In September 2003, the State Council held the National Conference on Education in Rural Areas, deciding to establish a system that helps poor rural students receive compulsory education.

A timetable of goals was set up. By 2007, all rural students in poverty, whose total family income is below 625 yuan ($75.5) annually, at compulsory education age (between seven to 16) are eligible for exemption from tuition and textbook fees. Poor boarding students are offered a living allowance. The goal of the system is to allow no student to drop from school due to inability to pay the costs.

In March 2004, the Ministry of Education issued the 2003-2007 Action Plan for Invigorating Education. According to the plan, China will boost efforts to ensure that the coverage rate of the nine years (six years of primary school and three at junior middle school) of compulsory education hits 85 percent in its western region.

In the early 1990s, the Chinese Government put forward the goal of making nine-year compulsory education universal by the end of the century and formulated a series of policies to realize this goal.

"Universal" means 85 percent of all school children are able to receive public education for at least nine years. By 2000, China achieved that goal. The remaining 15 percent primarily dot rural areas in the west. Those areas have the lowest rate of compulsory education in the nation; the highest county registered only 76 percent of its children in schools. Underdeveloped education in China's rural west has become the biggest hurdle for the country's goal of compulsory education.

"An important factor that restricts the development of compulsory education in rural areas is lack of funds".

Over the past five years, the government has put more money into education. The proportion of education funding to China's GDP has gone up from 2.45 percent to 3.41 percent. National funding for education in rural areas reached 99 billion yuan ($11.96 billion), increasing 1.3 times in five years time. Meanwhile, China has also encouraged non-governmental organizations and individuals to aid education. "Project Hope," for example, is a government-conceived initiative that encourages the general pubic to donate to poor students as well as help establish schools in poor areas.

Nevertheless, since 70 percent of China's population resides in rural areas, per-capita educational funding is very small. According to statistics from the Rural Development Research Center of the State Council, in 2001, public funds for education in rural areas only amounted to 28 yuan ($0.97) per student for an entire year. Take a school of 100 students as an example. Funds for one term for a school that size in some of the poorest parts of rural China is only 1400 yuan ($169.1), which cannot even afford the regular maintenance of teaching facilities.

Another reason for limited compulsory education, particularly in rural areas, is unbalanced economic development, which directly enlarged the gap in educational input between urban and rural areas.

In 2002, the budget for education for Beijing Municipality was over 11.83 billion yuan ($1.43 billion) while the money for education in Qinghai, a large province just east of Tibet, was nearly 1.58 billion yuan ($190.58 million). The average funds for primary and middle schools in rural areas are much lower than that of the national average. Even in areas that have installed compulsory education, there are sharp differences between rural and urban education, especially in terms of access to technology. In cities many schools have plugged into the information age, while in rural areas many students have never seen a computer.

To pay teaching staffs and administer facilities, rural schools short of funds are compelled to collect money from students. But only those who can afford the tuition can attend. In 2003, 5.47 percent of the middle school students in rural areas dropped out of school because of financial difficulty, according to sources from the Ministry of Education.

Lack of funds also leads to lack of teachers in rural areas. In Pan'an Primary School in Gangu County, northwestern Gansu Province, there are over 1,300 students, but only 39 teachers.  Because of poverty, lots of teachers have tried to transfer to other places and some have quit their schools and changed to other jobs since the school is short of staff, many teachers have to teach several subjects, like Chinese, mathematics, music and physical education. Some schools only have one or two teachers, who are responsible for six grades of students.

According to the Ministry of Education, the coming years will see a continual increase in funding for education at a rate of about 1 percent annually. That money will mainly go to rural areas.

As of 2004, the fund fee for textbooks will increase from 200 million yuan ($24.15 million) in 2003 to 400 million yuan ($48.31 million) every year. Students from 56 economically strapped counties in the western Xinjiang Uygur Autonomous Region are now exempt from textbooks and tuition fees.

With more educational funds allocated to rural areas, problems in developing rural education will be gradually solved.

As China's poor population is concentrated in its rural western region, the difficulty of rural education also can be found in the west.

Urban school teachers have it vastly better than their rural counterparts in western China.  There are no modern teaching facilities and even the most basic classrooms or desks cannot be guaranteed.

As a sort of intra-national faculty exchange, eastern schools send their better-trained teachers to western areas to help with local educators, while the latter send teachers to study in eastern area schools.

Gansu, a long slender province just west of Inner Mongolia, is a sister-region to Tianjin, a municipality in the east, in terms of educational assistance. In 2002, Tianjin sent 100 teachers from 100 primary and middle schools to 100 schools in 13 counties in Gansu. Tianjin has also donated money and computers, worth of over 850,000 yuan ($102,657).

The Ministry of Education takes information technology as the key to improve the education in the west. A "modern distance education project" in rural primary and middle schools is supposed to fill this technology gap.

A total of 10,000 experimental schools were set up in western areas already. State investment totaled more than 1.34 billion yuan ($162,319 million). The Ministry of Education has decided to work hard to connect primary and middle schools above the county level in eastern areas and those at or below the county level in western and central regions into China Education Broadband Satellite Net before 2005, so that the western and eastern schools can share the educational resources.

By 2007, all junior middle schools in rural areas will have computer classrooms. All primary schools in those areas can join satellite teaching program, with a shared pool of teaching tools and materials.

The goal of the Ministry of Education is to let children living in rural areas enjoy the same high-quality educational resources as their peers in urban areas.