Op-Ed Contributors

Attracting talent globally for the future

By Wang Huiyao (China Daily)
Updated: 2010-09-14 08:02

Nation should plan to draw talented workers from abroad to fuel its further development and industrial innovations

China recently released a very ambitious national talent development plan. The National Medium- and Long-term Talent Development Plan (2010-2020) sets a blueprint for creating a highly skilled national workforce within the next 10 years.

This plan is the first national comprehensive program on national human resources development. It is of vital importance to China's current and continuous development for the next 30 years and beyond.

Among the plan's goals is the transformation of China from a manufacturing hub to a world leader in innovation, a grand objective that will be met in part by increasing its talent pool from the current 114 million people to 180 million people by 2020.

The plan is being released at a time when China's development model has undergone some very serious reconsideration. The country needs to re-examine its 30-year-old national development strategy and cope with the following five trends:

The first trend goes from the population dividend to the talent dividend.

For the past 30 years, China has thrived on its population dividend. However, increases in life expectancy and strict family planning have led to a population that is rapidly aging.

China saw the largest annual increase in its aged population last year, with the number of people aged 60 and above growing by 7.25 million to 167.14 million, forming 12.5 percent of the total population.

In addition to its rapidly aging society, China's reliance on cheap labor to buttress economic growth is meeting unprecedented challenges. Strikes by Chinese low-wage workers alone have been increasing over the years.

Another challenge is the unemployment among recent college graduates. About 6 million young Chinese men and women are graduating from college every year and they are finding it increasingly difficult to find jobs.

How to better use and absorb these new skilled workers are huge challenges for the country. Encouraging all enterprises as well as social and government entities to better use this workforce is seen as a major way to upgrade the Chinese economy.

The second trend moves from "Made in China" to "Created in China".

The Chinese government has set a target to transform China into an innovative and creative country by 2020. However, this cannot be realized unless China places more emphasis on the innovative and creative talent required to build it into an innovative country. Although China is the world's largest manufacturer and exporter, it has very few brand names that are globally recognized.

In order for China to climb the ladder of technology, elevate its value chain and produce well-known brands with reputations for quality, innovation and service, it has to place more emphasis on talent.

The third trend shifts from attracting financial capital to attracting human capital.

China's economic development model has emphasized attracting foreign capital. For years, China has ranked as a top FDI recipient country. It now has the largest foreign exchange reserve in the world, with reserves rising above $2 trillion in April 2009 and reaching a record $2.4543 trillion at the end of June 2010. China has also enjoyed a huge trade surplus for a number of years. However, in terms of the exchange of talented individuals, it has suffered a big deficit. China has sent out 1.62 million students and scholars since 1978. As of today, only 497,000 of them have returned to China.

Although the total return rate now is about 30 percent, the percentage of highly qualified personnel such as United States-educated PhD graduates in science and engineering who return to China stands at only 8 percent.

China has begun to recognize that having financial resources is not enough. Indeed, human resources should be the most important factor in today's knowledge-based economy. Therefore, methods for attracting human capital originally coming out of China to return, and even attracting global talent from other countries to come to China, can have a profound impact on the country's economic, political and social transformation.

The next trend shifts from the hardware to the software.

China has built a large number of landmark infrastructure projects over the past 30 years. These range from the Three Gorges Dam and super-high-speed railways to the Olympic Stadium and the World Expo pavilions. But now China needs to increase its investment in its software.

Specifically, the investment needs to be diverted toward education, research and development, public health, energy conservation, environmental protection, social welfare and many other areas related to a balanced development.

This mindset change from an obsession with hardware to a focus on software requires a new strategic approach that concentrates on a talented and highly skilled workforce as well as experts and an intellectual community.

The last trend discussed here moves from an investment-driven economy to a talent-driven one.

Today, China's economy is still largely driven by investment. In fact, investment now represents 45 percent of the Chinese economy. It is at a level that is historically unprecedented, both in China and in any other major economy.

In order to maintain economic growth and develop a balanced society in the medium-to-long term, China must rebalance the economy by placing a stronger emphasis on reducing savings and boosting private domestic demand. The rebalancing requires a reduction in the nation's reliance on fixed investment and exports as well as a boost to domestic consumption. This will in turn require an increasing reliance on the non-tradable and well-paid sectors such as services, and less focus on the tradable sectors such as manufacturing.

To complete this transition, China will have to create better paying jobs in the service sector - which includes professionals, entrepreneurs, teachers, engineers, doctors, lawyers, accountants, consultants, artists, IT specialists, technicians and social workers - and raise overall consumption levels.

This in turn requires many more well-paid and well-trained talented individuals beyond migrant labor. China needs to transform its workforce from one that is labor intensive to one that is talent rich. If it does so, its currently unsustainable development model will be transformed into a talent-driven one that will give China new impetus and power to develop for the next 30 years and beyond.

The author is a visiting fellow at the Brookings Institution's John L. Thornton China Center and also director general of the Center for China and Globalization in Beijing.