Education to get land transfer windfall

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The State Council has ordered 10 percent of profits from land transfers to be plowed into education spending as the Cabinet strives to find diverse sources of funding for at least an extra 200 billion yuan ($30.9 billion) needed to improve learning resources by 2012.

The decree published on the State government's website on Friday also said local governments "should not reduce or remit" the amount of the levy or make additional education charges in order to raise education spending to the level of 4 percent of national GDP.

"In rural areas, teachers live simple lives, like farmers, and, if spending does not increase significantly, excellent teachers will not work in these poor areas," said Xie Jiafang, deputy director of the Kunming Institute of Education Science in Yunnan province.

The 10 percent levy on the profits from land transfers has been backdated to Jan 1, the decree said.

During the five years from 2006 to 2010, China gained more than 7 trillion yuan from land transfers, according to official figures. The forced demolitions of some of the discontented former owners of property being transferred to new owners have often been reported in the media.

China's Mid- and Long-term Plan for Education Reform and Development (2010-2020) calls for spending on education to equal 4 percent of GDP each year, starting 2012.

Education experts said 4 percent is a "bottom line" level for spending compared to developed economies, such as the United States, Japan and those in northern Europe, where spending is typically 6 or 7 percent.

"Four percent is not enough," Xie said. "Many primary students haven't got meat to eat in rural school canteens. The investment must come first, before we can deliver equality of education."

Tao Yuen, deputy director of the education bureau in Shuangjiang county, Yunnan province, said audit figures show his county needs another 20 million yuan a year to meet the government's upgraded requirements for the provision of nine-year compulsory education.

"Out of the 20,000 students in my county, only about 1,000 in the largest schools can learn such things as information technology with the help of computers."

Tao said any increase in the education budget will be used to improve local school infrastructure and buy books and equipment.

The State Councils' decree described education as a "mission of great importance and urgency" while acknowledging that raising spending from 3.56 percent of GDP to 4 percent would be "very difficult".

Though public fiscal spending on education increased by 20.2 percent annually - from 270 billion yuan in 2001 to 1.42 trillion yuan in 2010 - the total spending could not keep up with the double-digit increase in China's economy, experts said.

Moreover, "in some regions, strained fiscal resources cannot support the mission and many local leaders do not have a clear understanding of the important social undertakings", said Hu Xingdou, an economics professor at the Beijing Institute of Technology.

He said audit and education authorities should actively supervise and monitor how land transfer profits and extra education charges are collected and allocated into education budgets, in case local governments misappropriate money.

"But the levies will not be sustainable as land becomes more of a scarce resource in China," he said. "Fiscal budgets and, potentially, support from major State-owned companies should play key roles in achieving the goal."

Education accounted for 15.8 percent - the biggest item of spending - in the nation's fiscal budget in 2010.