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Notes on China Blog
Cong Cao, Research Fellow, Levin Institute 
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Has China Spent Enough on Science and Education?
Wed,09/10/08
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This is a fair question, especially after China just mustered the resources to stage an extravagant Olympics. It is estimated that in the preparation of the sports gathering, China at least spent RMB300 billion ($43.7 billion). Of course, given the volume of the Chinese economy – GDP reaching RMB24.7 trillion ($3.43 trillion) in 2007 and given that the money had been spent in a period of seven years, RMB300 billion is an affordable price tag.
In addition to the Bird’s Nest and other sports venues, the hefty bill was mainly used to pay for such infrastructure projects as Terminal Three (T3) of the Beijing Capital International Airport, new subway lines, and environment improvement, which will surely bring long-term benefit to Beijing. Moreover, while the Water Cube, the national aquatics center, is known to be built from the donation of overseas Chinese, the Beijing Capital International Airport Company, as a company listed in Hong Kong stock exchange, is supposed to fund the T3 project by itself.
Still, a significant amount of the RMB300 billion must have been from government. For example, after 2001 when China won the bit to host the Olympics, the General Administration of Sports, the nation’s bureaucracy to run the sports machine, saw its annual budget increased to $714 million, from $428 million the year before, according to a recent Time magazine article.
To put the “gold medal strategy” – pricey for the 52 gold medals that Chinese athletes won at the Olympics – in comparative perspective, one has to look at government spending on such public goods as science and education. In 2006, the latest year in which data are available, Chinese government’s budgetary expenditure on science and technology and education was RMB169 billion ($21.2 billion) and RMB478 billion ($60 billion) respectively.
Reality behind these at-the-first-glance extremely higher expenditures than those spent on sports is disturbing. Although China’s revised “Law on Compulsory Education” took effect on September 1, 2006, its stipulation that students receiving a nine-year compulsory education be exempted from tuition and other charges was not implemented until the fall of 2008, after the Olympics.
Indeed, China’s failure to keep its promise made 20 years early, when it promulgated the Law, on the provision of a nine-year compulsory education “free of tuition” to all primary and junior middle school students made it join the membership of less than 30 such countries worldwide, who have similar policies. Furthermore, China’s expenditure on education as a percentage of GDP has been less than 3 percent for the past 15 years, among the lowest in the world.
In the meantime, China’s spending on basic research as a percentage of the total expenditure on research and development has been around five percent for the past 15 years. During most of the same time frame, government’s share in the expenditure on science and technology has been less than a quarter of the total – shifting its responsibility to enterprises may be counterproductive, making a push for innovation unsustainable in the long run.
In contrast, since the General Administration of Sports has unique right to raise money through lottery ticket sales, it has consistently outperformed the Ministry of Science and Technology and the National Natural Science Foundation, in terms of the money allocated to basic research. As one of the only two government agencies (the other is the Ministry of Civil Affairs for the purpose of the social welfare provision), in 2007 alone, the sports administration sold $5.1 billion worth of lottery tickets with about 17 percent of the proceeds going to its turf.
Given these and the fact that science and education reach a much larger population than the elite athlete-focused “gold medal strategy,” one could only conclude that China has not spent enough on the institutions critical to its future economic competitiveness and social development. |
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