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School pupils watch robots at an artificial intelligence education centre in Handan, Hebei province, on Thursday. Photo: AFP

Explainer | How will talent dividend keep China competitive as its population shrinks and ages?

  • China’s population fell by 850,000 to 1.412 billion last year in the first decline in six decades
  • Country’s gross higher education enrolment rate hit nearly 60 per cent last year
With China recording its first population drop in six decades last year and losing the title of the world’s most populous country to India last month, the Chinese authorities have repeatedly promoted the notion of a national talent dividend.

To dismiss concerns about the country’s growth potential, they have stressed that China’s talent pool is booming and have played down the disappearance of the demographic dividend that powered decades of rapid economic development.

So, just how does China view its demographic shift and where does it stand now in terms of talent?

02:14

Chinese reluctant to have children as China reports first population fall in 61 years

Chinese reluctant to have children as China reports first population fall in 61 years

What is Beijing’s idea of a talent dividend?

China’s basic stance on its declining population can be summarised as “the population dividend has not disappeared, while a talent dividend is in the making” – an idea frequently trumpeted by top officials in recent months.

Though its population peaked earlier than expected, falling by 850,000 to 1.412 billion last year, it still had a 900 million-strong workforce with improved education to provide a strong impetus for development, they said.

China also had 137 million healthy and relatively young senior citizens, who were the “new dividend” to be developed, an article in the Communist Party mouthpiece People’s Daily said on Tuesday. They had “high overall quality, rich experience and a big passion for re-employment and volunteer service” and should be regarded as a “precious fortune” for society, it said.

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While noting the need to maintain a “moderate” birth rate and population size, President Xi Jinping has urged a focus on the quality of the population as the Chinese economy transitions from high-speed growth to high-quality development.

China’s goal was to seek “modernised human resources” of good quality and sufficient quantity that were optimised in terms of age structure and reasonable in regional distribution, he said this month at a meeting with top officials on ways to generate economic growth.

How developed is China’s talent dividend?

University enrolment in China has soared in recent decades, with the gross higher education enrolment rate reaching nearly 60 per cent last year, according to the Ministry of Education.

By last year, the country had more than 240 million people with higher education, and those just entering the job market had received an average of 14 years of education, official data showed.

China is also among the top countries in the world in terms of the number of valid invention patents and the number of scientific articles that are included in the Scientific Citation Index.

However, there has been a mismatch between the talent being cultivated and what the market needs.

7 takeaways from China’s 2022 population figures

On the one hand, with the number of graduates hitting records each year, numerous young people are struggling to find work. On the other, factories are having trouble employing qualified skilled workers.

Wang Peian, deputy director of the China Family Planning Association, told the 21st Century Business Herald this week that the demand to supply ratio for skilled workers at factories had long remained at 1.5 to 1.

While the authorities have promoted vocational education in an effort to expand the pool of highly skilled workers, parents and their children, immersed in an education system centred around academic study, often shun such work.

To change such attitudes, “we need to improve the way people are evaluated, and cure the stubborn illness of obsession with thesis papers, professional ranks, diplomas, and awards”, Xinhua urged in a commentary on Monday.

02:07

Population decline in China raises concerns of economic implications

Population decline in China raises concerns of economic implications

How does China compare to the US and India in terms of talent?

Though still lagging far behind the United States in the overall competitiveness of its talent pool, China has been catching up in recent years as the world’s two largest economies have undergone destructive decoupling.

China ranked 36th in last year’s Global Talent Competitiveness Index, an annual ranking by French business school INSEAD, climbing from 54th in 2017.

The US was fourth last year and India 101st.

While the three countries were placed in different groups – with the US as a high-income country and India among the lower-middle-income ones – China was the most talent-competitive upper-middle-income country, according to the index.

China has more digital professionals, including programmers, than the US, but it lacks top talent and many of them are moving overseas, according to a report issued in January by AliResearch, the research arm of Alibaba Group, and Beijing-based technology company Zhipu AI. Alibaba is the owner of the South China Morning Post.

China is home to 17 per cent of the world’s digital professionals, and has 1.5 times more than the US, it said. However, only about 7,000 had “relatively high academic achievements”, just over a third of the number in the US.

03:58

The ageing Chinese town where the one-child policy worked too well

The ageing Chinese town where the one-child policy worked too well

While China’s population is ageing, India’s is expected to expand for several more decades. That has led to speculation that it could outperform China economically by taking advantage of the demographic dividend that China once enjoyed.

The median age in India is 10 years less than in China, according to UN estimates, with the Chinese figure put at 38.4 years in 2020.

But China’s per capita gross domestic product was more than five times that of India’s last year, according to data from both governments.

The South Asian giant is also behind China in a variety of parameters, including educational attainment, foreign direct investment and innovation.

About one in three Indians between the ages of 15 and 29 were not engaged in education, employment or training in 2020 and 2021, according to a report released in March that was based on the Indian government’s Multiple Indicator Survey.

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