This case study examines the interaction between basic education (primary education, adult literacy, and nonformal adult education) and economic development needs in rural Zhuji County, Zhejiang Province, located in southeast China. In Zhuji, parents traditionally have endured hardships to send their children to school and otherwise encouraged their children to strive for the highest level of education possible. To many peasants, admission to a polytechnic school or university seemed the only possible escape from farming. As a result, Zhuji has eliminated illiteracy. Nevertheless, the continued emphasis on purely "academic" achievement left the county with thousands of junior and senior high school graduates who lacked any of the technological knowledge or skills needed for local economic development aims. In 1987, the authorities addressed this problem by formulating a policy of promoting basic education, vocational education, and adult education geared to development aims. Concrete measures included banning preparatory courses for university entrance examinations, reforming the enrollment system for junior and senior high schools, reinforcing the educational monitoring system, and increasing attention to labor skills taught in schools. Agricultural and vocational education were expanded in junior and senior high schools and adult technical schools. However, vocational education continues to be hampered by problems, including shortages of funds and teachers, peasant resistance, and inability to predict specific educational needs of the local economy. Education finance in Zhuji is outlined. (SV)