INTERGOVERNMENTAL GRANTS AND THE FINANCING OF COMPULSORY EDUCATION IN CHINA

Since the mid-1980s, China has made substantial progress in the reform of the financing of education, including the establishment of a decentralized and diversified system of financing and the mobilization of additional resources for the education sector. In compulsory education, however, significant challenges remain; they include, in particular, the financial difficulties of poor and rural areas as well as large and widening disparities in per-student spending across areas. Intergovernmental grants from central and provincial levels could be used to address these challenges but their use in China has so far been very limited. This paper argues for the establishment of a regularized and substantial scheme of intergovernmental grants in the financing of compulsory education and highlights some of the issues to be explored in the future. The analysis draws upon information on educational financing in China and examines the potential relevance of the experience of other large decentralized systems in the use of intergovernmental grants.