Shaanxi Xi’an Preschool Education Development Program As the People's Republic of China (PRC) transitions from a middle-income, manufacturing-based economy to a high-income innovation economy, investing in the human capital of its future labor force is key. As the first step in lifelong learning, investment in early childhood education (ECE) pays off for society, delivering significant social and economic benefits that include increased labor productivity and reduced inequality. Evidence confirms that participation in ECE is associated with additional years of schooling, a key indicator of human capital, and results from the PRC were higher than the pooled average of 12 countries. The government has made significant efforts to ramp up support at this important level. Under a series of national ECE action plans, the PRC's gross enrollment ratio (GER) for 3-year ECE increased by 23 percentage points from 56.6% in 2010 to 79.6% in 2017, but the country has yet to attain the near-universal enrollment (over 90%) achieved in neighboring countries Japan and the Republic of Korea, and in many Organisation for Economic Co-operation and Development (OECD) countries. The government recognizes that promoting equitable access to high quality ECE is an effective strategy for inclusive development, and has set ambitious national targets that include, by 2020, a GER of 85% for 3-year ECE for children aged 3?6 years, and a coverage rate of "public-interest kindergartens" ?comprising public kindergartens plus affordable privately-owned kindergartens?of at least 80% of enrolled children.

Located in Shaanxi province, the rapidly growing city of Xi'an is facing a major shortage of affordable kindergarten places, which threatens to widen existing gaps in access and perpetuate inequality. Comprising 11 districts and two counties, Xi'an's increasing population is a result of both the 2016 two-child policy and the 2017 relaxation of household registration policies for migrants. The number of permanent residents grew from 8.8 million in 2016 to more than 10 million by the end of 2018, and is projected to exceed 11.4 million by 2025. Increasing privatization of ECE has led to a proliferation of private kindergartens that charge high fees, which creates cost barriers for low-income families. About 70,000 children attend informal child care centers with uneven quality. With several gaps in the provision of affordable high quality ECE, the Xi'an Municipal Government (XMG) has requested Asian Development Bank (ADB) support for a results-based lending (RBL) program based on the comprehensive Xi'an Preschool Education Development Plan, 2019?-2025. 

Xi'an has made notable progress in developing ECE especially over the past decade, including through a series of three 3-year ECE plans, a plan for quality improvement, and guidelines for managing privately-owned public-interest kindergartens. However, several critical challenges remain. The 2019?-2025 plan contains a sector analysis that diagnoses the key constraints, including (i) insufficient kindergarten seats to meet current and projected demand; (ii) a geographically imbalanced distribution of high quality public-interest kindergartens; (iii) a shortage of qualified ECE teachers and insufficient in-service training opportunities; and (iv) a need for better financing and cost-sharing mechanisms, regulation, and supervision of ECE, particularly for private kindergartens. A lack of innovation in the curriculum and in the delivery of ECE also affects kindergarten quality. The plan notes that in 2018, a total of 75% of Xi'an's 1,780 registered kindergartens were considered public-interest (36% were public). The Xi'an Education Bureau (XEB) assesses 38% of the existing kindergartens as class IV or V, meaning they do not meet the standards to be considered high quality (either class I, II, or III or designated as a Shaanxi provincial demonstration kindergarten). To address these challenges, the 2019?-2025 plan's intended results include accelerating development of ECE to benefit all while elevating quality and promoting balance.

Gender issues in ECE. The XEB forecasts a shortage of more than 118,000 kindergarten seats by 2025. Children's lack of access to kindergarten has an impact on both children's future learning outcomes and labor market productivity and on their mothers' ability to engage in the formal and informal labor force. A lack of sufficient kindergarten spaces increases women's unpaid care work and time poverty. The proposed RBL program aims at effective gender mainstreaming and will explore these and other gender issues in ECE during program preparation, including (i) boys' and girls' equal access to enrollment, (ii) gender-responsive and inclusive ECE curriculum, (iii) the low representation of men among preschool teachers, (iv) the involvement of fathers in parenting education, and (v) the issue of migrant workers' left-behind children, who are more likely to be girls.

Lessons from ADB country and sector engagement. ADB's education sector partnership with the PRC has evolved from smaller investment lending for technical and vocational education and training (TVET) to larger RBL operations in both TVET and ECE. For example, an ongoing TVET project in Nanning, Guangxi is responding to the shortage of ECE teachers. A first ADB ECE lending operation is being developed in Shangrao, Jiangxi province and can provide lessons for the proposed program in Xi'an. Ongoing TVET RBL programs in Guizhou and Guangxi have confirmed the modality's suitability for sector programs that involve many stakeholders. Experience has also shown that RBL is particularly appropriate for large-scale systematic teacher training. Lessons include the need for (i) stakeholders to understand the nature of the program including deliverables for meeting the agreed targets and disbursement-linked indicators (DLIs), (ii) robust financial planning by the executing agency because disbursement is made based on achievement of DLIs, (iii) a strong monitoring mechanism, and (iv) close communication between ADB and the executing agency on progress monitoring towards DLI achievement.