China: Investing in human capital


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.


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

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


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

  • The carbon clock is ticking: OECD’s Gurría on CNBC
  • IMF Finance and Development Magazine, December 2015

    Powering the Planet: The Quest for Sustainable Energy

    Read the magazine here
    Visit their website
  • In Iceland, geothermal power is being used for almost everything. Scientists and engineers from around the world are participating in a course at the United Nations University (UNU) to learn how to use geothermal energy in their own countries.
  • 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.
  • Pole to Paris Project
  • Send a message from #EarthToParis.
  • From the World Bank: Managing the Impacts of Climate Change on Poverty
  • 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.
  • 10 climate-friendly habits everyone should adopt: Although the main aim of COP21 is to reach an international agreement on climate change between government stakeholders, it is also the perfect opportunity to remind citizens of how everyone can help to reduce greenhouse gas emissions in their day-to-day lives.
  • 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.
  • Do you know the OECD’s web ending? Or which Serbian American engineer is famous for his electric cars? Try our latest OECD Observer crossword. It’s full of fun facts, simplex in style, and gives you the solution at the tip of a button. You can time yourself too.
  • 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
  • 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
  • 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 .
  • 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


What issue are you most concerned about in 2015?

Euro crisis
Global warming
International conflict

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 2015