Abstract：The current fiscial system for compulsory education in rural China is in straits. In order to guarantee universal and balanced compulsory education in rural China, Chinese government should provide totally free compulsory education in rural areaes. Moreover, fiscial responsibility should be shared by different level governments explicitly: (1) the central government should pay salaries for all the teachers in primary and junior secondary schools; (2) the local governments should account for capital investment and non-personnel expenses; and (3) the provincial governments should provide fiscal transfer payment for less-developed rural area and subsidy for poor students.
