117The evolution of funding systems in a country reflects political, economic,
educational and financial development. As the economy has become more inte-
grated and interrelated, and national power has been projected more effectively
from the centre, rural education in China has been gradually changing from “peo-
ple run” to “state run”, and the funding has changed gradually from “lower level
centered” to “higher level centered”. Reforms over the last 30 years have funda-
mentally changed the system devised in the 1950s to manage basic education at
a distance and tolerate wide variations in participation, quality and facilities that
reflected differences in wealth and commitment at local level, and benign neglect
and regressive fiscal strategies that favoured urban areas.
The relationship between centralization and decentralization has always been
a central issue as greater priority has been given to providing funds and other
resources with the goal of creating a system that was sustainable and more equita-
ble than in the past. There are several levels of administration in China: (i) Central
government, (ii) provincial level, (iii) prefecture level, (iv) county (city) level, (v)
township level and (vi) village. When talking about local level, it can mean any
levels below central level. Provincial, county and township are the key administra-
tive levels for funding rural education. The history of reform is a history of trying
to balance decentralized approaches with shared responsibilities and costs across
levels of government with accountability and commitment to goals from higher
levels of government designed to promote efficiency and equity. Over time the lat-
ter has gained ground over the former.
6.2 Reform of Management and Fund Guarantee System
The commitment to the goal of nine-year compulsory education in 1986 catalysed
and accelerated reforms of the management and funding system. The evolution of
the system has had four phases. In the first period basic education was supported
through the highly-centralized planned economy which made allocations under
its five year plans (1949–1985). This was a period of mostly benign neglect with
no strategy to close differences in development between rural and urban areas and
provide level funding for all schools. The second period (1985–2001) followed the
major political reforms of the mid-1980s and developed from a system of admin-
istration and funding which was “local responsibility, multi-level management,
and township centered” (yi xiang wei zhu) to one which was “local responsibility,
multi-level management, and shared county-centered and township responsibil-
ity”. The third period moved responsibility to the county level in 2001 as a result
of the slower than anticipated progress and persistent inequities of the existing
system. The “power to the county reform” (yi xian wei zhu)” (2001–2005) delib-
erately sought to accelerate development in more slowly developing counties. The
fourth and most recent reform since 2005 introduced the “New Mechanism” of
rural compulsory education management which explicitly increased the share of
central government in funding compulsory education, included pro-poor subsidies