China: Investing in human capital

©CDRF

Human capital spending is needed to reshape China’s growth engine. The action can start at an early age. 

In thirty years of reform and opening up, China’s economy has achieved to sustain a nearly double-digit growth on average, and increase the GDP per capita from $190 in 1978 to $5,432 in 2011. In three decades, China has entered the group of middle income countries, and in 2010, surpassed Japan as the world’s second largest economy.

China’s economic success is largely due to reforms that created favourable incentives and unleashed productive forces. A favourable demographic structure and adequate labour supply also contributed, as did a high level of capital accumulation and the implementation of an exportoriented economic strategy.

However, some of the factors that have been supporting China’s rapid economic growth are changing. China is now facing a rapid population ageing, overinvestment is creating excess production capacity and the demand from world markets is becoming sluggish. Can China’s growth miracle still continue? Can China successfully enter the ranks of high income countries? The answer lies in China’s current and future ability to have higher and more equitable investments in human capital.

In the past thirty years, China’s level of human capital has improved sharply, but there is still a big gap with developed countries. One of the particularly acute challenges China faces is that of early childhood development. For example, between 1980 and 2010, China’s average life expectancy rose from 66 years to 73.5 years, and the average number of years of schooling increased from 3.78 to 7.55 years. Between 1990 and 2010 the prevalence of stunting growth among children under age 5 declined from 33.1% to 9.9%, and the rate of anemia among rural children between under 24 months decreased from 38.7% to 20.8%. These achievements are very significant, but still insufficient to support the need for upgrading the industrial structure and economic restructuring in China’s future.

©Jason Lee/Reuters

Moreover, these national average data obliterate the gap existing between urban and rural areas, yet this gap is difficult to ignore. A survey conducted by the China Development Research Foundation found that in 2009, the prevalence of stunting among 6 to 11 months of age children in poor rural areas was 3.3 times the national average; in Yunnan province’s Xundian County, children of the same age showed a stunting rate 5.7 times higher than the national average; In both Qinghai province’s Ledu County and Yunnan province’s Xundian County, the rate of anemia of the children 12 to 23 months of age were respectively 3.9 and 3.2 times higher than the national average. The Chinese government has in recent years recognised the importance of human capital investment, leading to a substantial increase in investments in education, health care, student nutrition and early childhood development. But for China, a country with significant different regional disparities, more funding does not suffice to improve human capital substantially and equitably. What is needed even more are innovative practices in supporting systems and policies. For example, the Chinese government has committed to ensure that 70% of children have access to three years of early childhood education by 2020. But a large number of children in remote and poor areas will be blocked outside the doors of regular kindergartens.

That is why, in poor and remote areas of the western region, the China Development Research Foundation has been conducting a policy experiment that aims at providing affordable preschool education through innovative practices, which were partly inspired by discussions around OECD’s “Starting Strong” series. This “Go Teach” experiment involves teachers that rotate from one village to another during a week of school to provide pre-school education for poor children who live in the vicinity. This mobile education system has allowed the local young pupils to develop cognitive and language skills close to those of children who have access to the regular kindergartens in China’s cities and towns. It will help to close the gap in early childhood education, which if not addressed, will affect the development of China’s future human capital and fuel existing inequalities.

See: 

OECD (2001-2012), Starting Strong: Early Childhood Education and Care, Paris; for more on these monographs, including summaries, visit www.oecd.org

The China Development Research Foundation

See also: 

Huang, Yukon (2012), "In the balance: China’s economic conundrum", in OECD Yearbook 2012.

©OECD Observer No 290-291, Q1-Q2 2012




Economic data

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive print editions delivered to you directly


Online edition
Previous editions

Don't miss

  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • OECD Environent Director Simon Upton presented a talk at Imperial College London on 21 April 2016. With the world awash in surplus oil and prices languishing around US$40 per barrel, how can governments step up efforts to transform the world’s energy systems in line with the Paris Agreement?
  • Happy 10th birthday to Twitter. This 2008 OECD Observer interview with Henry Copeland said you’d do well.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Once migrants reach Europe, countries face integration challenge: OECD's Thomas Liebig speaks to NPR's Audie Cornish.
  • “Un Automne à Paris”: listen (and read) this sad yet uplifting new song by jazzman Ibrahim Maalouf and pop singer Louane that will be launched on 11 January in honour of the victims of the murderous attacks on the French capital in 2015 and as a tribute to love and liberty in this City of Light.

  • Secretary-General Angel Gurria on CNBC: Developed vs developing nations at COP21

  • Message from the International Space Station to COP21

  • COP21 Will Get Agreement With Teeth: OECD Secretary-General Angel Gurría on Bloomberg

  • The carbon clock is ticking: OECD’s Gurría on CNBC

  • If we want to reach zero net emissions by the end of the century, we must align our policies for a low-carbon economy, put a price on carbon everywhere, spend less subsidising fossil fuels and invest more in clean energy. OECD at #COP21 – OECD statement for #COP21
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa. blogs.worldbank.org
  • Pole to Paris Project
  • Black carbon causes millions of deaths every year and contributes to the warming of the planet. The United Nations Environment Programme explains how reducing black carbon can save lives and help combat climate change.
  • In order to face global warming, Asia needs at least $40 billion per year, derived from both the public and private sector. Read how to bridge the climate financing gap on the Asian Bank of Development's website.
  • How can cities fight climate change?
    Discover projects in Denmark, Canada, Australia, Japan and Mexico.
  • Climate: What's changed, what hasn't, what we can do about it.
    Lecture by OECD Secretary-General Angel Gurría, hosted by the London School of Economics and Aviva Investors in association with ClimateWise, London, UK, 3 July 2015.
  • French Economy Minister Emmanuel Macron came to the OECD on 18 September for a webcast discussion on economic reforms, inequality and the outlook, with OECD Secretary-General Angel Gurría. You can watch the event by clicking on the photo.

  • Climate change: “We should not disagree when scientists tell us we have a window of opportunity–10-15 years–to turn this thing around” argues Senator Bernie Sanders.

  • In the long-run, the EU benefits from migration, says OECD Head of International Migration Division Jean-Christophe Dumont.
  • Is technological progress slowing down? Is it speeding up? At the OECD, we believe the research from our Future of ‪Productivity‬ project helps to resolve this paradox.
  • An employee prepares breakfast in front of the Eiffel tower at the Parisian luxury hotel Le Plaza Athenee. Nowhere in the world has more accommodation available on Airbnb than Paris. Now the home-sharing website that has transformed budget travel is giving super-deluxe hotels a fright too.
    ©REUTERS/Stephane Mahe
  • Is inequality bad for growth? That redistribution boosts economies is not established by the evidence says FT economics editor Chris Giles. Read more on www.ft.com.
  • Low interest rates here to stay for half a century, says OECD director Adrian Blundell-Wignall.
  • Bill Gates visited the OECD on 26 June. He met with the Secretary-General Angel Gurría to discuss areas of collaboration with his foundation and participated at a briefing session on official development assistance modernisation with OECD experts.
  • The People’s Republic of China decided to enhance longstanding collaboration with the OECD and to join the OECD Development Centre, in a historic visit by Chinese Premier Li Keqiang on 1 July to the OECD in Paris.
    Read about it on OECD.org
  • Catherine Mann, OECD Chief Economist, explains on Bloomberg why "too much bank lending can slow economic growth".
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .
  • Come va la vita in Italia? How's life in Italy? The OECD Better Life Index is an interactive online platform in seven languages that goes beyond GDP by offering important insights into measuring well-being and quality of life. Try it for yourself!

Most Popular Articles

Poll

What issue are you most concerned about in 2015?

Euro crisis
Unemployment
Global warming
International conflict
Other

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2016