In the post-Mao era, reformers in the People's Republic of China have taken significant steps to privatize social welfare services. After the adoption of a socialist market system in the 1990s, educational development has been affected by strong market forces. It is argued that the emergence of private educational institutions, the shift of state responsibility in educational provision to families and individuals, the prominence of fee-charging, as well as the introduction of internal competition among educational institutions, clearly suggest that China's education has been going through a process of marketization. The principal goal of this paper is to examine institutional origins of the policy change in education, with particular reference to the process and implications of such changes. The paper will also appraise the Chinese experience in the light of global practices on marketization of social welfare services.