A Center for Strategic and International Studies brief was released May 16 which describes the work and investments China has made to attract and improve its human capital.
While China has been working to improve its education systems and create talent pipelines, its workforce still faces major challenges, many of which lead back to the divide between urban and rural residents. The conclusion is that the more China is able to stimulate the quality of its workforce, the more globally competitive the country will be.
"We have to remember we are not in a strategic competition with foreign Chinese companies; we are in a strategic competition with the world’s largest and second wealthiest nation-state. We must address the dangerous, growing imbalance between America and China comprehensively, decisively, and swiftly," Sen. Marco Rubio, R-Fla., said May 11. "Or we will live to see a future in which the world’s most powerful nation is a totalitarian, genocidal Communist dictatorship and our country is relegated to the role of a once great nation in decline."
Chinese leader Xi Jinping has cited talent as "a strategic resource to achieve national revitalization and win the initiative in international competition," according to the CSIS brief. Although China has made notable attempts to build its human capital, the country still faces struggles pertaining to the divide between urban and rural populations, education and government restrictions. Two thirds of China's children are from rural areas, but an estimated 60% of those children have problems with anemia, untreated vision issues or intestinal worms, while half of rural children display cognitive or social-emotional delays.
Another struggle is that, although literacy rates in China have improved rapidly, from around 20% in 1949 to almost 100% today, the country's high school graduation rate is low. A 2015 study estimated only 30% of China's workforce had finished high school. In certain areas, China is halting its own ability to improve its human capital, according to CSIS.
Chinese students who finish high school find their career options hindered by the gaokao, a national, standardized college entrance exam. Bad performance on the gaokao exam can outweigh a student's GPA or extracurricular activities and severely limit where they can attend college, negatively impacting their income potential for later in life, CSIS reported. China's hukou system is another challenge to improving economic activity, and it adds to rural-urban disparities.
Although the hukou was designed to decrease the chance of social instability, it results in constraints put on rural workers, as reported by CSIS. Gender discrimination is another problem in the Chinese workforce. Social factors, including hiring bias, combined with policies such as a decreased number of childcare facilities, have led to an increase in China's gender labor force gap, from 9.4% in 1994 to 14.1% in 2020.
Although China faces obstacles pertaining to its human capital, the government has made attempts to boost education, notably in STEM fields, according to CSIS. China’s Ministry of Education has increased higher education outlays from $24 billion in 2012 to $47 billion in 2021. In 2010, Chinese universities put out 34,000 STEM PhD graduates, but that number is anticipated to go up to 77,000 by 2025.
By comparison, the U.S. is expected to put out 40,000 STEM PhD graduates in 2025, including 16,000 international students, CSIS reported. China has also created programs that start talent pipelines for skills such as cybersecurity and semiconductor manufacturing. China runs more than 200 talent-recruitment initiatives, including the Thousand Talents program, which drew 7,000 experts to Chinese institutes as of 2018.
China maneuvers significant resources in the direction of promoting the areas of science of technology, according to CSIS. In 2020, the Chinese government put 2.4% of its GDP ($441.3 billion) into research and development, reflecting an increase of 14.2% from 2019. Between 2020 and 2021, China went up to 12th place on the World Intellectual Property Organization’s Global Innovation Index, improving its score by two ranks.
China has also reportedly made attempts to update its military, putting more emphasis on curriculum related to technology, aerospace and computer sciences, CSIS said.
