118 6 Financing Compulsory Education in Rural Areas: The Development ...
and exemptions from charges for low income students, and set norms for expendi-
ture per child and for building safe and appropriately equipped schools.
Funding for compulsory education has been increasing steadily in real terms as
China has developed. The shared structure between different levels of government
has changed and been transformed from peasants run to government run, and from
low level government centered to higher level government centered.
6.2.1 The Planned Economy Centralized System (1949–85)
In 1949 when New China was founded she began to develop policy for universal
education step by step. The enrolment rate for school-age children was less than
20 %, and illiteracy rates were more than 80 % (Wang 2009 ). Massive educational
reconstruction was needed after the destruction of war and political uncertainties.
Following the former Soviet Union model, the new government adopted a highly
centralized system of planning economy linked to budget allocations and five year
plans. Educational financing system was highly centralized but unlikely to find its
way to all parts of a large and complex system. Though primary education was
supposed to be universalized there was no clear plan about how this would be
achieved or financed, nor was universalization compulsory (Wu 2008 ).
Regulations on primary and secondary education funding were included in
“The Decision on Unified Administration on the Annual Fiscal Revenue and
Expenditure of 1950”. This stated that the funds of universities, middle schools
and primary schools which were included in the central people’s government’s
budget, were to be provided by the ministry of finance. The funds of county-level
middle schools were to be provided by administrative regions and the province
(or cities). Vocational schools that were commissioned by the central govern-
ment were included in the provincial budget. In contrast rural primary schools
and county-level teachers and below were to be supported from levying additional
taxes often paid in grain by farmers. Educational funding of city primary schools
would be supported by levies and surtax linked to education in the city. This
essentially regressive system persisted until the 1990s.
During the period of the first five-year plan (1953–1957), educational financing
reforms followed broader reforms of the greater administrative areas, reflecting
changing political and economic realities. The fiscal management system held to
principles of “Divided responsibility for payments, hierarchical management, and
prioritization of key aspects”. Under this system, the financing of education had
three-level management; the central, provincial (city), and county under central
leadership. The regulations of the central fiscal system were strictly implemented
at the three levels (Fu 2009 ).
From 1963 onwards, central government began to take more interest in reforming
the scale, development pace, management and financial system of basic education.