Upon the entry into WTO, the Chinese education has been positioned in a new domestic and international environment. It demands speeding up the innovation of education system to fully comply with the new rules of development.

I. New Way for Education System

The education system is "total of varied educational institutions and educational regulation systems in a country", which includes the environment and arrange of education systems. The former refers to a series of basic rules adopted to guide the process of educational production while the latter is used to adjust the methods of possible cooperation and competition between different educational units. The theory of system transformation stipulates that changes in the system environment determine changes in the system arrange while the system arrangement is the practical representation and expansion of the system environment.

Although the opening-up of education generally adds potential interests of a country's education, it still relies on the ratio of costs to profits in the innovation of education system to determine whether the education system will alter under the conditions of opening-up. As a whole, the subsequent countries also enjoy late-developing advantage in the innovation of education system, as in other aspects of economy and life. On one hand, the international exchanges in education involve different kinds of system information, which is crucial to drive the subsequent countries to carry out innovation upon their education systems. One feature of developing countries lies in that the traditions and customs are widely dominant upon the behaviors of the masses. While the old tradition-based behavioral standards hinder the advancement of education systems, the outer stimulus often greatly change the public thoughts. The international
competition is the strongest in inspiring the national dignity, creativeness and other mental elements, which starts the all-around innovation of education system not only in the education, but also in politics, economy and culture. On the other hand, the opening-up of education also enables the developing countries to compare their different education system, and thus clearly find the interests and costs in the innovation of education systems. In addition, they will rationally simulate the innovation of systems of other countries to reduce the time and costs.

II. Two Routes for Innovation of Education System

The system economics works out two types for the system transformation: imperative and evocative system transformation. The former refers to introduce and implement the system transformation through governmental instructions or legal measures. The latter implies organizing the system transformation individually or by a group of volunteers. The imperative system transformation is relatively rapid, easy to reach the expectation and save the costs. In the evocative system transformation, all bodies concerned spend more time in negotiation and rights allocation, which is allowed for implementation only with the approval of the whole group or the majority. Therefore, it ensures better cooperation among all parties with lower costs in exchange.

The direction of education system transformation is always in accordance with the trend of economy and society. With the establishment and development of market economy in our country, the government is bound to back out of many fields of education and shift for indirect macro adjustment and control, giving place to the market or schools themselves. Accordingly, the suppliers of education system are inclined to diversify while the governmental dominance will greatly weaken in the system supply. As the public plays an increasingly strong role, the education system transformation enters into the stage of evocative transformation.

III. Practical Road for Transforming Education System

The Chinese education system is bound to transform in the open international environment. Against the current situation, the transformation should choose to take the following road: to give priority to the imperative transformation at the initial stage, i.e. to transform the education system with definite targets and step by step through legal methods or the administrative orders issued by the central government or state administrative and judicial organs. The advancement of reforms in the education system gradually contributes to the formation of standard management and legal systems of education. At the appropriate time, the education system transformation should shift to the stage with evocative transformation as center. Afterwards, the focus is placed on the behavioral methods of micro educational bodies.
Up to now, the educational rules and regulations are not yet perfect as the educational market has been open not for a long time. It is effective in solving the imbalance in system with authorities to design and imperatively rearrange the system. It also maintains or enhances the educational development through local adjustment, modification or overall reform on the current system, which is an effective activity of system innovation in the short term. In addition, the system transformation greatly relies on the route. Before the reform and opening-up, he Chinese education is basically owned and operated by the government. Afterwards, the non-governmental education has developed to a certain extent while the public education is the absolute body of the national education. Through innovation, the state education system is bound to be dominated and operated by the owners.