Global Trends and Relevant Issues in Chinese Education

1
Global Trends and Relevant Issues in Chinese
Education
Public Private Partnerships
Beijing, China 1st November, 2005

2
Structure of Presentation

• Challenges for China
• The Knowledge and Education Challenge
• Global Trends in Education and Training
• Broad Overview of Education and Leaning System in
  China
• Key Challenges of Life Long Learning for China
• Greater Partnership between Government and the
  Private Sector
• Getting More Private Sector Participation in
  Education and Training in China

3
Challenges to Chinese Development

• Increasing Globalization and International
  Competition
• Limited Natural Resources
• Need for a more knowledge intensive growth
  strategy
• Providing productive employment for
  Migrants from
  rural to urban
  Workers laid off as result
  of Chinas economic restructuring
  
  New entrants to labor
  force
• Increasing Inequality
• Need to turn abundant human resources into
  strategic advantage

4
An Increasingly Globalized and Competitive World
Economy

• Increasing Globalization
• Rapid reduction of transportation and
  communications costs
• Increasing global information (political,
  cultural, socio economic)
• Strong trends towards regional integration
  (NAFTA, EU, ASEAN3)
• Increasing Competition
• Significant trade liberalization is creating
  larger global market and increased competition
• Share of exports and imports to GDP has increased
  from 38 in 1990 to 52 in 2002
• Value added directly controlled by MNCs is 27 of
  global GDP in 2002
• Underestimate doesnt include backward
  supply linkages or forward linkages to marketing,
  distribution, service, etc.

5
Education and Innovation as Key Elements for
Competitiveness and Growth

• Education and Innovation are becoming more
  important the increase in speed of the
  creation and dissemination of new knowledge
• Education is the fundamental enabler of the
  knowledge economy and a key to long term
  competitiveness and growth
• Not just basic and secondary education, but
  higher education and the constant upgrading of
  skills
• This is a challenge for all countries of the
  world
• There is also increasing competition for people
  with high level skills
• Innovation is becoming a more important element
  of competitiveness and growth there is greater
  mobility of products, services and knowledge.
• A larger percentage of a countrys economic
  growth can be attributed to more effective use of
  knowledge, even in developed countries
• Countries behind the global frontier can
  dramatically increase their performance by
  improving their ability to innovate
• Expenditures on RD globally have been
  increasing, particularly the share contributed by
  the productive sector

6
Key Challenges for Education Training

• Increasing globalization and competition
• Need higher level education to keep up with and
  make effective use of rapidly changing knowledge
• Also need high level scientific and technical
  manpower to create new knowledge
• But also need system of continuous training in
  order to constantly up-skill or re-skill people
  who have already passed through the formal
  educational system
• Therefore need to move to system of life long
  learning
• Needs to cover all levels of formal education as
  well as
• Enterprise based training
• Plus all kinds of specialized training to
  re-skill people
• As well as education and training for persons who
  have already left labor force
• This system will need to have
• Multiple public and private providers of
  education and training
• Multiple pathways to different levels of
  competence
• Coordination among many suppliers/accreditors/regu
  lators

7
Key Issues that Need to be Addressed for An
Effective System of Life Long Learning

• Assessment of peoples education and skills
• Not just years of education or raw ability scores
• Also functional ability such as measures by OECD
  adult literacy tests, PISA
• Plus specific job related skills
• Certification and accreditation
• Not just in countries but also across borders
• And not just for physically present universities,
  but also for distance learning programs
• Financing education and training
• Government, vs firm, vs. individual
• Full market vs. grants and loans
• Effective use of information technologies in
  general and distance education
• In classrooms computer based instruction,
  internet materials, video, etc
• Radio, TV, Interactive video, internet based
  courseware and simulations, etc.
• Information on
• Needs of market,
• Quality of different providers,
• Quality and skills of students/workers

8
Implications for Role of Government and
Structure of Education and Training Systems

• Implies rethinking the role of government
• What does the government need to provide? What
  can be provided by the private and non-government
  sector?
• Who can best set the standards and do the
  accreditation? What should be compulsory and what
  voluntary?
• What should be the financing role of government
  versus that of parents or corporations?
• What role does government have in ensuring equity
  as there is a growing private system?
• How can government promote development of an
  education loan market?
• Implies rethinking and improving structure and
  content of education and training systems
• Major challenges in what content and skills
  should be given at different levels of formal
  education
• How to do this in the most cost effective way?
• We are moving to system of just in time learning
  for whatever is the relevant need

9
Global Trends in Education and Training

• Increasing educational attainment
• Continued high returns to higher levels of
  education until very recently
• Increasing contribution of education to GDP
  growth
• Increasing globalization of education
• Increasing tendency for adults to go back to
  school or to get new skills
• Growing amount of training provided on the job or
  by going back to formal education
• Increasing private provision of education
• Increased need to approach education and training
  as life long process from cradle to grave

10
Changing the Education Training Paradigm

• Traditional Model
• Information based
• Rote learning
• Teacher directed
• Just in case
• Formal education only
• Directive based
• Learn at a given age
• Terminal education

• Knowledge Economy Model
• Knowledge creation/application
• Analysis and synthesis
• Collaborative learning
• Just in time
• Variety of learning modes
• Initiative based
• Incentives, motivation to learn
• Lifelong learning

11
Three Challenges for
Education and Training
in China

• Stock Challenge
  upgrading skills of people
  already out of the formal school system
• Flow Challenge
  expanding formal educational
  enrolments and increasing quality
• Dynamic Challenge
  adjusting education and training to
  rapidly and constantly changing needs

12
Stock Challenge in China

• Rapid creation and diffusion of knowledge means
  adults constantly have to learn. China has to
  upgrade the skills of 700 million workers
• Improve training to millions of rural migrants
• Retrain millions of laid off workers
• Upgrade skills of hundreds of millions of
  employed persons
• Provide education and training to hundreds of
  millions of adults outside the labor force
• China needs
• Multiple mechanisms for continuous training
  beyond formal education system
• Effective system for skills assessment and
  certification
• To exploit potential of information and
  communications technologies to expand training
  opportunities

13
Flow Challenge in China

• China need to continue to expand access and
  improve the quality of its formal education
  systems which has more than 240 million students
• Education system must teach students how to learn
  through their lifetime regardless of when they
  leave it implies need for
• Better teaching and learning pedagogies for core
  skills
• Broader interdisciplinary approaches
• Financing mechanisms to expand access and improve
  quality
• China need to address both stock and flow
  challenges, though severely financially
  constrained

14
Enrollments Tertiary Sector
15
Chinas Gross Enrollment Rates
.
. . still some challenges ahead
16
Dynamic Challenge in China

• In designing system need to take into account the
  changing population structure
• Because of one child policy, school age
  population is already starting to decrease at
  primary school level
• But still need to expand enrollments at higher
  level
• And need to plan for different mix of students -
  more adult learners at higher level
• Need to take into account changing economic
  structure resulting from rapid growth
• Decrease in agriculture, increase in industry and
  especially in services
• Changing occupational structure and skill
  requirements - especially of higher value
  knowledge skills in service sector
• Need to update the content of curriculum and
  training to be relevant to changing needs

17
Overview of Chinas Formal System
20 Million (2005)
Higher Education
950 inc
90.3 Million
Secondary Education
2.1 Million
72 inc
52.4 Million
130 Million
Basic Education
130 Million
2 inc
1990
2001
18
Chinas Learning Needs Beyond Formal Education
Beyond Retirement Age
Training for the unemployed
Labour Force (750m)
Remedial/ Updating/ Upskilling the Participating
Workforce
Adult learners
Government Failure students out of school
Higher Ed
Secondary
Formal Education (244m)
Basic Education
19
Key Challenges for LLL for China (1)

• Fragmentation and Lack of Coordination of System
• Many ministries involved controlling different
  parts
• Growing private universities and training
  programs
• Need for a More Integrated and Coordinated
  Approach
• Need system that allows for multiple providers
  and multiple pathways to different levels of
  education and skills
• This requires broad set of general rules and
  standards and coordination and mutual recognition
  among multiple systems
• Great Needs, Limited Finance, Imply Need for
  Innovative Approaches
• Govt cannot afford to finance increase in access
  and quality
• Need to tap potential for private financing

20
Education expenditures from public and private
sources as share of GDP (1980-2001)
Source Angang Hu 2003
21
Funding Comparatives
. . . the most populous examples
Sources UNESCO 1999 2000 World Bank 2001 US
Department of Education 2001 Department of
Education Skills UK, 2002 China National
Center for Education, 2002/3 OECD 2002 All
Sth East Asian countries without China India
22
Financing Challenge of LLL Increasing Resources
for and Productivity of Education

• Increase public resources for education
• Increase students contributions to cost of
  delivering public education, including loans
• Increase private provision of education and
  training
• Develop student loan and education finance market
• Improve the productivity of education
• Improve the incentive regime and management of
  education systems
• Improve knowledge management in the education
  sector
• Reduce the time it takes to get different levels
  of education
• Improve the pedagogy of education
• Use new ICT technologies more extensively

23
Key Issues in LLL for China (2)

• Poor Demand Supply Links of Education and
  Training to Labor Market
• Mismatch between skills supplied and needs of
  market
• Poor information on career options, income
  streams, quality of different providers
• Need for Massive Upgrading of Skills
• Require innovative ways to reduce skills gaps of
  population already in labor force
• Need to put in place system to continuously
  upgrade skills
• Need to Improve Quality and Content
• Quality at all levels low
• Need to improve assessments
• Need to reform curriculum and teaching pedagogies

24
Key Issues in LLL for China (3)

• Need to Realize Potential of ICT Technologies to
  Expand Access and Quality of education and
  training
• Need to develop more providers
• Need to help create more content
• Need for Accreditation, Vocational Qualification
  and Certification
• Need better accreditation of education and
  training providers
• Need effective system for assessing and
  certifying vocational qualifications (and not
  necessarily just by government)

25
Need for Greater Partnership between Governments
Private Sector in Education

• Government has key role as architect and
  coordinator of life long learning system
• Legislation / Regulations and standards / Quality
  assurance
• Equity
• Finance
• Information on needs of dynamic and rapidly
  growing system
• quality of different education and training
  providers, and qualifications and competencies of
  people
• Encouragement for development of specialized
  intermediary institutions to fill gaps
• Key private sector role
• Increasing tuition payments by students in public
  system
• Increasing provision of education at all levels,
  but especially higher education and training
• Helping develop the education market finance,
  information, content, standards, qualifications,
  accreditation

26
Spending Per Student Tertiary Sector
US per Student (in Constant 1995 US)
816 5 decrease
856
Sources World Bank Development Indicators World
Bank Edstats UNESCO Global Education Digest
OECD Education at a Glance IFC calculations
Developing Peers includes Angola, Argentina,
Bangladesh, Bolivia, Brazil, Bulgaria,Chile,Colomb
ia, Dominican Republic, Ecuador, Egypt, Ghana,
Guatemala, Hungary, Indonesia, Jamaica, Jordan,
Kenya, Madagascar, Malaysia, Mauritius, Mexico,
Mozambique, Pakistan, Peru, Philippines, Poland,
Romania, Russia, Senegal, South Africa, Thailand,
Trinidad Tobago, Turkey, Uganda, Uruguay, and
Vietnam
27
Education Expenditure Comparatives - 2003
China needs around 50 increase on current public
expenditure to exceed world average
28
China Projected Enrollments
2000 to 2020
Millions
Source ? ? Zhang Li December 2004 - ??
?????????? - ?? - ????????? -
National Center for
Educational Development Research, MOE, China
29
Three things that attract
private sector investment !

• Positive regulatory environments
• Financial incentives and returns
• Opportunities for good corporate citizenship

30
Private Investors Will Avoid . . .

• Ineffective regulations and frameworks
  commercial uncertainty
• Political instability
• Revenue controls / capping tuition fees
  can
  heighten commercial risk where marginal returns
  exist can jeopardize commercial
  objectives, including capability to invest in
  higher quality inputs
  can cause insufficient financial returns
  for servicing debt, or to provide fair returns
  to shareholders
• Uneven playing fields where loans to Govt.
  hybrids SOEs are made on soft / favored /
  not-real-profit basis where vested interests
  are impervious to change
• Inefficient / inconsistent / uneven approval
  processes where
  private investors are disadvantaged

31
Public Private Partnerships Success Factors

• No revenue controls (eg. capping tuition fees)
• (Foreign) no limiting equity ownership
• Even treatment of public and private providers
• Meets market demand (eg. growing demand for
  skilled labor)
• Incentives for private investment and
  participation financing and
  provision
• Positive regulations for private investment
  more enabling and less
  controlling

32
Examples of Risk Sharing Structures
Examples
Scenario 2
Scenario 1
Local Bank 79
Local Bank 50
Third Level
IFC 10 Foundation 10

Mezzanine Level
IFC 10
University 5 Local Bank 6 Total
11
University 10 Foundation 10
Local Bank 10 Total 30
First Level
33
Eduloan - South Africa
private financing for
students attending public institutions

• Started Yr 2000/01 initial IFC investment
  US2.8 million

• Payroll-based lender collections through
  payroll deductions

• Students are working bank/employers share the
  risk

• Access to public University Technikon
  programs soon extends to professional training
  including nursing and other programs

• Delinquencies have been low (less than 2)

• EO 2003 there were 49,000 students being
  financed expected to reach US 40 million
  portfolio (est 97,000 students) by EO 2006

• Loan amounts per student are small - est. up to
  US 500 range
  repayable within 12 months

34
New innovations for donors . . .
Donors are beginning to look
for other options
how to better optimize the use of available
funds
Traditional model
25 million 5000 FTE students _at_ 5000 tuition
fees
35
1
Example Only
The Advent Of Donor Interest In Partnering With
Local Banks Investors?

Less 0.5m
40
30
40m 8000 FTE Students
36
Previous vs. New
New
40m 8000 FTE Students



Total 5000 FTE Students
Total 11000 FTE Students
37
1
Example Only
The Advent Of Donor Interest In Partnering With
Local Banks Investors?

Less 0.5m
40
30
40m 8000 FTE Students
38

The Next Wave . . .
myth or reality?
Donors are interested in risk sharing initiatives
to leverage private sector financing
What about governments?
39
World Bank Group
4 decades of education lending
65
22
Projects supporting more than one level of
education or projects such as those supporting
lifelong learning that do not fit well into one
of the other categories
40
IFCs Growing Education Portfolio

• Universities
• Colleges
• Technical Vocational Education Training
• Education Communications Technology Platform
• Schools
• Education financing facilities
  
  student financing
  
  smaller institutions
  
  special purpose funds

41
PPPs todays examples

• Private provision supplementing delivery to
  remote / distance settings
• Private sector technology and communications
  solutions for public institutions
• Private foreign providers internationalizing
  curriculum with local public providers
• Foreign private investors partnering with public
  institutions in local joint private/commercial
  initiatives
• Private medical school partners with a public
  hospital to become a teaching hospital

42
PPPs todays examples

• Private agency establishes degree granting
  institute and provides programs on behalf of a
  public regulatory body
• Private institution establishes information
  centers / libraries for public institutions
• 8. Private banks establish student financing
  facility for public and pvt institutions

43
??? . . . ???!
It doesnt matter if a cat is
black or white . . . .
as
long as it catches mice.
Deng Xiaoping