ANNEX 20: EXPLANATION OF PROJECTION

Enrollment Projection
Enrollment expansion is affected by the growth rate of the relevant age cohort, as much as it is by public policy of whether to set enrollment quotas to restrict growth or to let enrollment be driven by demand and the private ability to pay. The population of the 18-to-22-year-olds in China is projected by the World Bank to decline gradually from 1994 to 2001, when the generation born after the implementation of the one-child policy in 1979 comes of age (Annexes 21A and 2IB). The size of the 18-to-22 age cohort is projected to fluctuate between 88 million at the lowest point in 2001 and 117 million at the highest 2009. The projected enrollment is based on two different enrollment growth rates (Table 4.8 and Annex 23):
(a) Gradual growth. If enrollment is to follow the historical average annual enrollment growth rate of 7.6 percent up to 2020, China would reach an enrollment ratio of 5 percent by 2000, nearly 8 percent by 2010, and nearly 19 percent by 2020. This growth rate, however, lags behind the historical GDP growth rates.
(b) Fast growth. If enrollment growth is to catch up with the historical average annual GDP growth rate of 9.8 percent, the enrollment ratio would reach 5.5 percent by 2000, nearly 11 percent in 2010, and 25 percent in 2020. Although the ratio of 25 percent by 2020 would be similar to those in middle-income countries nowadays, the enrollment ratio in 2000 is still only 5 percent, half of the current enrollment ratio of Indonesia (see Table 1.2 for comparison).

Projection of GDP

To estimate the amount of public resources available in the future, projection is made of three scenarios of average annual GDP growth rates between 1995 and 2020 at 7 percent; 8 percent; and 9 percent, respectively (Annex 22). The reason for choosing these average annual growth rates is as follows—7 and 8 percent fall within the government's own target, and 9 percent is close to the historical growth rate of 9.8 percent between 1978 and 1994. The projected GDP then forms the basis for the projection of the government expenditure on higher education (Annex 22).


Projection of Government Expenditure on Higher Education

The projection of government expenditure on higher education assumes that future government expenditure remains at 12.9 percent of GDP (the ratio in 1994), and the government expenditure on higher education is about 2.6 percent of total government spending (the ratio of 1992) (Annex 27). The reason for choosing the 1992 ratio instead of the 1994 ratio is because government expenditure on higher education in 1994 increased considerably over the previous years, and that this level might conflict with the overall objective of deficit reduction. The projection is based on the pessimistic assumptions that the future growth of revenue remains unchanged and that the future growth of public spending on higher education will be constrained by the need to reduce the consolidated government deficit (Annexes 13A and 13B). Using these ratios

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