Chaos in the classrooms

An education policy torn between the market and the state
From The Economist print edition

THE students at Shengda Economics, Trade and Management College, in the quiet rural town of Longhu, in the central province of Henan, are among the most privileged in China. So why did they go on a rampage at the beginning of summer? In June thousands of them stormed through the grounds of their college, smashing windows and throwing stones at police cars. It was one of the biggest and most unruly protests on a university campus reported in China since the 1980s. ...

At first glance, the cause of the riot might look unremarkable. Shengda students have long been unhappy with the college's strict regime. This includes compulsory physical exercise at 6.30am, a ban on alcohol and smoking, and confinement to campus at weekends except for those with written permission to venture out. What self-respecting student wouldn't protest? But the trigger for the violence was in fact quite different. It was the college's decision to add the word “Shengda” to its students' graduation certificates. The fact that this apparently trivial change provoked a riot illustrates the parlous state of China's education system—and the difficulties of reforming it.

Since the early 1990s, China's embrace of market forces has upturned the provision of public services. Although most schools and colleges are still funded by the government, they now operate much more like businesses. They are allowed to generate extra revenue and so improve their facilities and attract more students. And, crucially, they have been permitted to raise fees—often in a disguised form to evade nominal government-imposed limits. The Chinese Academy of Social Sciences says that households now spend more on education than anything else, even though town- and city-dwellers are allowed to have only one child. In 2004 fees provided 18% of the revenues of schools and colleges, up from 4.4% in 1991.
A common way for state schools and universities to earn extra cash is to start schools of their own, which they then run, in effect, as expensive private schools. The trend began some 15 years ago among primary and junior schools, and has reinforced an existing inequality. For most of the communist era, a two-tier system identified a few “key schools” that receive extra money and other favours in order to nurture pockets of academic excellence.

In June, a revision to the education law abolished the key-school system, which had caused much resentment. This left these pampered establishments in an excellent position to attract the highest feepayers to their new quasi-private facilities. They can also charge high fees from students from outside their official catchment areas. This levy, which is known as a “school selection charge”, can amount to thousands of dollars. Many less privileged state schools are also prospering: after dividing their intake into separate streams, for example, they charge more for the classes with better teachers and facilities.

Following the schools' lead, state universities had by the end of the 1990s also increased their incomes, often in partnership with private capital. Shengda, which was founded in 1994, was an early pioneer. A decade later, China had 249 such quasi-private colleges with a total of 680,000 students, more than half a million of them studying for undergraduate degrees.

At every level, the rich now have much better access to good education than the less well-off. At the same time, the opacity of the privatisation process stops fair competition between fee-charging institutions. State-funded institutions, especially those formerly designated key schools, dominate the market and deter genuine private investment.

In the past two years, local governments have begun imposing business taxes on (genuine) private schools. Unable to make ends meet, some are now going bust. One of the biggest private education companies, South Ocean Education Group, which ran ten schools with some 10,000 pupils and 400 teachers, collapsed last year after officials in one province accused it of raising funds illegally. Even the official media suggested that its fate was more related to the reluctance of state-owned banks to lend to private schools.