China - Textbook development

Report No. 6735-CHA Sector Report China Textbook Development July 1, 1987 Projects Department East Asia and Pacific Region FOR OFFICIAL USE ONLY Document of the World l,Ank This document has a restricted distribution and may be used by recipients only in thie performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS The Chinese currency is called Renminbi (RMB) It is denominated in Yuan (Y) US$1.00 = Y 3.70 Y 1.00 US$0.27 (1986) FISCAL YEAR January i - December 31 ACADEMIC YEAR September 1 - August 31 ABBREVIATIONS gsm = grams per square meter HEPH = Higher Education Publishing House PEP = People's Education Press SEdC = State Education Commission XHS - Xinhua Shudian Annex 4 contains a glossary of printing terms  FOR OMCIAL USE ONLY CHINA SECTOR STUDY ON TEXTBOOK DEVELOPMENT Table of Contents Page No. SUMMARY AND RECOMMENDATIONS ...................................i - vi I. INTRODUCTION .................................................. 1 II. THE CONTEXT2................................................. 2 Educational Reform and Expansion.......................... 2 The Policy Framework for Textbook Provisiono.............. 4 Economic Reform......... ..... 4 Textbook Publishing in China.............................. 6 Current Performance.ooeo. ..... oo..... ..o....... ..... 6 The Institutional Framework............................. 7 III. CHINA'S PLANS FOR QUALITATIVE IMPROVEMENT..................... 10 Improving Primary and Secondary Textbookso....*........... 10 Improving Production Standards.......................... 10 Upgrading Content..o44*...... ,........................o 11 Increasing Varietyo......o...o.........................o 12 Improving Textbooks for Higher Education.................. 13 Increasing Varietyo..................... ooo 4o4o4oSoo4*4. 15 Modernizing Content ............ ... .6...........444... 16 Improving Presentation of Technical Material............. 17 Diversifying Distribution.,............................. 17 This report was prepared on the basis of two missions to China. The first, comprising Ms. Barbara Searle (Educator, Mission Chief), Mr. Anthony Read (Publishing Consultant) and Ms. Terrice Bassler (Operations Assistant), visited China from May 23 to June 5, 1986, to conduct preliminary investiga- tions. The second, comprising Ms. Searle (Mission Chief), Mr. Michael Mertaugh (Senior Economist), Mr. Read, Mr. Philip Cohen (Print and Production Consultant), Mr. Wang Jian Liang (Education Consultant) and Ms. Premjit Dhillon (Operations Assistant) visited China from November 9 to 28, 1986. In- formation was gathered in Beijing, Shanghai, and Jiangsu Province and, Inner Mongolia and Xinjiang Autonomous Regions. The work was conducted in close cooperation with the State Education Commission. In particular, officials from the Planning and Finance Department, the Foreign Investments Loan Office, the two offices responsible for textbook development, the People's Education Press and the Higher Education Publishing House were instrumental in assuring the success of the work of both missions. We express our appreciation to all the many officials in Beijing and other locatiorns who shared their time and information. The present paper draws substantially on a consultants' report, "Educational Publishing in the People's Republic of China" by A. Read and P. Cohen. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Page No. Technological Upgrading.oo.....o......... e......o............. 18 Upgrading Typesetting.,. * ....................... ... 18 Upgrading Prnig.n. 19 Upgrading Mimeographing................. .... ... e ......... 20 Improving Skills.... 20 Commercializing Textbook Publishing... 22 Creating and Managing Book Inventor ies..........,...... 22 Improving Distribution... ..... .*........ .... , ,...... 23 Increasing Efficiency.... ..... . ............. ......o 24 IV. COSTS AND FINANCING OF TEXTBOOK PROVISIONV........ 25 Introduction.......... ..... ...... .......... ..... .......... 25 Cost Concepts.o. ............... ... ............. ... .. 25 Textbook Prices .............. .... . 26 Cwurrent Textbook Production Co s t s 29 Costs of the Proposed Improvements.o.o.oe...........o.... 34 financing of Textbook Improvements...........o....o....oo 40 Setting Priorities for Investment....vs..,......e nt....... 42 TABLES IN TEXT 2.1 Actual and Projected Enrollments and Gross Enrollment Ratooo..tios000000006*000000 4 2.2 Book Sales: 1985o.ooo.............. ....... ......... ... . . 6 2.3 Textbook ProvIsion: 1985985ooo....o.....o.oooo.....o.... i.oo 7 3.1 Expansion Targets: Higher dAucation..o..... o.....o...o...... 15 4.1 Estimated Breakdown of Unit Financial Costs of Textbook Production 1985 ...... . ............ .............0..........0. 31 4.2 Comparison of Chinese and Hong Kong Textbook Production Costs Under Current Production Standards..........***.... 33 4.3 Unit Recurrent Cost of Improved Textbooks: Full Upgrading as per Government Proposal .o..o.ooooo...o.oe......... .. . 35 4.4 Projected Impact of Textbook Upgrading on Total Recurrent Cost of Textbooks..e x tb....... oo ks..................... 37 4.5 Comparison of Chinese and Hong Kong Textbook Production Costs Under Full and Intermediate Upgrading Optionso.*..,** 39 4.6 Summary Estimate of Costs of Textbook Upgrading According to Two Upgrading Options: Annual Costs by Cost Category....... 40 ANNES 1. Institutional Arrangements Chart 1: Organization Chart for SEdC Chart 2: Organization Chart for PEP Chart 3: Organization Chart for HEPH Table 1: Institutional Framework for Textbook Provisior: Role of State Commissions/Ministries/Bureaus  - iii - Table 2: Procedures for Development and Distribution of Primary and Secondary Textbooks Table 3: Compiling Committees for Higher Education Table 4: State Publishing Houses Responsible for Publishing Teaching and Learning Materials for Institutions of Higher Education Table 5: Provincial Publishing Houses Responsible for Publishing Technical Material for Institutions of Higher Learning Table 6: University Publishers 2. Data Tables, Education: Table 1: State Unified Textbooks for Primary and Secondary Schools by Type and Price Table 2: Number of Students in Primary and Secondary Schools, 1895-2000 Table 3: Production of Primary and Secondary Teaching Materials, 1985- 2000 Table 4: Production of Teaching and Learning Materials Between 1981- 85: Higher Education Publishing House Table 5: Number of Printed Teaching Materials in Some Key Institute and Universities in 1985 Table 6: Publication of textbooks for Universities, Colleges, Polytechnic Schools, 1981-1985 Table 7: Schedule for Primary and Secondary Textbook Production 3. Data Tables, Costs: Table 1: Price Schedule for Textbooks Table 2: HEPH Speciment Price Calculations Table 3: Capital Requirements to Meet Year 2000 Targets: Primary and Secondary Table 4: Capital Requirements to Meet Year 2000 Targets: Higher Education Table 5: Relation of Print Run to Profitability for Recently Published Higher Education Textbooks 4. Glossary of Printing Terms 5. Bibliography  CHINA SECTOR STUDY ON TEXTBOOK DEVELOPMENT Summary and Recommendations 1. Since the founding of the People's Republic, the Government of China has recognized the importance of textbooks and has endeavored to supply them to all students. The present system succeeds in providing a full set of inex- pensive textbooks each year to all of the approximately 200 million students, at 811 levels of the education system. This requires the production, distri- bution and sale of about 2.6 billion textbooks annually. China's achievement in successfully supplying textbooks is indeed extraordinary. 2. Nevertheless, although the number of textbooks is adequate, Chinese educators recognize deficiencies in both content and production quality. The primary and secondary books now in use were prepared in the late 1970s, are commonly out-of-date and considered inappropriate for the new stress on science and technology. Books for higher education suffer these deficiencies even more acutely. Almost all titles are printed on 52-gm letterpress paper, which is similar in quality to newsprint, and are covered with paper scarcely heavier than the inside pages. Under classroom conditions, such books deteriorate quickly. Page size is small, about 13 by 18.5 cm, margins are narrow, and pages are crowded. Illustrations reproduce indistinctly on the lightweight paper and line drawings tend to be small and inadequately labeled and captioned. Only about 301 of the textbooks for higher education are published books; the remainder are manuscripts prepared for each institution and mimeographed and bound for sale to students. The production quality of mimeographed material is lower than that of the published books and, typi- cally, the manuscripts have not been edited. Finally, at all levels, there is rarely more than one official textbook for each subject and grade, a degree of uniformity that is clearl) inappropriate in a country as large and diverse as China. 3. In the light of these problems, the Chinese government has adopted ambitious plans to raise the quality of textbooks. Work has already oegun on a new cycle of textbooks for primary and secondary levels, which will be ready for use in 1990. The proportion of published textbooks for higher education is expected to increase from 30 to 60% over the next decade. Further objec- tives are to increase the variety of textbooks available, both in methodologi- cal approach and in sophistication of treatment, to upgrade content levels and quality of authorship, and to significantly improve production and design quality of books by the use of better paper, larger format, more color, and better covers and binding, which in turn will require a substantial investment in the upgrading of typesetting, printing and paper provision. 4. The paper examines the Government's plans for textbook upgrading and finds them justifiable on pedagogic grounds, and financially affordable. Primary and secondary texts would be improved through a phased progrem that  - ii - would: (a) improve production quality, by increasing paper weight and page size of all texts, and adding color to the texts for Chinese, science and mathematics used in early primary grades (paras. 3.3, 3.4); (b) bring the content up to date and introduce more effective pedagogy into the presentation of material (paras. 3.5-3.8); and (c) increase the variety of texts available, to meet the needs of different localities and students of different capabilities (paras. 3.9-3.12). Improved production quality would allow more effective use of illustrations, which are important pedagogical tools for teaching about language, science and mathematics. Color, which has been shown to enhance the effectiveness of written instructional materials, particularly for younger children, would be added to illustrations on a selective basis. 5. The program to upgrade texts for higher education has two objectives: to increase quality of texts vhile at the same time meeting the demand for larger numbers of books arising from projected increases in enrollment (para. 2.3) and to shift from mimeographing to publishing of texts (para. 3.13). The program would: (a) increase the variety of texts available for individual courses (para. 3.14, 3.15); (b) modernize the content of texts (para. 3.16, 3.17); (c) improve the presentation of technical material (para. 3.18); and (d) diversify the system for distributing textbooks (para. 3.19). Accomplishing the program for upgrading would require technological improve- ments in typesetting, printing and mimeographing (para. 3.20-3.30) and improved procedures in publishing, printing and distribution (para. 3.31-3.38). 6. After describing the setting and planned improvements, the paper goes on to examine the current structure and the prospective evolution of textbjok production costs under the proposed upgrading (Chapter IV). It concludes that costs are not likely to constitute a binding constraint on textbook upgrading because textbook costs are reasonable and financially sustainable for the groups who bear them, students and the Government. The prevailing cost and financing formulas, which set textbook sales prices in relation to production costs, lead to a desirable sharing by students and the Government of the full costs of textbook production. Textbook purchases by students meet virtually all financial costs of textbook production and distribution, equivalent to just under half of the estimated real or total costs. Subsidies by the Government, both direct payments to publishers and paper manufacturers, and indirect subsidies as described in para. 4.33, account for the balance, estimated at 53X of total costs in 1985, a proportion that would be maintained under the proposed upgrading if the prevailing textbook pricing and cost formulas are retained in essentially their present form. While the mission finds the proposed upgrading program affordable, many issues remain to be resolved before the program can be successfully implemented. Recommendations are made in five key areas: (a) rationalizing textbook pricing and financing; (b) adopting an appropriate implementation pace for the program; (c) improving the educational effectiveness of text- books; (d) assuring the effectiveness of the distribution system; and (e) meeting the human resource development requirements of the upgrading program. The chapter concludes with a discussion of setting priorities for investment.  - iii - Pricing Formulas and Financing 7. China's system for mana%ing the financial aspects of textbook production and sale has worked well in the past because of the stability of prices and the availability of government subsidies. Under the present changing circumstarces, existing pricing formulas may become increasingly unable to achieve their objective of assuring equitable cost recovery for textbook publishers. Therefore, the mission recommends that: -- Pricing formulas should be reviewed now, and regularly in the future to assure their continuing suitability for achieving the Covernment's objectives (para. 4.23). -- As new production standards are introduced, for example monochrome offset printing (which requires specially treated, more expensive, paper) the range of pricing formulas will need to be expanded. Specifically, to ensure that the current degree of cost recovery is maintained under the proposed upgrading, the mission recommends that the existing text- book pricing and cost formulas be modified as follows: -- The pricing formula for primary and secondary texts should be modified to eliminate the loss which publishers now incur in publishing monochrome primary and secondary texts (para. 4.8). If this were to take the form of an increased sales price equal to average publishing costs, additional measures shculd be adopted to permit cost recovery for individual textbook publishers whose costs are high for historical or geographic reasons rather than as a result of inefficient management (para. 4.14); Issues concerning the financing of textbook distribution should be addressed: -- The current formula for setting the fee received by Xinhua Shudian for textbook distribution, which is based on historical relation- ships, should be reevaluated to ensure that the fee paid for distri- bution of upgraded textbooks adequately meets the actual distribu- tion costs, including interest payments, without generating excess profits for textbook distributors (para. 4.18). While mission findings suggest that current sources of support to the poorest households are adequate to assure full textbook availabiLity at present, additional sources may be necessary in the future, (para. 4.10). To meet that need: -- The adequacy of support to poor households for textbook purchases should be kept under review as upgrading progresses. If additional forms of support are necessary, targeted subsidies should be considered as well as general subsidies. 8. The issue of book life (para. 3.4) has an impact on both pricing and financing of textbooks. The issue is of considerable consequence for lower levels of schooling because the projected production costs of upgraded books  - iv - are quite high, about 125% higher for books with color, about 110% for book!, with heavier paper and better covers, but no color (Table 4.3, para. 4.21)._ If texts were used for three years, for example, the total annual cost of improved cextbooks would be less than for the present low-quality books and demands on the printing and distribution systems would be reduced because only one-third of all textbooks would have to be printed and distributed each year. On the other hand, shifting to multiple-year use would require some additional administrative tasks for schools and students and parents would have to forego book ownership. 9. A related issue is whether the Chinese should continue to design primary and secondary books to be used for only one semester, rather than for a full year. If texts continue to be sold to students, then twice yearly distribution is preferable in order to spread the printing task throughout the year and not overburden the distribution system. Changing to annual distribution would mean books would be printed throughout the year, and storage facilities at printing houses would have to be significantly increased. Also, because books would weigh at least twice as much (because they have content for a year instead of one semester), Xinhua Shudian would have to greatly increase both storage facilities and transportation capacity. On the other hand, if texts were used for sever&l years, a shift to books covering material for an entire year could be made without strain on the system, and at some savings, since several expenditures, including the cost of covers, would be reduced. In light of the strong preference for student textbook ownership expressed by Chinese authorities, the mission recommends that: -- The present system of selling primary and secondary textbooks to students should be retained, but experiments should be undertaken with multiyear use of some improved primary textbooks. If multiyear use is adopted for some texts, serious consideration should be given to producing texts covering the material for one year, instead of one semester (para. 3.4). -- Second-hand book markets at universities should be strengthened, so that as book quality improves, texts no longer needed by students can be used by others, thus conserving resources (para. 3.4). The Pace of Upgrading 10. As noted above (para. 5) the pace of implementation of textbook upgrading is likely to be constrained not by financial requirements of upgrading but by the availability of suitable quality paper, typesetting, printing and binding facilities, trained personnel and investment funds. Therefore, the program will have to be phased. The mission recommends that: 1/ It should be noted that the production quality of the upgraded textbooks will still be far short of the hard-bound, sturdy books used in most of the schools systems that reuse books.  -- For primary and secondary texts, upgrading should begin with primary texts in Chinese, science and mathematics for the early primary grades, which will be produced using color, and only later expand to include the remainder of texts for primary, and then secondary grades. The use of offset printing for monochrome books should be delayed until the first phase of the upgrading is complete. -- For higher education, publishing houses and their associated printing houses should receive assistance in systematic fashion so that all the requirements for upgrading are put in place together and expensive machinery is used efficiently and productively. 11. Dramatic increases are projected in numbers of textbooks for higher education in the coming years (para. 3.12, Table 3.1). Title growth puts pressures on authorship, editorial resources, production resources, raw materials, and on publishing management and financial accountability. It is the impression of the mission that the consequences of the proposed title increases have not been examined in sufficient detail by the Chinese authori- ties. Therefore, specifically in regard to higher education, the mission recommends that: -_ Targeted increases in numbers of titles for higher education be reviewed to assure that they are realistic; a multi-year planning horizon be used in developing detailed estimates of requirements for raw materials and trained personnel; and measures be taken to assure that all the prerequisites needed to meet the targets, including supplies of paper, printing and binding capacity, and trained personnel are being strengthened or made available in an appropriate time frame. Educational Effectiveness 12. The Chinese authorities have adopted several strategies to increase the educational effectiveness of textbooks. These include assisting authors to improve their knowladge of both substance and pedagogy; extensively field testing new texts; and increasing the variety of textbooks available, thereby providing education authorities with the means of addressing differences among regions and types of students. To strengthen and expand these initiatives, the mission recommends that: -- Programs for assembling resource materials for textbook authors and increasing their availability, especially reference books and reports of research, 3hould be strengthened (paras. 3.8, 3.16); -- Methods for field testing textbooks should be improved and the schools selected as field test sites should represent the full range of kinds and quality of Chinese schools (para. 3.7); and Nen, programs to expand the number of approved texts for individual courses, at both lower and higher levels of schooling, should be pursued vigorously and procedures for approving alternative texts should be streamlined to allow for rapid implementation (paras. 3.12, 3.14).  - vi - Textbook Distribution 13. Changed standards of tex:book quality and, for higher education, significant increases in the number of textbooks published, will strain the present resources and systems of Xinhua Shudian, the book wholesaling agency. The mission recommends that: -- Subsidies for textbook distribution to remote areas should be reestablished (para. 3.27); and -- Diversification of channels for distribution of higher education texts be encouraged (para. 3.19). Human Resources 14, The textbook upgrading program will require large numbers of people with upgraded skills in authorship, editing, book design, field testing, type- setting, printing, binding, warehousing, financial management, production control, marketing and inventory control. The mission recommends that: -- Institutions that provide training in publishing and printing on a national basis should be established or strengthened, to train both practitioners and trainers f)r on-the-job and institution-based truining (paras. 3.28, 3.30); and -- Selected key personnel should undertate training programs or be seconded to publishing houses overseas, to quickly bring knowledge of more advanced technologies and practices to China (para. 3.28).  CHINA SECTOR REPORT ON TEXTBOOK DEVELOPMENT I. INTRODUCTION 1.1 Research on education has shown that textbooks are crucial inputs to assuring high quality instruction in schools and to raising student achieve- ment levels (Annex 5). Since the founding of the People's Republic, the Government of China has recognized the importance of textbooks and has endeavored to supply them to alT students. The present system succeeds in providinig a full set of inexpensive textbooks each year to all of the approximately 200 million students, at all levels of the education system. This requires the production, distribution and sale of about 2.6 billion textbooks annually. China's achievement in successfully supplying textbooks is indeed extraordinary. 1.2 Nevertheless, although the number of textbooks is adequate, Chinese educators recognize deficiencies in both content and production quality. The primary and secondary books now in use were prepared in the late 1970s, are commonly out-of-date and are considered inappropriate for the new stress on science and technology. Books for higher education suffer these deficiencies even more acutely. Almost all titles are printed on 52-gm letterpress paper, which is similar in quality to newsprint, and covered with paper scarcely heavier than the inside pages. Under classroom conditions, such books deteriorate quickly. Page size is small, about 13 by 18.5 cm, margins are narrow, and pages are crowded. The typical page has about 500 Chinese characters. Illustrations reproduce indistinctly on the lightweight paper and line drawings tend to be small and inadequately labeled and captioned. Books are bound with wire staples or side-stitching, which means they cannot lie flat when open. Only about 30% of the textbooks for higher education are published books; the remainder are manuscripts prepared Tor each institution and mimeographed and bound for sale to students. The production quality of mimeographed material is lower than that of the published books and, typi- cally, the manuscripts have not been edited. Finally, at all levels, there is rarely more than one official textbook for each subject and grade, a degree of uniformity that is clearly inappropriate in a country s large and diverse as China. 1.3 Ia the light of these problems, the Chinese government has adopted ambitious plans to raise the quality of textbooks. Work has already begun on a new cycle of textbooks for primarv and secondary levels, which will be ready for use in 1990. The proportion of published textbooks for higher education is expected to increase from 30 to 60% over the next decade. Further objec- tives are to increase the variety of textbooks available, both in methodologi- cal approach and in sophistication of treatment, to upgrade content levels and' quality of authorship, and to significantly improve production and design quality of books by the use of better paper, larger format, more coler, and better covers and binding, which in turn will require a substantial investment in the upgrading of typesetting, printing and paper provision. Chinese  authorities estimate that the proposed improvements in design would increase the cost of textbooks by 2002. 1.4 These plans raise many questions: Are the nature and the proposed pace of adoption of improved book production standards realistic given present shortages of paper and machinery? How should they be financed? How are costs and technological requirements for upgrading book quality affected by Chinese policies regarding book ownership and use? How will the present book produc- tion and supply system need to be modified to accommodate the proposed improvements? This paper explores these questions. Chapter II presents a brief overview of the context in which the textbook provision system is functioning: an education system striving to achieve universal basic (nine- year) education and at least double university enrollments by the year 2000, and economic reforms that are changing significantly the regulations and context under which the publishing industry operates, and provides a brief description of the scope and institutional framework within which the book provision system functions. Chapter III discusses problems with the existing system and presents China's plans for improvement and expansion. Chapter IV analyzes the costs of the existing system and explores the cost implications associated with the proposed improvements. Recommendations are presented in the summary to the report. Given the complexity of the textbook production system in China, a narrowing of focus is imperative. Thus, the report gives less attention to pedagogical issues, and makes no attempt to examine the contents of textbooks. Rather, it focuses on describing and assessing the Government's plans and exploring issues of costing, pricing, and technology. It finds the Government's plans justifiable and affordable, and identifies many of the problems and issues that must be addressed during implementation. II. THE CONTEXT Educational Reform and Expansion 2.1 Educational progress in China since the establishment of the People's Republic has been intermittent, with significant disruption occurring during the decade from 1966 to 1976. However, since the late 1970s, steady progress has been made in reorganizing and expanding the formal school system. In May 1985, in conjunction with the Seventh Five-Year Plan, China annnunc*A an education reform with five key aspects: (a) education is a key to "national quality;" (b) basic education (grades 1-9) is to become universal; (c) vocational and technical education will be developed vigo- rously; (d) at the tertiary level, enrollments will be increased, assignment of graduates will be improved, and colleges and universities will be given greater autonomy; and (e) leadership in education will be strengthened at all levels. 2.2 Universalization of basic education is to be accomplished in stages: in cities and coastal areas by 1990, in towns and villages with a medium level of development by 1995, and in thr uore backward areas, which account for about 252 of the population, at a rate commensurate with local conditions. Although under the reform, basic education would encompass nine years,  - 3 - provinces have the freedom to adopt a five-year primary, four-year lower secondary plan, or a sis-three plan, in effect allowing continuation of the dual system of five-year primary schools in rural areas and six-year schools in urban areas, which exists in much of China. Furthermore, poorer areas can progress towards nine years through a five-three system. This flexibility in the compulsory education law promulgated in 1986 ensures that, for the foreseeable future, China will have to continue to produce alternative series of texts for school cycles of different lengths. 2.3 Such a reform as is being undertaken in China would, under ordinary circumstances, be expected to result in an increase in enrollment. However, because of the highly successful effort at population control since 1979, total enrollment, which is dominated by primary enrollment, is projected to decrease between now and 1990 and then increase by 2000, but not i9 the levels of 1980 (Table 2.1). For the most part, gross enrollment ratios _ will increase. (The decrease predicted in the gross primary enrollment ratios for 1990 and 2000 reflect expected decreases in the proportion of overage students, from about 35% in 1985 to 0% in 2000.) Because of the demographic changes, only higher education will experience a substantial increase in the number of textbooks required but, because the number of students is relatively small, the increase will be a small percentaga of overall requirements. As will be discussed in detail further on, the strains in the textbook provision system will come from increasing the number of titles available, and from efforts to improve book quality, rather than from an increase in the number of textbooks required. 1/ Gross enrollment ratio = number of people in school (of all ages) divided by the total number of people in the appropriate age group. The net enrollment ratio uses the same denominator, while the numerator is the number of people in school who are in the appropriate age group.  - 4 - Table 2.1: AC7UAL AND PROJECTED ENROLLMENTS AND GROSS ENROLLMENT RATIOS ('000) Actual Projected 1980 1985 1990 2000 Enroll- Enroll- Enroll Enroll ment Ratio ment Ratio ment Ratio ment Ratio Primary 146,300 95 133,700 107 122,400 96 125,000 94 Lower secondary 45,400 60 39,700 52 46,0O0 75 51,400 82 Upper secondary 11,400 17 7,400 16 20,000 29 29,000 56 Higher /a 1,100 2 2,700 4 4,400 4 7,600 11 Total 204,000 163,500 192,800 213.000 /a Includes polytechnics. Source: State Education Commission; World Bank projections. The Policy Framework for Textbook Provision 2.4 Several key policies govern textbook provision in China at present: (a) All students at all levels must have their own new copies of all required textbooks. Typically, schools and universities purchase texts and sell them to the students at the purchase price. (b) Most textbooks cover course material for only one semester. Thus, two books per year are required for most subjects. (c) The sales price of texts are to be set so as to recapture fully the production cost, and provide minimal returns to publishers. (d) Textbook prices are to be kept as low as possible, to keep books affordable. (e) Printing and distribution of textbooks are to be given priority over other printed materials, to assure that books arrive in schools by the beginning of each semester. 2.5 China has fulfilled these policy objectives, meeting the quantita- tive needs of the vast majority of students in school with commendable effi- ciency and consistency. This achievement has been poss.ble through a publish- ing policy that, on the whole, restricts choice to one basic textbook per  subject per semester for the whole of China,2/ greatly simplifying the manage- ment of book production and distribution, and by keeping the quality, and hence the cost, of paper low. Economic Reform 2.6 In October 1984, China announced a program of economic reform that called for rationalization of prices, increased enterprise financial accountability, a reduced role for mandatory planning, and adoption of new instruments of macroeconomic regulation. Some provisions of the program have been operational since 1985; implementation guidelines for others are being developed, in some cases through experimentation with alternative formulas. The main features of the new economic policy which affect enterprises involved in textbook publishing are the following: (a) Prices and allocation of resources are gradually being freed from control by Government at various levels so as to begin to respond to market signals. Quotas and controlled prices will be reLained for inputs to essential goods, including textbooks, but are to be eliminated for other categories of production. The main input to textbook production--paper--will continue to be provided at below- market prices. Mandatory planning is being replaced by guided, self-marketed production for other categories of goods, including general publishing. (b) Enterprises are now to be held financially accountable, which means they are required to cover costs through receipts from sales. (c) Enterprises will now be permitted to retain profits in excess of a stipulated profits tax, a move which is expected to serve as an incentive to improve enterprise performance. Unprofitable enter- prises are subject to bankruptcy. Part of the retained profits can be used to pay bonuses to workers. (d) Enterprises' capital requirements, which used to be provided on a grant basis from parent ministries, are progressively being met througq enterprises' own financial resources--retained profits and loans.J/ 2.7 The new economic policies cause peculiar difficulties for textbook publishers, who face strong pressure to make a profit in a situation where some input prices are rising but textbook sales prices (but not the prices for reference and geaeral books) remain fixed. The circumstances create an incen- tive for publishers to expand the more lucrative nontextbook publishing as a 21 Actually two at the primary level because of the five-year and six-year systems. 3/ It continues to be Government policy to provide investment capital for educational publishers and printers for items in excess of 50,000 yuan.  means of generatirig development funds which textbook sales, by reason of price and profit restrictions, cannot create. Textbook Publishing in China 2.8 Current Performance. The publishing industry in China is large by any standards; more than 6 billion books were sold in 1985 (Table 2.2). Educational books represent somewhat less than half of sales; in 1985, about 402 in number of copies, and about 30% in value of total book sales were for texts and other educational materials published for school use. Textbook production is given priority over all other publishing (including newspapers) so that generally speaking shortages of inputs experienced by the rapidly growing publishing field do not curtail the provision of school books. Table 2.2: BOOK SALES: 1985 No. of Value X copies X (billion (book (billion) yuan) sales) Primary/secondary level /a 2.41 40 0.864 27 Higher education /b 0.13 2 0.154 5 General books 3.56 58 2.197 68 Subtotal 6.10 100 3.215 100 Nonbook sales _c 0.135 Total 3.350 /a Includes texts and supplementary books. Th Includes texts, reference and library books. Th Includes records, tapes, educational hardware such as computers. Source: Xinhua Shudian. 2.9 Table 2e3 provides a breakdown of textbook publishing by school level. As the table indicates, the number of titles is dominated by higher education; textbooks for universities and polytechnics account for about 80S. Book numbers are dominated by texts for primary and secondary levels, which constitute over 90% of the total. Texts for other types of schools constitute 10% of the titles and 3% of the copiis.  - 7 - Table 2.3: TEXTBOOK PROVISION: 1985 No. of (of which No. of copies Type schooling titles new) (million) Primary and lower secondary 351 (53) 2,259 Upper secondary 94 (18) 9 Teacher training 113 (13) 9 PRG schools 140 (34) 38 Polytechnics 828 (217) 43 Universities and colleges 2,446 (802) 79 Adult education 144 (54) 22 Total 4,116 (1,191) 2,459 Source: State Education Commission. 2.10 The average number of textbooks per primary and secondary student is thirteen, a number comparable to that found in developed countries. (In China each subject requires two texts per year, one for each semester. See Annex 1). At the tertiary level (college, university, polytechnic), students require about ten texts per year, but less than half this require