China Invests Heavily in Human Capital
This NYT article is spot on. China’s heavy investment in university research and teaching and greatly expanding the undergraduate base is fundamentally changing global competition in traditional and high-tech sectors. The author likens it to the US GI bill but China’s current drive is on a scale unprecedented in world history.
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China is making a $250 billion-a-year investment in what economists call human capital. Just as the United States helped build a white-collar middle class in the late 1940s and early 1950s by using the G.I. Bill to help educate millions of World War II veterans, the Chinese government is using large subsidies to educate tens of millions of young people as they move from farms to cities.
The aim is to change the current system, in which a tiny, highly educated elite oversees vast armies of semi-trained factory workers and rural laborers. China wants to move up the development curve by fostering a much more broadly educated public, one that more closely resembles the multifaceted labor forces of the United States and Europe.
It is too early to know how well the effort will pay off.
While potentially enhancing China’s future as a global industrial power, an increasingly educated population poses daunting challenges for its leaders. With the Chinese economy downshifting in the past year to a slower growth rate, the country faces a glut of college graduates with high expectations and limited opportunities.
Much depends on whether China’s authoritarian political system can create an educational system that encourages the world-class creativity and innovation that modern economies require, and that can help generate enough quality jobs.
China also faces formidable difficulties in dealing with widespread corruption, a sclerotic political system, severe environmental damage, inefficient state-owned monopolies and other problems. But if these issues can be surmounted, a better educated labor force could help China become an ever more formidable rival to the West.
“It will move China forward in its economy, in scientific innovation and politically, but the new rising middle class will also put a lot of pressure on the government to change,” said Wang Huiyao, the director general of the Center for China and Globalization, a Beijing-based research group.
To the extent that China succeeds, its educational leap forward could have profound implications in a globalized economy in which a growing share of goods and services is traded across international borders. Increasingly, college graduates all over the world compete for similar work, and the boom in higher education in China is starting to put pressure on employment opportunities for college graduates elsewhere — including in the United States.
China’s current five-year plan, through 2015, focuses on seven national development priorities, many of them new industries that are in fashion among young college graduates in the West. They are alternative energy, energy efficiency, environmental protection, biotechnology, advanced information technologies, high-end equipment manufacturing and so-called new energy vehicles, like hybrid and all-electric cars.
China’s goal is to invest up to 10 trillion renminbi, or $1.6 trillion, to expand those industries to represent 8 percent of economic output by 2015, up from 3 percent in 2010. At the same time, many big universities are focusing on existing technologies in industries where China poses a growing challenge to the West.
– NYT on Yahoo Finance
For the entire article, visit: http://ca.finance.yahoo.com/news/next-made-china-boom-college-030958274.html