Between local community and central state: Financing basic education in China

From the early 1980s, China underwent perhaps the world’s largest and most comprehensive experiment of decentralization in education. There has been a shift from decentralization to some degree of recentralization, however, since the mid-1990s, particularly since the early 2000s. The purpose of this shift was to establish a stable and regularized financing mechanism for rural education. Using provincial-level data from between 1997 and 2005, this paper analyzes whether the shift worked as expected. It finds that by the end of 2005, there had been a substantial decrease in the rural–urban gap, the regional disparity, and the overall inequality in per student budgetary expenditure and total spending. Much of the decline occurred in the 2000s. Moreover, the rural–urban gap declined more rapidly than the regional disparity, and inequalities in spending on primary education declined much more rapidly than junior secondary education.