China to Waive School Fees for 150m Rural Children

China will waive tuition fees for 150 million rural children next year in an attempt to close the education gulf that has opened up between rich and poor students since the start of the country's market reforms.

The 15bn yuan (£1bn) scheme was hailed by the state media as a major element in the government's construction of a "new socialist countryside", but it will have to be followed by more funds if China is to shed its reputation as one of the lowest education spenders in Asia.

Under the plan, pupils will save £9-12 per year, which is a significant sum of money for rural families living on an average annual income of £195. "It may not be a big sum of money for an urban family, but it can be something important for a rural one, especially one in poverty-stricken areas," Liu Shangxi, an official with the ministry of finance, was reported as saying in the state-run China Daily.

Free schooling for all was once one of the proudest boasts of the communist state, but in the past 25 years, the state has put a priority on economic rather than social development.

Although the nine-year compulsory education is nominally free, cash-strapped - and often corrupt - local authorities have introduced a raft of supplementary fees on everything from chalk and textbooks to classroom heating and telephone bills.

Along with healthcare, education is now the biggest financial burden for peasant families, whose average incomes are a third of urban levels. In the most impoverished areas, such as Gansu, Sichuan, Yunnan and Tibet, many children - especially girls - have to drop out of school because their parents cannot afford the fees.

In the city, most students have access to computers and the tuition fees at private international schools can rise above £10,000 per year. But in remote mountain regions, some children are so poor that they have to practice their Chinese characters by writing in the dust with twigs and old batteries. Such inequalities have contributed to a wave of protests that has alarmed the government. Last year, the government reported 74,000 "mass incidents", up sevenfold since 1994.

To placate a restive countryside, the prime minister, Wen Jaibao, announced plans to redistribute wealth and create a "new socialist countryside" during this year's National People's Congress.

Higher education spending was among a raft of measures, including a ninefold increase in the budget for rural healthcare, aimed at reducing inequality. But the government has a very long way to go to narrow the gap that has opened up between the two Chinas.

Since 1986, per capita spending on health has fallen to the lowest level in Asia. As of last year, it stood at 2.96% of China's gross domestic product, compared to a global average of 4.2%. In its latest five-year plan, the government said it would gradually increase the education budget to 4% of GDP. Although the waiving of fees is likely to be welcomed by students, it could create a headache for poor local education authorities unless they receive compensation from the central government. Rural schools already owe their teachers more than 10bn yuan in unpaid wages, state media have reported. This has contributed to a severe shortage of qualified teachers in the countryside, where school wages are so low that many teachers can earn more by working as maids in the city.

The last time the central government announced free education for all, it failed to provide the funds to back its policy. As a result, many schools were obliged to introduce "incidental fees" that were in many cases higher than the original tuition fees.