Chinese Education: The Truth Behind the Boasts; Parents in China’s big cities sometimes pay donations and steep fees to middlemen to get their children into the best schools

Chinese Education: The Truth Behind the Boasts

By Dexter Roberts on April 04, 2013

In an international survey released just over two years ago, high school students from Shanghai scored at the top in math, science, and reading. Some Americans saw this as a Sputnik moment—a wake-up call for the rest of the world to better educate its young or risk falling behind the Chinese. In March, China’s leadership announced that education spending totaled 7.79 trillion yuan ($1.26 trillion) over the last five years, reaching a target of 4 percent of gross domestic product. “The quality and level of education in China was comprehensively raised,” said outgoing Premier Wen Jiabao on March 5.

The reality is China’s students receive educations of greatly varying quality. Their parents often pay a lot for it, depending on where they live and how ambitious their choice of school—even though China is committed to a system “implemented uniformly by the State,” with “no tuition or miscellaneous fee,” according to the 1986 Compulsory Education Law. Yet some rural families struggle to pay school costs as high as one-half their meager incomes, while up to 130 students crowd country classrooms, according to Yang Dongping, an education expert at the Beijing Institute of Technology and the dean of the 21st Century Education Research Institute. Yang adds that urban parents pay introduction fees of as much as $10,000 to middlemen to win entry into the better schools.The central government’s decision in 1994 to have localities return the lion’s share of their tax revenue to Beijing has made it much harder for poor cities to afford a decent school budget. The annual education expenditure per middle school student in 2010 in Beijing totaled 20,023 yuan, more than six times the 3,204 yuan spent in the poor province of Guizhou, according to the Ministry of Education. Students in an impoverished district of Hubei province were told to bring their own desks to class last year. After the media widely reported this, Chinese vented their ire at officials. “This brings shame on the government,” wrote one microblogger on Sina Weibo (SINA). Says Bill Bikales, chief of social policy and reform for children at Unicef China: “When China did the recentralization of finances 20 years ago, they never really confronted the issue that there would be huge gaps in services between wealthy and poor areas.”

The consolidation of country schools—in response to declining numbers of rural kids as China urbanized—has worsened conditions, as closings outpace shrinking enrollments. In 1997, China had 630,000 primary schools; in 2011 it had 254,000, with average class sizes soaring, says education expert Yang. Primary schools are now more than five kilometers away from home on average, says Yang, so children face long commutes on dangerous country roads.

Rural families pay up to 2,000 yuan annually in education costs, due in part to higher transportation expenses or dormitory fees for students who opt to board. To secure desks near the teacher, families pay 300 yuan per month, says Liao Ran, who runs programs in Asia combating graft for Berlin-based Transparency International. While a few years ago the youngest students almost all went to school, now as many as 900,000 6- to 8-year-olds drop out every year, says Yang.

The estimated 20 million children who have accompanied their migrant worker parents to the cities face a different challenge. Blocked from acquiring the residency papers that grant access to city schools, many migrant parents are forced to pay for lower-quality private schools. Most migrant children must return to their hometowns to take high school and university entrance exams.

Fifteen-year-old Zhan Haite, whose parents hail from relatively poor Jiangxi province, was born in the city of Zhuhai in Guangdong province, where her parents first worked. When she was 5 they moved to Shanghai, where her father now installs phones. After attending primary and middle school in the city, she was refused entry to high school because she is still registered as a Jiangxi resident. She got national attention in the media late last year after she organized an online campaign to change education restrictions on migrant workers’ children. “I want to end the tragedy of migrant children having to go back to the countryside to study,” says Zhan.

“We need to create conditions, strengthen the system’s design, and coordinate the interests of all parties, steadily going forward in an orderly manner” to allow more migrant worker children to attend urban high schools and universities, says Yin Houqing, deputy director of the Shanghai Municipal Education Commission, in an e-mail. “We must consider the interests of migrant children, but at the same time we must take into account the impact on the capacity and sustainable development of our urban resources.”

Even registered urban children face heated competition to get into so-called key schools. Officials focused resources on such schools to train experts to industrialize China in the 1950s. While elitism was supposed to stop with the 1986 law, Yang says parents pay middlemen fees, and make school donations from 200,000 to 800,000 yuan, to win entry to the most sought-after institutions. “Corruption in education has become rampant,” says Transparency International’s Liao.

“In China you are supposed to be able to enjoy free education. But in every good school, all the children are from families with money or connections,” says Guo Jing, 38, who tried to get her daughter into a key school in 2008. “Good connections are all based on spending.” She says she paid a middleman 20,000 yuan to secure a spot in Beijing’s exclusive Zhongguancun No. 3 Primary School but balked when he wanted an extra 10,000 yuan. Her 11-year-old daughter is now at a less prestigious school. “We don’t accept this kind of interview. You should talk to the Municipal Education Commission,” said an employee who answered the Zhongguancun school’s phone but would not give her name. The education commission had not answered faxed questions by Bloomberg Businessweek’s deadline.

The government has often announced crackdowns on arbitrary fees. By 2020, Beijing vows that preschool education will be universal and that 90 percent of China’s young people will attend senior high school. “My dream is to ensure that we can teach students in accordance with their aptitudes, provide education for all people without discrimination, and cultivate every person in this nation to become a talent,” said Education Minister Yuan Guiren at a March government meeting. A lot has to happen before that dream is realized.

The bottom line: Parents in China’s big cities sometimes pay donations and steep fees to middlemen to get their children into the best schools.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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