According to that article,

In a little-noticed mid-summer announcement, the Asian Development Bank presented official survey results indicating China's economy is smaller and poorer than established estimates say. The announcement cited the first authoritative measure of China's size using purchasing power parity methods. The results tell us that when the World Bank announces its expected PPP data revisions later this year, China's economy will turn out to be 40 per cent smaller than previously stated.

This more accurate picture of China clarifies why Beijing concentrates so heavily on domestic priorities such as growth, public investment, pollution control and poverty reduction. The number of people in China living below the World Bank's dollar-a-day poverty line is 300m - three times larger than currently estimated.

However, according to David Dollar, World Bank director of Development Policy, the conclusion in that last sentence is wrong:

The new PPPs reveal that prices are about 40 percent higher than had been assumed under the old PPP, which was an academic guestimate.  Some researchers immediately applied the new PPP conversion factor for GDP to household data and came up with hugely higher estimates of the $1 per day poverty rate for China.  However, the World Bank does not use the GDP conversion factor in measuring poverty.  The research department of the bank will produce a conversion factor for poverty analysis that takes account of two important things:

    (1) the basket actually consumed by the poor is different from the GDP basket; and

    (2) the poor almost exclusively live in rural areas where prices are lower.

This work is still underway but the research department has given us a range for their new estimates.  Their old estimate of $1 per day poverty rate was 10% in 2004; the new estimate will be in the range of 13-17%.

[Bold in the original, italics mine]

New PPPs reveal China has had more poverty reduction than we thought

In other words, the  dollar-a-day poverty line is not 300 million, as claimed in the FT article, but 170-220 million.

Moreover, according to Dollar, the new PPP figures mean that there has been more poverty reduction than previously thought:

The reason for this is that the better price data will also be applied to earlier estimates of poverty (all of which are based on constant Chinese yuan data).  The World Bank estimate of $1 per day poverty in China at the beginning of reform will be raised to somewhere in the range of 71-77%.  The old estimate was 64%.  So, we used to think that 54% of China's huge population had been lifted out of poverty during economic reform.  The improved estimate will be around 59%.

[italics mine]

Finally, some of David Dollar's comments from his travels in Gansu province, China's second poorest:

• Traveling around rural areas, one can see that China is still a relatively poor country, with the second largest number of $1 per day poor after India.  At the same time, there has been tremendous progress.  At the beginning of reform, we now know that China was substantially poorer than Sub-Saharan Africa.

• It is natural to be struck by the glaring disparity between rural Gansu and coastal cities such as Shanghai, with their skyscrapers and neon. But when I travel I always like to ask people, in my mediocre Chinese, how their lives have changed in the past decade. It is hard to find anyone whose life is not far better than before.

• In a village close to Lanzhou airport we met Dongxiang people who had voluntarily resettled out of their poor county to irrigated land in the Hexi corridor. <...> I asked the old man if he ever regretted moving. Without two seconds hesitation, he said: "Not once. The old village had poor transportation, no school, poor crops. Now we have good transportation, school for the kids, more income."

• My casual impressions of Gansu accord with the improved poverty estimates - which show still significant poverty but huge progress since the beginning of reform.

[italics mine]