44 1978, as reflected in the huge fall in illiteracy and nearly a doubling of life expectancy.<sup>85</sup> Broad education and health indicators have continued to improve during the reform period. However, the pace has slowed down considerably. Indeed, China seems to have lost some of its lead among developing countries in East Asia in these fields. In particular, China does not rank very high today among developing countries in terms of public-sector spending on education and particularly not in health care (UNESCO, 2005; World Developing Indicators, 2005).

In the case of primary school enrollment, China today seems to be on level with other countries in East Asia with about the same per capita income. However, in spite of considerable progress in education during the last half-century, only a modest fraction of today’s adult population has received more than elementary schooling.<sup>86</sup> Education is also very unevenly distributed across geographical areas and population groups.<sup>87</sup> Therefore, there is a strong relationship between children’s socio-economic background and their education.<sup>88</sup> Girls in remote rural areas lag behind the most, especially those who belong to minority nationalities.<sup>89</sup> These distributional problems in the field of education are largely the result of the relatively small tax financing of education in China, and a correspondingly large share of non-government (“non-budget”) financing, including payments from various organizations and out-of-pocket money from households. Non-government financing seems to account for 32-46 percent of the total spending on education,<sup>90</sup> and according to Zhang and Kanbur (2005), private out-of-pocket money has increased from about 2 to

> 85 The illiteracy rate fell from 80 percent in 1949 to about 32 percent by 1980 (Zhang and Kanbur, 2005). Life expectancy from birth increased from 35 years in 1945 to 68 years in 1981 (China Human Development Report, 2005).

> 86 For instance, in 2000, 16.5 percent of the population aged 25 or older had high school training, 4.3 percent college level education, 1.4 percent bachelor’s degree and 0.1 percent an advanced degree (master’s or doctor’s degree); see, Holz (2005b, Table 4). No more than about one percent of a relevant cohort is currently in research training; see UNESCO (2005); EU (2005); Freeman (2005).

> 87 Adult illiteracy is about twice as high in rural as in urban areas. Moreover, for the country as a whole, illiteracy among adults is reported to be 2.6 times higher for females than for males (UNDP, 2005, p. 3). According to a World Bank report (2001), about half the boys and nearly all the girls in some of China’s poorest villages do not even attend school, and they are not likely to ever achieve literacy.

> <sup>88</sup> Indeed, according to the World Bank (2002, pp. 42-43), the share of children from poor families who complete basic education fell from 68 percent in 1988 to 53 percent in 1995 in non-poor regions, and from 54 percent to 42 percent in poor regions. The population census in 2000 also shows a slower improvement in educational attainment during the 1990s for ethnic minorities than for the Han majority, which constitutes 92 % of the population.

89 For a summary of the socioeconomic status of ethnic minorities in China, see West (2004). 90 The highest figure, 45 percent, is reported by Chow and Shen (2006).