Strategic goals for Chinese education in the 21st century

Report No. 1 8969-CHA Strategic Goals for Chinese Education in the 21St Century November 30, 1999 Human Development Sector Unit East Asia and Pacific Region Document of the World Bank  Exchange rate (1999): US$1.00 = 8.26 Yuan Fiscal year: January 1 - December 31 Weights and measures: Metric system Abbreviations BAC Vocational Baccalaureate (France) BOOB The Education Industry Committee (Netherlands) CAS Chinese Academy of Sciences GDP Gross Domestic Product GNP Gross National Product HBO Higher Professional Education Colleges (Netherlands) HDN Human Development Network HEI Higher Education Institution IPR Intellectual Property Rights LMS Local Management of Schools MBO Senior Secondary Education (Netherlands) MOE Ministry of Education MOLSS Ministry of Labour and Social Security NGO Non-governmental Organization OECD Organisation for Economic Co-operation and Development PSRE Per-student Recurrent Expenditure SOE State-owned Enterprises STS Secondary Technical Schools SVS Senior Vocational Schools SWS Skilled Workers Schools VBO Lower Secondary School (Netherlands) VET Vocational Education and Training Vice President: Jean-Michel Severino Country Director: Yukon Huang Sector Director: Alan Ruby Team Leader: Halsey Beemer  Contents Acknowledgments iii Executive Summary 1 1. Study Background 7 Context 7 The strategic role of education 9 Labor market context 10 2. General Principles 13 Structure 13 Efficiency, outputs and quality assurance 15 Levels of funding 16 Funding mechanisms 17 Implementing mechanisms 17 3. Strategies for Schools 21 Structure and responsibilities 22 Increased efficiency 22 Levels of provision and funding 23 Curriculum 25 Outputs and quality assurance 26 4. Strategies for Higher Education 29 Structure and responsibilities 29 Institutional management and increasing efficiency 31 Volume and funding 32 Curriculum and quality assurance 34 Role of research 35  5. Strategies for Vocational Education and Training 37 Labor market context 37 Structure and responsibilities 38 Curriculum structure 39 6. Implementation 41 Annexes 1. Disparities in primary and lower-secondary education in China 45 2. East Europe and Russia-educational reforms over the last five years in transition economies 49 3. OECD countries-changes and/or useful operational models 55 4. OECD study of education policy changes in transition economies 65 5. Government expenditure on education in China 71 6. Estimation of earmarked fund for compulsory education in poor areas in China 79 ii Contents  Acknowledgments his policy note is based on work done by a team of World Bank Staff and consultants who visited China during January 1998, May 1998, and July 1999. The team comprised Halsey L. Beemer, Jr. (Task Team Leader), Sandra Erb, Hu Wenbin, Stewart McIntyre, Alan Ruby, Christopher Thomas, Quentin Thompson, and Mun Tsang. Insightful comments from peer reviewers Arvil Van Adams, Ralph Harbison, Ruth Hayhoe, Marlaine Lockheed, Xie Xide, Christine Wong as well as from Albert Keidel and Jee-Peng Tan and members of the Education Team of the Human Development Network (HDNED) were appreciated. Studies were conducted for this report by researchers from the Shanghai Institute of Human Resource Development and Beijing Normal University, Department of Education Economics and consultants Xia Xudong and Olivia Lankester. iii  The study could not have been completed without Education Bureau and the Hubei Provincial Education the close cooperation of the Finance Department of the Commission. Ministry of Education, Ministry of Finance, Ministry of The policy team would like to acknowledge and Labour and Social Security, Ministry of Personnel, State thank the Canadian Consultant Trust Fund grant of the Development Planning Commission, The State Council, Canadian International Development Agency for their The National People's Congress, The Chinese People's financial support. Political Consultative Conference, Beijing Municipal iv Acknowledgments  Executive Summary hina is making a major transition to a socialist armarket economy with the intention of being a middle-income country by 2020, while monitoring and pro- moting social development and cohesion. Education strategy To reach its economic and social goals, China needs an edu- cation system that: * produces high-quality results in a flexible manner, * uses resources efficiently, and * is sufficiently equitable to maintain social cohesion. To do this, there needs to be: * effective governance structures at all levels and * adequate resources. We suggest a two-part education strategy: one part is to ensure that there are adequate resources for the weakest parts of the system, especially in the poor rural areas, in order to provide increased access to high-quality basic education to all; 1  the other is to encourage the strongest parts of the sys- The curriculum in higher education is also too narrow tem, especially in the urban and coastal areas, to as there needs to be much more scope for students to increase their quality to grow and prosper as fast as pos- study across subjects. Basic foundation courses in the sible. Such a strategy would enhance equity while undergraduate curriculum, especially in the sciences responding to the imperatives of an increasingly com- and engineering, need to be strengthened. In VET, there petitive economic environment. Implementation will needs to be more emphasis on general competencies and require leadership and resources. less on job-specific skills. We suggest that, over the next We recommend that the Government act on a num- 20 years, the proportion of separate VET secondary ber of short-, medium- and long-term priorities. The schools be substantially reduced according to local con- most immediate priority is to provide increased funding ditions. Additionally, we suggest that the VET curricu- for the poorest parts of China to increase access to qual- lum content in comprehensive, general and diversified ity basic education for all of China's poorest children. secondary schools be reduced over the long-run with The second priority is to increase the efficiency of the parallel development of a two-year post-secondary use of current government expenditures at all levels. vocational provision instead. We also recommend that Increased efficiency will ensure the current funds are individuals take more responsibility for their own job spent wisely while increasing the quality of education. training and companies producing training plans for The third priority should be the introduction of more their employees. effective outcome indicators to assure the government There is a more general point on content. Higher that efficiencies have been achieved by the restructuring national productivity and growth are becoming increas- of the education system. Once effective outcome indi- ingly dependent on knowledge and information. The 21I cators are in place and efficiencies are being achieved, century will be one of ever faster change and the educa- the medium- to long-term priority of substantial tion system, at all levels, will need to develop and adapt to increased funding for the whole education system can meet the changing needs. This will require more versatile be carried out with some assurance that these new people, more initial emphasis on general skills, greater increases in funding will achieve improved educational flexibility in the curriculum and greater responsiveness on outcomes. The long term priority is to address the sub- the part of institutions to adjust their provision. We think stantial and widening educational disparities among that this is best able to be achieved if institutions have regions and areas to promote greater equality in the more pedagogical autonomy of decisionmaking about education system. what and how they teach-to respond to local needs-as Our main report first discusses these as matters of well as more managerial autonomy to arrange the provi- general principle and then under separate headings for sion in the most effective and efficient way. schools, for higher education and for vocational educa- The current approach to the assessment of quality is tion and training (VET). Our recommendations are done mainly by reference to the levels of inputs; we highlighted throughout the main report, and at the end think this is misguided, but it is also unhelpful in that it of the report, a smaller number are identified as appro- hinders the search for efficiency gains. The quality of priate for early action. This summary follows the struc- education is best judged by assessments both of its ture of the five themes mentioned above. results and of the processes that produce those results. We think it will be vital both to produce output indica- High-quality results tors of quality and to develop a means of observing and judging the education processes themselves. Such qual- In our view, the content of what is taught should be ity assessment processes will need to operate at the level reformed and up-graded for the 21st century. At all lev- of the individual institution (school, university, etc.); at els, there is too little emphasis on problem solving and higher tiers in the governance structure, there will need practical skills and too much on theory and on learning to be a quality assurance approach which checks that what the books and the teachers say. This suggests the the lower tiers operate effective assessment processes. need for a major cultural change in the classroom and We are also convinced that the volume of education in the teachers-many of whom will need retraining. provision needs to increase significantly by 2020. China 2 Strategic Goals for Chinese Education in the 21' Century  has made good progress toward introducing universal for Economic Co-operation and Development (OECD) nine-year basic education; but for 2020 we suggest that countries by providing block funding to institutions (at China move toward 12-year universal education. The all levels) and allowing considerable managerial auton- participation levels in higher education are also well omy to decide how the funds are to be spent (e.g., on below those needed for China's goals. We believe that staff numbers)-with accountability based on results significant expansion of higher education can and and on a quality assurance system. This would provide should be achieved with little extra cost through not only the means for the search for efficiency, but also increasing the efficiency of provision. For the 21st cen- the pressure to do so. It would require major changes in tury, there will also need to be a significant increase in institutional management and streamlining of many of the volume of provision for life-long learning (at all lev- the administrative processes. els of education). Equity and social cohesion Efficiency Universal access to nine-year compulsory education is There are considerable inefficiencies in the use of clearly a major component of equity; unfortunately it resources in education; it will be important to find ways has not yet been achieved in all the poorer Provinces. We of reducing them. think the current arrangements for intergovernrnental We are convinced that considerable efficiency gains transfers of funds are not adequate to address the can be made by improving the overall governance struc- inequities of need and of resources, as they rely too much ture through a reduction in the number of bodies on the local areas producing matching funds. If educa- involved, with their overlapping responsibilities and tion is to be a driving force behind economic develop- duplications. We deal with this below. Changes in gov- ment, there must be higher levels of fund transfers ernance structure would also facilitate some rational- earmarked for the provision of compulsory education. ization in the provision itself and should produce Inequities are growing at the local level too, particu- improvements in economies of scale-for example, larly in some urban areas, with the growth of private, through merging the three separate systems of voca- fee paying schools often created by privatizing public tional secondary provision and through broadening, schools. We think that this risks social division if it con- merging or closing higher education institutions hith- tinues unchecked-although we think that the private erto associated with line ministries or their state-owned provision of higher education should be encouraged. enterprises (SOEs). Inequities of access to compulsory education between There are considerable inefficiencies at the level of those who can and those who cannot afford to take the individual institution too; for example, in the num- advantage of what is perceived as superior education bers of nonteaching staff (at all levels), in the staff- run the risk of damaging social cohesion. For similar student ratios in higher education and in the reasons of equity, we think that student loan and grant arrangements for some of the social support-which we arrangements for higher education should generally be suggest should be divested from education institutions. made by the Province and not the institution. We think there is scope for a considerable increase in student numbers in many higher education institu- Governance structure tions-perhaps by as much as 50-100 percent-with only limited extra resources and no real danger to qual- To deliver high-quality education, efficiently and in an ity (as long as quality is not measured by inputs; see equitable manner, requires a streamlined and effective above). governance structure. This is not yet in place. Although More generally, there are no pressures to search for there have been some changes toward rationalization at efficiency at the institution level-almost the reverse. the national level, they do not go far enough. In essence, The best place to identify the scope for efficiency gains we think there should be fewer public bodies involved is at the level of the institution itself, so we propose that with education at almost all levels. We propose consid- China should follow the example of many Organisation erable rationalization at the national level with the Executive Summary 3  transfer of education responsibilities from line min- existing resources; (3) insufficient resources to support istries and their SOEs to the Ministry of Education expansion and quality improvement; and (4) substantial (MOE) (with their current funding) with MOE clearly and widening disparities in education. Achieving effi- taking the lead role on national issues. We also suggest ciency gains should be the first step to increasing the a single national body at the center with overall policy funds available for teaching and learning. We also pro- responsibility for VET. pose bringing the various current levies, surcharges and Below the national level, we think there are too many fees into the tax base, thus making them available for tiers of government involved with primary and sec- more equitable distribution. Further we have no doubt ondary education and suggest removing education that private sources of funds for public institutions are responsibilities from any tier below the county level for likely to grow-and should be encouraged, especially schools. Public universities should belong either to for higher and VET levels and for research which, in gen- MOE, if they are national universities, or to the relevant eral, should only be undertaken at full cost. provincial or municipal authority. Each tier's resulting But even with all that, we doubt there will be suffi- responsibilities should be aligned to their access to the cient funds within the system to meet China's needs for funds available to deliver those responsibilities. This the 21st century. While efforts to improve efficiency will require major restructuring and redefining the roles should persist, a substantial increase in government of the tiers of government. The emphasis should be on education spending is needed after the initial efficiency- decentralizing responsibilities to the lowest tier to related reforms called for by the National Education which it is practical to do so. As well as improving effi- Working Conference. A regularized intergovernmental ciency, such delegation increases the system's flexibility grant system in education with greater central and to respond to local needs-especially at the institution provincial transfer to lower levels should be developed level (see above). to assist poor areas, assure a minimally adequate fund- The result would be a clearer and more efficient gov- ing level for all areas and maintain regional disparities ernance system that required fewer resources for admin- within a socially acceptable level. istration and thus enabled a higher proportion to be Setting targets for educational spending is an appro- spent on teaching and learning. For the system to work priate strategy because it focuses attention and affirms effectively, there also needs to be more effective planning priorities in providing resources for education; provides and budgeting at all levels that sets priorities, allocates a stimulus for the difficult task of mobilizing political, resources accordingly and then implements the resulting social and financial resources; and ensures a process for plans. We suggest that each province should be required monitoring and assessing long-term achievements. We to produce a strategic plan for its education provision- support the Government's effort to raise government including a properly thought-through role for private education expenditure (total of budgeted and out-of- provision, particularly in higher education and VET. budget education expenditures made through the gov- Each province also needs to recognize that it will need to ernment's financial system) to 4 percent of GDP in the make and to implement its own laws to give effect to its near future and encourage the Government to set incre- plans. We propose that one province might be invited to mental and higher targets for the year 2005 and for five- develop a pilot for this purpose. year periods thereafter. We further recommend that the Government consider a three-legged stool approach of Funding levels setting these goals, which takes into consideration the indicators of efficiency (using funds wisely), equity None of this can be achieved without adequate funding (increasing participation and quality) and economic and China's current expenditure on education as a pro- development (relative speed toward a socialist market portion of gross domestic product (GDP) is one of the economy). We recommend that the Government set lowest in the world. There are clearly a number of major these five-year targets taking into consideration actual challenges in educational financing: (1) difficulties of and current circumstances such as the relative speed of poor areas in achieving nine-year compulsory educa- China's movement toward a market economy, rate of tion; (2) significant inefficiencies in the utilization of the GDP growth, changing demographic and education 4 Strategic Goals for Chinese Education in the 21St Century  participation rates, regional comparators on educa- bility. This report is based on the firm belief that the first tional spending and achievement, special areas of equity path-tbat of excellence, equity and flexibility in edu- that must be addressed such as gender and minorities, cation-is fully within the reach of the Chinese and the changing needs of the labor market.' Government, and that pursuit of this goal would be in the long-term interests of the country and society. Implementation National Education Conference China is a large country with different levels of eco- nomic development in different provinces. These differ- The National Education Working Conference was held ences must be taken into consideration in any reform in Beijing on June 15-18, 1999. At the end of the meet- plans pursued by the Government. The recommenda- ing, the Central Committee of the Communist Party tions in this policy note represent a massive agenda for and the State Council issued the Decision "Furthering change, even without the extra complexities of a coun- Education Reform and Carrying Forward Quality- try the size of China. The date of 2020 seems a reason- Oriented Education" (a brief summary of this Decision able target by which it should all be achieved-and we appears in Annex 7). This important meeting and the are sure an incremental approach is right. In terms of Decision that was delivered by the central government phasing, we suggest that the most urgent tasks are to on education came in the last stages of the preparation increase the inztergovernmental transfers to the poorest of this policy note. areas, to improve the current levels of efficiency, and to Tested against the principles that we have established develop quality instruments that are based on outputs. in this policy note, we find that several points in the Managerial and funding changes at the institutional Decision indicate that the government is moving in the level to encourage flexibility and the search for effi- right direction. There are a number of structural changes ciency can be planned and piloted quite quickly. that the Decision recommends that coincide with recom- Structural changes will take longer, but a program of mendations made in this policy note, especially the fur- the changes and their timing should be prepared. Once ther decentralization of the education system and the all this is done, the need for additional public funds and development of two- and three-year tertiary level institu- the routes for their injection can be reassessed with con- tions at the provincial level. Increased emphasis on the fidence that such extra funds will be well spent in help- new curricular areas of creativity, teamwork, and prob- ing to achieve China's goals for 2020. lem solving is an important element of the Decision, as is Rapid technological change, open and competitive the increase in tertiary education enrollments, although economies, and knowledge-based industries will be the both these development areas have substantial resource hallmarks of the coming century. In this environment, implications. The increased flexibility in the structure of stable countries, with well-educated and healthy peo- VET, with greater emphasis for such education placed at ple, will realize the most rapid progress. A strong edu- the tertiary level, while decreasing the emphasis at the cation system can help create a "virtuous circle" of senior secondary level, is an important decision and one increasing economic growth and growing social capital that fits well within the specific recommendations of this in China. The importance of this should not be under- policy note. The move to support the development of pri- estimated. More people must have access to high- vate education will provide for increased access and quality education, and educational institutions must be resources for senior secondary and tertiary education flexible enough to provide it at key points in people's and therefore is a step forward. The central government's lives. The alternative scenario is not attractive. It is one decision to continue the compulsory education project in where large numbers of people are undereducated or the poor areas after 2000 and to increase support for the very narrowly trained, and in effect "unemployable" in poor and minority areas fits squarely with the recom- the emerging economy. The low level of human capital mendations of this report and the World Bank's primary becomes a drag on economic development, and the mandate of poverty reduction. unequal distribution of opportunities to learn and to Several of these policy decision will have substantial achieve upward mobility becomes a threat to social sta- resource implications for both national and provincial Executive Summary 5  governments. These decisions include the massive It is evident from reading the Decision that the expansion of senior secondary and particularly tertiary Chinese Government recognizes that their social and enrollments and the restructuring of the VET system economic development challenges in the 21st century over a short period of time. This expansion of the will be great and the response to these challenges will human resources necessary to support rapid economic have to be substantial and sustained. It is also clear that and social development, again, coincides with the the Chinese Government sees education as playing a World Bank's goals of eliminating poverty. central and critical role in answering these challenges It will be important to monitor carefully efficiency and enabling China to become a middle-income coun- gains that are expected to result from the expanded try by the middle of the 21st century. Implementing enrollments and structural reforms identified in the gov- these education policy changes will take a combination ernment's decision and be ready to modify policies if of political will, strong leadership and large amounts of necessary to ensure that these efficiency gains are human talent and financial resources. We are confident achieved. The Bank stands ready to continue its assis- that China will rise to the challenge. tance in this process as it has done with the Economics of Education Network. Note Additionally, there are a number of areas in which a continuing dialogue between the Bank and the govern- 1 The Bank team, using an Chnese anda anternational comparative ment may well be fruitful. These would include expand- data, has prepared a reference recommendation on the optimal level ing and strengthening the curriculum in the areas of GDP to be spent on education by the year 2020. This analysis and ref- skills for competitiveness and ensuring that all children erence recommendation is contained in Annex 5 and takes into con- sideration where Chinese education expenditures should be in 2020 in senior secondary schools have access to world class compared to other countries in the region that have similar or more curricula. advanced levels of economic and social development. 6 Strategic Goals for Chinese Education in the 21st Century  4a. Study Background _ uch progress has been achieved in China's education system over the last two decades since the start of the "Open Policy." However, much progress still must be made. For instance, recent OECD data shows that China lags behind many other countries in the expected number of years that a Chinese student will complete in their education career (see Figure 1). By 2020, China aims to reach the level of a middle-income country. Education has a central role to play in achieving this goal. In this policy note, the World Bank, with assistance from the Ministry of Education (MOE), set forth strategic goals for education, with the hopes of making an effective and efficient contribution to economic growth and social stability. Context The 21st century will bring new challenges for the education system. Rapid technological change, open and competitive economies, and knowledge-based industries will all be fea- tures of the next century. Economic progress will be most 7  School expectancy for full-time students, 1996 Years of schooling 20 - 2 Other Primary and lower secondary education 15 ' ' '' 4 4 '~~~~~~~~p4 Source: OECD Education Data Base. rapid in countries where people are well educated and Education needs to be a major force in addressing healthy, and where stability is ensured. For China, a these issues. high-quality, equitable and flexible education system People already have expectations for changes in the will be needed to help create a "virtuous circle" of education system. For example, many parents want a increasing economic growth and growing social devel- higher quality and better teachers but without undue opment. The importance of this should not be underes- costs to themselves-in particular, the poor can reason- timated. Education and knowledge must be accessible ably expect to have equal access to high-quality, afford- to a wide range of people, and educational institutions able education. Many parents now expect their children must be flexible enough to provide it at key points in to have access to secondary and even to higher educa- people's lives. tion, and look for choice in the type and amount of edu- In addition, China's whole social structure will con- cation their children receive. Many teachers recognize tinue to be affected by the transition from a centrally their need for new materials and new methods; they planned economy to a socialist market economy. As in also want better pay and living conditions. Many other countries making this transition, inequalities are school and university managers look for greater flexi- rising, diversity is increasing and people are becoming bility and autonomy for their institutions. Students unemployed-many of whom will have only low-level would like relief from the pressures of a highly or narrow skills. These are the results of, for example, examination-driven system. Employers will increas- rural migration to urban areas, new entrants to the ingly look to the education system to provide people labor force, and state-owned enterprises reducing their with core skills who can adapt to change. surplus workers. Unless actively addressed, the result- These are all reasonable expectations. Responding to ing problems may damage social cohesion as well as them will help economic as well as social development. limit economic development. But is the current education system able to deliver them? 8 Strategic Goals for Chinese Education in the 21>' Century  Will it be able to bring China into the ranks of middle- sive society. To do this, children need to be in school and income countries? We think that the answer is "not yet." to be receiving good-quality education, teachers need to Within the current system, the curriculum is fairly be well educated and equipped with good materials. rigid and designed more for a planned economy; fur- There are aspects of the Government's social policies on ther, teaching does not develop problem-solving abili- education that are also inconsistent; in particular the ties or creativity but prepares students for competitive increasing transfer of funding responsibility to parents examinations. At the same time, resources for educa- when coupled with more freedom of choice for the selec- tion are short, with the financial burden increasingly tion of schools is not consistent with a policy intention of falling on parents, and there are significant disparities of equity of access. Freedom of choice for the selection of provision, expenditure, quality and access-which are schools can mean that those families with more resources still growing (see Annex 1). While students in the best may make it more difficult for students with fewer finan- schools now enjoy a high standard of education, a cial resources to enter the best schools. Again, we think much larger number are in schools with poorly trained that the policies need more thought and analysis. teachers, few materials and greater difficulty in contin- For the education system to deliver these economic uing their education beyond the ninth grade. and social goals it needs to be equitable, efficient and of Many of the disparities arise from inequalities in the high quality; it also needs to be better funded. Equity educational finance system. If such disparities grow fur- means that high-quality educational opportunities ther, they could lead to increased social tension and dis- should be open to all regardless of income or location. content among the disadvantaged, both individually Efficiency means that public and private resources and in whole areas. should be used wisely and effectively to provide the highest possible benefit. Quality means that the educa- The strategic role of education tion system should provide students with academic achievement, with social skills and with preparation for There is clear evidence that education affects labor force employment. Better funding requires a higher level and productivity and economic growth. That link is more equitable distribution of government investment, strengthening with increasing globalization, competi- both to make up for investment deficiencies in the past tion for markets and dependence of economies on and also to meet the demands of the 21t century out- knowledge and information. Skill is replacing other fac- lined above. tors as a basis for competitive advantage in the global At its most fundamental, we suggest a two-part economy; the economic strength of a nation will strategy: the first part would be to ensure that there become more dependent on its ability to develop, utilize were adequate resources for the weakest parts of the and manage its human resources. system in order to provide high-quality basic education For education's contribution to economic growth, for all; the second would be to encourage the strongest the Government's policies are not wholly consistent. parts of the system to grow and prosper as fast as pos- There seems to be confusion as to whether economic sible. Such a strategy would enhance equity while also development must precede increased investment in edu- responding to the imperatives of an increasingly com- cation or whether education is a basis for economic petitive economic environment. To implement it will development. We feel that China's education policy require leadership as well as resources. should not wait for economic growth, especially in the In carrying out this strategy, the Government must more remote, poor areas, to provide the revenue to recognize and act on a number of medium- and long- improve education. Investment in education in these term priorities. The first and most immediate priority is areas needs to be made at the same time as investment to provide increased funding for the poorest parts of in the more developed areas. This fundamental issue China to address the problems of inequality in the edu- needs more thought and analysis in order to develop a cation system and to increase access for all of China's single, coordinated and consistent policy. poorest children. The second priority is to increase the Education is also a main driver for social develop- efficiency of the use of current government expenditures ment. It helps people build productive lives and a cohe- for post-basic education, especially by restructuring the Study Background 9  tertiary level. Increased efficiency will ensure the current The remainder of this chapter discusses briefly the funds are spent wisely while increasing the quality of edu- labor context within which the education system has to cation. Coupled with these priorities should be the intro- operate. Chapter 2 deals with general principles of pol- duction of more effective outcome indicators to ensure icy at the national and provincial levels. Chapters 3, 4 that efficiencies have been achieved by the restructuring and 5 then discuss more specific policies in the three sub- of the education system. Once effective outcome indica- sectors of education: schools, higher education and tors are in place and efficiencies are being achieved in the vocational education and training. Chapter 6 outlines post-basic education system the final long-term priority some early steps that the government could take as it of increased funding for the whole education system, moves its education reform agenda forward. Finally, our especially at the post basic levels, can be carried out with report includes a number of appendices that augment some assurance that these new increases in funding will the analysis and recommendations in the text. In partic- achieve improved educational outcomes. ular, there are two matrices showing how various In order to provide guidance for the role of education OECD countries and Eastern European transition in the 21st century, there are three aspects of this strat- economies have attempted to address issues similar to egy that recur as themes throughout our report. The those now faced by China. The latter matrix on transi- new education strategy must: tion economies includes useful comparative information * face the world: an education system that captures on the experiences of these countries as they reshape global knowledge, provides a world-class curriculum their education policies and structures to accommodate and enables China to compete in an international the moves from central planning to an economy more knowledge-based economy; driven by the market (Annexes 2 and 3). a face the people: an education system that ensures equi- table access to high-quality learning, provides people Labor market context with choice about the type and amount of education they can receive, and develops people's skills to build a suc- China's education system needs to be more market cessful economy and a tolerant and diverse society; and focused to deliver the goals of economic and social * face the market: an education system in which educa- development. For the economic needs of the country, tional institutions adapt to changing economic needs in the market that the education system needs to face is order to provide learners with skills that allow them to primarily the market for labor. It is difficult for the edu- succeed in an evolving and changing labor market and cation system to be market-facing unless there is a real that promotes the free flow of information to enable the labor market for it to face: producing flexible, adapt- markets to work and decisions to be well informed. able graduates (from schools, universities or vocational In the chapters that follow we present some of the training) will only lead to their frustration-and to the key issues that need to be addressed: changes in the frustration of education providers-unless they are able structure and responsibilities for educational provision, to find work in a flexible, adaptable labor market. changes in levels of funding and its distribution between We have identified four rigidities in the labor market, areas, adjustments in the volume and the content of each of which is beyond the immediate concern of the education and the more efficient management of education system, but each of which is important for a resources. successful education system. The first three are: The purpose of our report is to help provide * the relative lack of sufficient wage differentials to policymakers with a framework for further discussion. encourage individuals to acquire more skills; We do not try to provide a complete set of recommenda- * the arrangements that supply housing, social support tions because many of the necessary reforms are already and pensions as an integral part of a job package, which recognized in China. Instead, we focus on those aspects make it very difficult for individuals to change jobs; and of strategic reform for which we think there needs to be * the residential restrictions of the hukou system limiting more thought or development; we provide suggestions as access to social provision such as schools-which further to how such work might proceed. adds to the difficulties of people trying to change jobs. 10 Strategic Goals for Chinese Education in the 21st Century  We think that Government has made some recent they are capable of doing, irrespective of its classification. progress in reducing each of these rigidities but the Of course some graduates have strong ideas about which movement remains relatively slow. These rigidities must jobs are "suitable" for them (e.g., in terms of status) but, be substantially reduced as a condition for a successful as the higher education system expands and as the econ- market economy for the 215 'century. omy develops, such expectations must change. Career The fourth rigidity is the one most directly relevant guidance coupled with some form of publicity campaign to the education system: the current occupation classifi- will be needed to change graduates' attitudes as to what cation system, which also defines the qualifications are suitable jobs for them; but a prior need is to change needed for each of the large number of narrowly defined the occupation classification system. occupations. There are two fundamental problems with To serve the labor market, education providers will the current system: first, the classifications are far too need information both about the economy's needs and narrow with too many occupations; flexibility is not about the demands of society, in order to counterbal- achieved by adding a new occupation to the list when- ance the "supply-driven" approach that can be ever one is identified-as happens at present. Flexibility observed as a tendency among academics (in OECD is achieved by broadening the job descriptions and counties too). To be able to respond to such informa- making them less detailed and specific. The second tion, education and training providers need sufficient problem is that the classification system is used too autonomy to do so. The theme of greater autonomy and rigidly to designate specific qualifications as require- delegation runs through much of this report. ments for each occupation; it is much too restrictive to Several countries in Central Europe are in the process require each job to be filled only by someone who holds of making changes in their economies from central the designated qualification. Recently announced planning to a market orientation. Their education sys- reforms in the job classification scheme may add some tems have also been changed to reflect the new orienta- flexibility but it is still too soon to judge the success of tion of these economies. The OECD has studied the the implementation of these reforms. experience of these transition economies in the area of An important negative consequence of the current sys- education reform and has presented its findings on the tem is that it conditions job expectations of graduates- difficulties faced by these transition economies. The especially those from higher education. Graduates findings are presented here in summary (Box 1) and in should be able-and should expect-to take any job that Annex 4 of the report. BOX 1 Findings on difficulties facing education reform in transition economies