This record growth has commonly been attributed to factors such as market-oriented reforms, enterprise ownership changes, and the adoption of an export- and FDI-led development strategy. While these factors have undoubtedly contributed to China’s rapid growth since 1978, to attribute the entire post-1978 growth record to these factors alone is not completely justified.
One has to ask whether these three factors constituted the necessary conditions for China’s economic success, and if so, what other crucial factors were also involved. If these factors alone were sufficient, why have other countries that share these traits — and whose economies are much more market-oriented and whose ownership structures are more privately based — not recorded similarly rapid growth? It is clear that other complementary factors were involved.
One major factor was, in fact, China’s pre-1978 legacy of human capital accumulation. Over the first three decades of the People’s Republic of China, life expectancy increased by over 22 years. This beats the record of any other country for the same period and exceeds the next best performer by seven years. And in addition to major improvements in general literacy, there was a sharp increase in secondary education completion rates. For instance, according to the 1990 National Census data, the junior secondary education completion rate jumped 11-percentage-points between the two neighbouring age cohorts 1956–60 (32.5 per cent) and 1961–65 (43.7 per cent). Also, the senior secondary education completion rate rose 12-percentage-points from cohort 1951–55 (8.6 per cent) to cohort 1956–60 (20.7 per cent). These sharp rises were due to the spread of secondary education in the 1970s.
What critical contributions did these pre-1978 improvements in health and education make to the post-1978 growth record? First, true, China’s economy thrived in the post-1978 decades largely because of its adoption of an export- and FDI-led development strategy which successfully combined new foreign technologies, management models and markets with a wide pool of surplus labour. Still, this surplus labour would not have automatically translated into an equally vast stock of human capital. To take advantage of the new growth opportunities, these surplus labourers needed to be in good health and with sufficient education in order to satisfy job requirements and quickly learn new skills.
To those who have never experienced or observed major health and nutrition-related calamities, it may seem unlikely that health factors could be a major obstacle to economic growth and development. Yet, poor health does undermine a person’s physical and mental ability to endure long hours of work and their ability to concentrate and learn new skills.Some might also argue that although there were expansions of education across Chinese society during the Cultural Revolution (1966–76), the quality of education was sub-standard. True, the emphasis during this period was on practical knowledge acquisition and the expansion mainly occurred in junior and senior secondary education. There was no corresponding expansion in tertiary education, which suffered greatly during the Cultural Revolution.
But is this pre-1978 expansion of education in China limited in importance because of its failure to include tertiary education? To answer this question one should consider the needs of the country at the time. During an age of rapid globalisation, the development of a country such as China from a poor agrarian to a higher-income industrial economy would typically involve, first, joining regional and global supply chains and production networks as a manufacturing base; second, technological imitations and adaptations; and third, own innovations. These phases need not be mutually exclusive and may overlap.
Over the last three decades, China has successfully joined regional and global supply chains and production networks, and is now completing that phase. During this period, having a large work force with secondary education and an emphasis on practical knowledge was quite adequate.
Yet, as the country now enters the second phase of development, having a large workforce with mostly secondary education will no longer suffice. Tertiary education will have to be greatly expanded. And as the country further moves into its own innovations on a large scale in another two to three decades, tertiary education will need to be expanded on an even greater scale.
China’s gross tertiary enrolment ratio has tripled in recent years, reaching 23.5 per cent of the total population of the official tertiary education age group in 2008. Yet, even this rate of expansion does not seem sufficient to meet expected future challenges. Even more importantly, the quality of this education will have to improve significantly, particularly in terms of teaching, facilities and greater relevance of the subject matter taught to changing market needs and economic environments. These are among the principal challenges China will face in the coming decades.
Minquan Liu is a senior research fellow at the Asian Development Bank Institute.
This article is based on the author’s paper ‘Understanding the Pattern of Growth and Equity in the PRC’ available as an ADBI working paper here.
Emphasizing only science – medicine and engineering – and business – economics and finance – the Chinese lack of respect for the fields of law, political science, history, architecture, arts, and music has made Chinese growth fail in its development of cultural and intellectual refinement — sophistication and good taste. For example, the ‘newly rich’ in China – the wealthy young Chinese who are superficial, lack intellectual refinement and substance in character – has in turn caused lack of respect toward Chinese people and China as a whole. Also, this culture of emphasis only on trade and economic growth without developing the appreciation of arts has made China Towns across the world either in London, New York, San Francisco, Amsterdam, fail to emphasize on the importance of cleanliness, beauty, good taste, and community spirit. This primitive attitude has caused disrespect toward Chinese as a whole.
The relationship between technologies, social structure and the values of a society is an integral part of a necessary social change toward an advanced stage of development. It is time to emphasize on the sociocultural evolution that maintains the strength of intellectual complexity while producing a form or structure which is qualitatively different from the ancestral forms in terms of the quality of excellence in thought and manners and taste.
China’s rise that encompasses an advanced state of intellectual, cultural, and material development marked by progress in the arts and sciences, and the appearance of complex political and social institutions is an essential part of a peaceful 21st century. Respect cannot be forced, it must be earned.
I’ve heard that the university enrollment has fallen in China recently and that many university graduates cannot find a job. Maybe the latter was just a reflection of the much cheap labor supply prior to the end of unlimited cheap labor from rural areas and may soon change.
Certainly there is considerable university educated labor capital reserves in China, just as the relatively well educated labor reserve prior to the 1980s that contributed to the rapid economic growth following the reforms as the author implied.
Having said that, I am not saying that the current labor capital reserves will be perfect for the next stage of economic transformation in China. Certainly there are arguments that the rapid expansion of universities in China may have been at the cost of quality as well as many of the complaints about university academia quality.
As the introduction of economic reforms have a systematic effect on the economy, the economic changes in China have also resulted in many other social changes, including certain standards in the flux of changes.