The Politics of Financing Education in China

T. Lin

• Publisher: Palgrave Macmillan
• Year: 2013
• ISBN:
  9781137009166
• Topic: Politik & Internationale Beziehungen
• Subtopic: Öffentliche Ordnung

Tingjin Lin explores the conflict between self-interest and the provision of equality of opportunity facing educators in China. Provincial leaders prove reluctant to equalize education when doing so means sacrificing their future promotion.

1

Introduction

1.1 Financing compulsory education in China

China’s education, like its economy and society, is moving forward but facing challenges. It has achieved spectacular progress since the foundation of the People’s Republic of China (PRC), even though it had suffered tremendous losses before the reform era. Since 1978, the education policy has shifted gear from being mainly politically oriented to meeting the goal of the modernization of the country. In 1949, 80 per cent of the Chinese population was illiterate or half-illiterate; the total school enrollment accounted for only 4.76 per cent of the population. Out of every 100,000 people, there were only 22 college graduates, 230 middle school graduates and 4500 elementary school graduates. Yet the 2005 population survey showed a totally different picture: out of every 100,000 people, there were 5173 college graduates, 47,477 middle school graduates and 31,131 elementary school graduates.¹ In 2002, the Chinese government declared that it had accomplished the national goal of popularizing nine years of compulsory education “on the whole” by 2000.² This is indeed an amazing achievement for a country with a GDP per capita of less than 1000 US dollars.

However, the problems of compulsory education, most particularly the financial difficulties in the poor and rural areas and the widening disparities in per student spending across counties and provinces, are as apparent as the accomplishment. Ironically, in 2003, three years after the accomplishment was declared by the central government or the center, only 12 out of the 31 mainland provinces claimed to have universalized compulsory education “on the whole”. Children left out of school were concentrated mostly in rural areas and western provinces, where both educational and economic development lags behind the national average.³ This systemic inadequacy of public education is usually associated with equity problems, because the government has to decide who will be educated in the face of resource inadequacy.

1.1.1 Intra-provincial and inter-provincial disparities

The problem of unevenly financed compulsory education has attracted a lot of attention since the 1990s.⁴ Studies have tried to quantify the degree of inequality in per student spending or the distribution of resources for education, and some have linked the disparities in revenue and educational spending.⁵ Substantial disparities in per student spending across regions and areas were found in all these studies. Jiang compared per student expenditure among counties within the survey data of Jiangsu and Guizhou,⁶ while Ma analyzed the absolute differences of educational expenditure at county level and even township level.⁷ Some discussed the disparities of per student expenditure of compulsory education at the inter-provincial level.⁸ A more comprehensive study with the data of 1753 counties applied the Gini and Theil coefficients to explore per student expenditure differences among the counties in the 1997 finance year.⁹ Wei used one-way regression to test the relationship between per capita or per student expenditure on education and some measure of per capita output (GDP or income).¹⁰ More importantly, the problems persist as the economy continues to grow at a high speed.¹¹ That is why most scholars who touched on this issue called for inter-governmental transfer for compulsory education. Scholars generally viewed the unevenness of economic development in the past two decades as a principal contributor to the inequalities in compulsory education. A couple of studies were conducted in a statistical manner and found local wealth (GNP, GDP or fiscal capacity) was a significant predictor of the inequalities in compulsory education, indicating that China’s compulsory education was not wealth-neutral.¹² Regions with higher per capita output tended to spend more from both budgetary and extra-budgetary sources. And there were very large differences in per student spending from extra-budgetary sources.¹³ Evidence has also confirmed the view that fiscal decentralization has contributed to very large and growing inter-regional inequalities in China,¹⁴ particularly the urban–rural disparity in education finance.¹⁵ In the 2000s, the province-managing-county reform in some provinces, an experiment of fiscal decentralization, shows that counties given additional fiscal autonomy tend to spend a lower share of their annual expenditures on public education than other counties do, suggesting that fiscal decentralization does not necessarily make local governments more responsive to long-term benefits for local residents.¹⁶

However, most empirical studies on the inequality of compulsory education spending adopted province as the level for analysis¹⁷ because such data are available in the China Statistical Yearbook. A shortcoming of using provincial data is that provincial averages disguise disparities within a province, which are also an important source of inequality.¹⁸ Additionally, due to the limitation of sample size (the 31 provincial-level units in the mainland), researchers will have difficulty carrying out more sophisticated statistical analyses (e.g., multi-regression analysis) in exploring issues of inequality. A few studies based on sub-provincial information¹⁹ used more complicated measures such as the Gini Coefficients and the Theil Index for measuring inequality.²⁰ By virtue of the decomposability of the indexes, studies calculated and compared the intra-provincial and inter-provincial inequalities in per student spending of compulsory education in China.²¹ All of them have shown that the former is more pronounced than the latter,²² although the relative share of the two inequalities varied among the studies. Most studies agreed, however, that the intra-provincial inequality accounted for around 70 per cent of the entire regional disparity (Table 1.1)²³; for example, by employing the decomposition of the Theil indexes, a study indicated that between two-thirds and three-quarters of financial inequality resided within provinces, and between one-quarter and one-third of the financial inequality existed between provinces,²⁴ despite provincial governments officially being required to balance compulsory education among counties within a province, as will be presented later. Furthermore, previous studies in political economics also found there were large differences in expenditure on basic education among provinces in China.²⁵ However, in the US, studies found that the differences in per student funding within the state were estimated to account for about one-third of the total variance nationally in per student spending.²⁶

Table 1.1 Regional disparities in financing compulsory education²⁷

	Primary school (%)	Junior middle school (%)
Inter-provincial disparities	29.71	18.51
Intra-Provincial disparities	70.29	81.49

Such inequality in education provision would not be a policy problem in China if intra-provincial disparities were largely equalized.²⁸ Thus, scholars in education often attribute the education inequality in China to the political system and argue that provincial governments need to take more positive measures to narrow the intra-provincial inequality of education.²⁹ In fact, as Table 1.1 shows, provincial governments have not played a positive role in education equalization. Why do provinces lack sufficient incentive to balance the intra-provincial inequality of education? This seems worthy of exploration from a political perspective.

1.1.2 Financing compulsory education equally

Although opinions on the social function of the provision of basic education differ,³⁰ it is a fact that most governments in the world today finance basic education in their countries. It is widely held that people should have equal right and opportunity to develop their talents.³¹ In China as well as in other countries, education is one of the main channels for individuals to acquire upward mobility. If basic education as an equal opportunity cannot be evenly provided, the wealthy are more likely to be better educated because of the great regional disparities in contemporary China.³² Research has found that people who are better educated, more affluent and higher in status are more likely to participate in politics, and hence economic inequality will be converted into political inequality.³³ This stronger political influence will be manipulated to legalize the disparities. Education will unavoidably foster increasing inequalities in income and social status; and the inequalities will become transmittable across generations. In the end, education, like a “filter” of the society, makes the wealthy even richer while the poor have no chance to change their condition, risking social instability.

This reasoning explains why education has become the most equally distributed item among the public goods provided by governments,³⁴ though educational expenditure promotes equal opportunity rather than equal results. Equality and, a related concept, equity are viewed as two dominant concerns of education finance. Both concepts have evolved and carry different meanings in different contexts. Equity, as a more subjective concept involving ethical judgments as to what is a fair state, is usually defined as a state of fairness in distributing the benefit and costs of any endeavor.³⁵ It is closely related to equality, an objective measure of the state of being equal. Hence, student equity is often broadly defined as equality of access to educational opportunities based on the notion of “fiscal neutrality,” that is, the quality of education a child receives should not be a function of local wealth. The concept of equity is also expressed from time to time by “equal opportunity,” referring to providing an equal chance for all students to succeed. Actual observed success should be dependent on personal characteristics such as motivation, effort and ability, rather than on factors beyond the control of the children, such as racial identity, gender, the socioeconomic status of the family or the wealth of the community in which the children reside.³⁶ Some have observed that over time two quite distinct principles of equalization have evolved. One is the egalitarian principle and the other focuses on “equal educational opportunity.”³⁷ The latter means that school districts have equal access to the resources necessary to provide any given amount of education; this could be achieved by eliminating or substantially reducing the link between the local fiscal resources available to a school district and its ability to provide public education through a fiscal mechanism. This principle focuses more on inputs into education. However, the egalitarian principle focuses more on the output of education by calling for a system that achieves equal education for all students within a jurisdiction held responsible for education.

The concept of horizontal equity (equal treatment of equals) has been differentiated from that of vertical equity (unequal treatment of unequals) in education finance.³⁸ “Horizontal equity requires that all students receive equal shares of an object such as total local and state general revenues per pupil, instructional expenditure per pupil, instruction in the intended curriculum, focuses on thinking and problem solving, and equal minimum scores on student criterion-referenced assessment.”³⁹ Most of the previous studies on horizontal equity have focused on the inequality of financial inputs and expenditures per student at the school district level in the US.⁴⁰ The equity objective of these studies has been to reduce the inter-district disparities in per student expenditures (revenues) while taking into account the differences in local capacities and local effort in financing. Vertical equity is related to appropriate treatment of unequals. The basic idea is to address students’ special needs (e.g., students with physical disabilities) by providing greater resources to districts serving students who might require additional or more intensive services.⁴¹

This study defines the regional disparity of compulsory education as the unevenly spatial distribution of per capita expenditure on compulsory education in primary and junior middle schools. Obviously this disparity, if it were observed, would be contradictory to the key principle of public education, “fiscal neutrality,” and particularly harmful to the disadvantaged groups in China.

1.2 Role of provincial government: A policy perspective

As early as 1980, the State Council of the PRC issued a document on fiscal policy and claimed that provincial governments should be responsible for financing basic education, including compulsory education and upper-secondary education.⁴²

The Decision on the Reform of Educational System⁴³ promulgated by the Central Committee of the Chinese Communist Party (CCP) in 1985 explicates that localities including provinces should be fully responsible for developing basic education. It is generally believed to mark the onset of the financial reform in basic education. For basic education finance, the centerpiece is the principle of “local responsibility and administration by levels.” As highlighted at the very beginning of the second part of the policy,

local governments are required to shoulder the responsibility of basic education, and popu...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• List of Figures and Tables
• Acknowledgments
• Note on Transliteration
• 1. Introduction
• 2. Developing the Bureaucratic Framework
• 3. Personnel Rules and Education Equalization
• 4. 1994 Tax Reform and Provincial Fiscal Dependency
• 5. Personnel Rules, Fiscal Dependency and Education Inequality
• 6. Conclusions
• Notes
• Bibliography
• Index