China have remained fairly flat, with about 1.2 billion people living below that 1.25-dollar marker outside China. Within China, the number has fallen by 600 million over that time period.

But Ravallion also warned that China is "poorer than we thought," for there are still about 16 percent of the population living below poverty line now in China.

Justin Lin, chief economist and senior vice president for Development Economics at the World Bank, explained that there were many distortion in the economic sectors, which slowed China's efforts of poverty reduction.

"My advice to the Chinese government, my government back home, is to continue the market-oriented reform, and to make the economic growth more sustainable," said Lin, a former university professor and the first chief economist of the World Bank from a developing country.