Level of human capital
China: Investing in human capital
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 favorable 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. These achievements are very significant, but still insufficient to support the need for upgrading the industrial structure and economic restructuring in China’s future. 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.
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