This brings me to the terrible tragedies which have befallen many schoolchildren in China. The New York Times has also penned an article which has attracted much commentary asking why so many schoolhouses crumbled in Sichuan province when the earthquake struck. Certainly, the massive reserves accumulated by China look jarring next to the estimated 10,000 schoolchildren who perished during the earthquake in Sichuan province. Why can't a country with such vast reserves ensure a better standard of educational provision? Of course, there is a tradeoff in that domestic spending would not be helpful in propping up the dollar. Hence, the question that causes me to lose sleep is this: Has China used a trillion plus dollars to ensure that Americans party like it's 1999 while neglecting matters such as health and education at home? It is certainly a controversial thesis, but there are bits of evidence which suggest it cannot be easily discounted.
For instance, it has been extensively noted that economic activity in China has been concentrated in urban areas, giving rise to growing income disparities in this supposedly socialist country which now exceed those in capitalist America. Perhaps unsurprisingly, many of the schools which were adversely affected were in rural areas. Again from the NYT:
The Chinese government has known that many schools, especially in rural areas, are unsafe. Since 2001, the State Council, China’s cabinet, has budgeted roughly $1.5 billion for a nationwide program to repair dangerous schools in rural areas. In 2006, Sichuan Province’s government issued an urgent notice calling for localities to stop using substandard primary and middle schools.An earlier post I featured on China's economy notes that spending on education has taken a backseat in recent years, especially in rural areas. Again, this has gone together with an emphasis on urban instead of rural areas with regard to economic activity:
- In the rural areas, heavy taxation was accompanied by the withdrawal and rising costs of basic government services;
- A development that has garnered almost no attention in the West is that between 2000-2005 the number of the adult illiterate Chinese increased by 30 million, reversing decades of trend developments;
- The way the Chinese measure adult illiteracy implies that all of this increase was a product of the rural basic education in the 1990s and this adverse development coincided closely in timing with the intensification of urban bias in the policy model.
There is a large inequality in the distribution of spending on education across regions and across levels of education. The extent of the shortage of funds for education differs across the country and outcomes vary widely. Also, a comparatively large share of education spending is channelled to tertiary education at the expense of primary and secondary education.Finally, I am actually in agreement with the WTO here when it ties global economic imbalances with the provision of health and education in China:
Imbalances within China--urban versus rural, coastal versus interior--are tied to global economic imbalances in one way or another. Excessive reliance on exports does have its costs. Certainly, it does invite us to ask whether the $1.76 trillion largesse China has provided to the rest of the world could be put to better use, such as educating Chinese schoolchildren in better-designed buildings, for instance. While it may be controversial to link China's mind-boggling reserve accumulation to its inability to provide well-constructed school buildings, these are the sorts of questions more germane to political economy.
also needs to proceed with its plans to increase government spending on social services, such as health and education, and thus human capital, as well as basic pensions, thereby possibly reducing the need for precautionary saving and thus raising consumption. These and other measures to increase consumption would not only reduce China China's reliance on exports for growth, and hence its vulnerability to economic slowdowns abroad, but would also narrow the gap between national saving and gross domestic investment and therefore help to reduce 's large current account surplus. China