From: jzhang@sdcc3.UCSD.EDU
Subject: Re: Fundamental problem of China
Organization: Indiana University
Date: Tue, 21 Jul 92 16:26:47 PDT


In article <1992Jul19.004811.13000@ee.gatech.edu> gt9414b@ferrari.uucp (Wing-Cheong William Man) writes:
>In article <1992Jul18.171036.9661@ulowell.ulowell.edu> cshi@cs.ulowell.edu (Chunde Shi) writes:
>... [stuff deleted]...
>>China central govrnment's budget is 20% of China's GNP. U.S. is 25%.
>>East Europe nation did pretty close as you said. Then what happened:
>>  Party beaucrates used to manage "people's preperty" now owns them.
>>  Most property on sale were bought by foreigners from West Europe, U.S. Arab.
>>not thier own natives.
>>
>
>I'm quite surprised to know that the relative size of China's public sector
>is so small. Where does this figure comes from? Does that include the 
>national enterprises?
>
>William Man


Enclosed is an excerpt of my old article on China's education. Note
the percentage figure (19%) in Table 4 (from China's Statistical
Yearbook) is consistent with that deduced from Tables 2 and 3 (from
UNESCO yearbook).  According to the Asian Development Bank estimate,
China's state-owned enterprises accounted for up to 36% of 
GNP in 1990. However, whether the government can dictate their 
productions and control their profits is another question.


Zhenqin Li


-----------------------------------------
China's Education Expenditure

Zhenqin Li
jzhang@sdcc3.ucsd.edu

...
 
In the following, I present below some interesting statistics, 
from the _World Development Report 1990_ (Annual Report from 
The World Bank) [1], _UNESCO Statistical Yearbook
1991_ [2], and _Statistical Yearbook of China_ 1990 [3].
It is my belief that data about the percentages of education
expenditure in government budget and GNP are relatively reliable
measures of a government's investment in education, which unlike
the absolute amount converted into dollars, are insensitive to 
the fluctuation in the foreign exchange rate. 

Table 1: General Comparison of Economic Development, Health Care and
Education of Some Developing Countries [1]
                            Bangladesh   China    India     Pakistan
GNP per capita ($, 1988)       170        330       340       350
Life Expct at Birth (yrs,1988) 51         70        58        55
Adult Illiteracy (%, 1985)
      Female                   78         45        71        81
      Total                    67         31        57        70


Table 2: Central Government Expenditure on Education as a Percentage
of GNP [1] [2]
                            B'Desh      China     India   Pakistan  USSR
         1972                  ...       ...        2.3       1.2   ...
         1975                  1.1       1.7        2.7       2.2   7.6
         1980                  1.5       2.5        2.8       2.0   7.3
         1988                  2.1       2.3        2.9       2.6   7.8


Table 3: Central Government Expenditure on Education as a Percentage
of Total Government Expenditure [2]
         1975                 13.6       6.3        8.6       5.2   12.9
         1980                  8.2       9.3       10.0       5.0   11.2
         1987                  9.9      11.1        8.5       ...    ...
         1988                 10.5      12.3        ...       ...    ...


Table 4: China's Total Central Government Expenditure as a
Percentage of GNP [3]
                     Total Expenditure    GNP      Expenditure/GNP  
                     (billion Yuan)   (billion Yuan)
         1978         111.1         	358.8        31%            
         1980         121.3  		447.0        27% 
         1987         244.9 	       1130.1        22%  
         1988         270.7 	       1398.4        19% 


Conclusion

As Professors Qian Jiaju and Fang Lizhi pointed out, it is true that the 
Chinese central government expenditure on education/GNP has been 
consistently lower than 3% (the figure would be higher if we include local 
government spendings on education). Whether it is "far less" than India 
and other developing countries is a matter of personal opinion. However, 
if we look at the percentage of education in the central government
budget, we see that China's current education expenditure is
comparable to (if not more than) that of other developing countries,
and even that of USSR.  

Table 4 gives a vivid picture of the shrinking role of China's central
government in the economic activities of the nation, as a result of
the decade of economic reforms. Despite being known as the world's
largest "socialist/communist" country, the percentage of total 
government expenditure/GNP in China is even lower than that in the 
U.S., not to say the former USSR. From this table, we can see that
despite the percentage increase in the government budget on
education, the ratio of education expenditure/GNP has stagnated, or
even decreased after the economic liberalizations and
decentralizations. We may tentatively conclude that people are 
getting rich as a result of economic reforms.  However, the 
society has not found effective mechanism to channel its newly-found 
resources, especially in the private sector, into investment on 
education. It is likely that this structural problem, rather than some
policy conspiracy of the Chinese government, leads to the decline
in the percentage of China's education expenditure in GNP in the recent
years. 

Appendix: A REUTER News about China's Non-State Sector 
--------------------------------------------------------------------------
2. Non-State Sector to Dominate Chinese Economy ....................... 29
--------------------------------------------------------------------------
From:    A CND Reader
Source:  REUTER, 04/11/92
 
MANILA -- Communist China's buoyant non-state sector could account for
three-quarters of its fast-growing economy by the end of the century, the
Asian Development Bank (ADB) said in a report on Saturday.
 
The Manila-based bank said the non-state sector could contribute 75-80 per
cent of China's gross national product (GNP) by the year 2000. The bank's
annual economic outlook said China's economic reforms had resulted in the
rapid expansion of the non-state sector over the past decade.
 
It accounted for 64 per cent of GNP by 1990, against 49 per cent in 1978
when the reforms began. The world's largest nation has just embarked on a
new phase of reforms. "The buoyant growth of the non-state economy is
expected to continue over the remainder of the current decade, under which
circumstances its contribution to GNP could reach 75 to 80 per cent by the
year 2000," the 52-member bank said.
 
The ADB report said the non-state sector included collective and private
enterprises, as well as foreign and domestic joint ventures. It said non-
state enterprises were quick to reap the benefits of the dismantling of
rigid central planning controls.
 
By 1990, about 464 million people or 82 per cent of the total labour force
were employed by the non-state economy, the ADB report said. The non-state
sector accounted for 95 per cent of agricultural output and 46%  of gross
industrial output in 1990.
 
It said collective ventures, of which the township and village industrial
enterprises were the most important, maintained the largest share of
output. But foreign-funded enterprises were becoming an increasingly
important part.
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