Relatively poor western and rural areas where some 64 percent of China's population lives will receive priority in developing education over the next four years, with the Central Government allocating 10 billion yuan (US$1.2 billion) each year to the areas. This large allocation, at unprecedented levels, reflects the Central Government's determination to propel educational development in western areas so as to help advance the economy there. The first national meeting on education in rural areas held by the State Council in September 2003 set forth specific goals of the development of education in rural areas and important policies and measures to be taken. By 2007, students in rural and mountainous areas will be exempt from tuition, textbook expenses and fees for boarding schools, in an effort to prevent school dropouts. According to educational guidelines issued by the Ministry of Education on March 3, 2004 China has set a goal of ensuring the nine-year compulsory educational system covering at least 85 percent of the western area, basically eliminating youth illiteracy in the region. To fulfill the objective, Education Minister Zhou Ji pledged China will allocate more funds from the central budget to pay for approximately 60 percent of the local rural educational expenditure and 78 percent of local teachers' salaries.

In 2003, 3 billion yuan was allocated by the Central Government as a special fund to support compulsory education in impoverished areas; 2 billion yuan, out of a planned 6 billion yuan, was spent on renovation of dilapidated school buildings in the countryside; 1.4 billion was used for modern facilities for remote education; and expenses for free textbooks have been increased from 200 million yuan to 400 million yuan allotted by the Central Government.