A healthy and competitive education system requires more than increased expenditure

China spent 5.22 percent of its GDP on education in 2016, according to a report released by the Ministry of Education in September. With 37 million college and university students around the nation, China now has the largest higher education system in the world.

The Ministry of Education says it has met the government target – spending four percent of GDP on education for the fifth consecutive year. But more is needed than just money to improve the nation's education system and China's competitiveness.

China's education expenditure as a proportion of the economy has long been considered substandard. Despite establishing the four percent spending goal in 1993, it took almost two decades for the government to get there. In 2012, China exceeded this benchmark for the first time, spending 4.28 percent of its GDP on education.

But there are several other ways China needs to reform to establish an adequate, fair and competitive education system.

A major issue has long been the unequal distribution of expenditure between urban and rural areas, and between the more prosperous eastern regions and the poorer inland west.

According to research conducted by Scott Rozelle, an American development economist, about 63 percent of children in China's officially designated “poverty areas” drop out of school after ninth grade. While there are myriad reasons for this, access to resources beyond the nine-year compulsory education period is a central one.

China's educational resources are concentrated in major metropolitan areas, which is one of the primary reasons for skyrocketing house prices in these areas. The quality of education resources can vary vastly even within the same city.

If the unfair distribution of education resources persists, it could lead to reduced social mobility and rigid class stratification, and undermine China's economic competitiveness, social justice and ultimately, its political stability.

China needs to reform its exam-oriented educational approach to keep in line with the times. China's education system has long been criticized for its overwhelming focus on standardized tests, rather than critical thinking and real-world applications.

China's education philosophy may have helped it increase literacy and provide a stable labor force to feed the booming manufacturing industries. But in the information age, this is becoming increasingly obsolete as the country strives to upgrade from a labor-intensive to an innovation-oriented economy.

If China experiences an extended economic slowdown, this will limit room to increase educational expenditure. China should shift its focus from how much is spent to how it is spent – from total expenditure to quality and fairness in education spending.

If the unfair distribution of educational resources persists, it could lead to reduced social mobility and rigid class stratification, and undermine China’s economic competitiveness, social justice and ultimately, its political stability