Together with a companion paper, this is an ambitious attempt to view the
relationships involving education and income as forming a system, and one that can generate a
poverty trap. The setting is rural China, and the data are from a national household survey for
2002, designed with research hypotheses in mind. Enrolment is high in rural China by
comparison with most poor rural societies, but the quality of education varies greatly. The paper
analyses the determinants of dropout from middle school and of continuation to high school. It
also examines the determinants of pupil performance, time spent learning, and educational
expenditure. Poverty is found to have an adverse effect on both the quantity and quality of
education - so contributing to a poverty trap.