A Terrible Education System
Yasheng Huang is professor of political economy and international management at Sloan School of Management, Massachusetts Institute of Technology. He is the author of “Capitalism with Chinese Characteristics” and will soon begin a large-scale survey of college graduates in China.
In 2007, the job openings for new graduates fell by some 22 percent compared with 2006, according China’s National Development and Reform Commission.
Although Chinese universities have pockets of excellence, they are churning out people with high expectations and low skills.
Some estimate that 30 percent of Chinese engineering students will not find jobs after graduation and that the average pay of the college graduates is now approaching that of rural migrant workers. At the same time, factories in Guangdong province cannot find enough labor. What is going on?
The idea that China is running out of unskilled labor is a myth. The news reports typically concentrate on Guangdong but this does not mean the country as a whole is short of unskilled labor. Development in rural areas in the past six years has meant that rural residents, previously denied economic opportunities close to home, now have a choice between going to Guangdong and staying in their hometowns. Many choose to stay. Any “labor shortage” in Guangdong is mostly evidence that the factories should not be located there in the first place.
But the job market is a problem for college graduates — with the opportunities created in the wrong places. Colleges educate students, but in China they also give a young person a formal right to move to an urban center.
You cannot tell a Chinese college graduate, “you’ve invested years and money in a college education, but your job prospects are in your home village.” So there is now a geographic mismatch between locations of jobs and locations of college graduates.
Secondly, there is a skills mismatch. In my conversations with Chinese managers and entrepreneurs, they constantly complain about a shortage of people with the right set of skills, capabilities and inclinations. China is so short of the right human capital, and books with titles like, “War for Talent,” are best sellers in China.
The Chinese educational system is terrible at producing workers with innovative skills for Chinese economy. It produces people who memorize existing facts rather than discovering new facts; who fish for existing solutions rather than coming up with new ones; who execute orders rather than inventing new ways of doing things. In other words they do not solve problems for their employers.
You multiply this skills mismatch by a sixfold increase in the college enrollments between 1997 and 2008, you get a sense of scale of the problem. Although Chinese universities are not without pockets of excellence, they are churning out people with high expectations and low skills. That combination cannot be good for any country, let alone a country with a low capita income.