VoxEU Column Development Education

China’s higher education transformation and its global implications

Unlike most developing economies, China’s educational policy focuses on upgrading higher education. This column summarises the major transformation occurring in China – including nearly a quintupling in enrolments – and highlights its implications for the global economy.

A central element of China’s unconventional development strategy has been industrial policies aimed at building domestic capabilities in sophisticated industries, though whether these have succeeded remains controversial.1 Since 1999, a similar strategy has been adopted in educational policy, and the emphasis on sophistication has resulted in a major transformation of higher education in China.2 This transformation has involved major new resource commitments to tertiary education and significant changes in organisational form, reflecting China’s commitment to continued high growth through quality upgrading and the production of ideas and intellectual property as set out in both the 10th (2001-2005) and 11th (2006-2010) 5-year plans. The number of undergraduate and graduate students in China has been growing at approximately 30% per year since 1999, and the number of graduates at all levels of higher education in China has approximately quadrupled in the last six years. Entering class sizes and total student enrolments have risen even faster, approximately quintupling. Much of the increased spending is focused on elite universities, and new academic contracts differ sharply from earlier ones, which lacked tenure and often used annual publication quotas.

These changes have already had large impacts on China’s higher education system and are beginning to be felt by the global educational structure. Skilled labour supply in China now equals around 40% of that in all OECD countries, and the growth rate of student numbers is much higher than in the OECD. In the coming years, these shifts may have major implications for global trade both directly in ideas, and in idea-driven products.

The changes we discuss also reflect a wider strategy of attempting to upgrade the quality and skill content of Chinese production through large increases in higher educational resource inputs and other changes in economic policy in China. This strategy, adopted by high-level policymakers in China, is seemingly not driven by analysis of the demand side of labour markets. The sharp increase in the number of individuals with higher educational attainment has created significant short-term problems of absorption and unemployment for such labourers in various areas. These education policies have also been a factor in China’s increasing inequality. China’s transformative strategy differs from that of most low-wage developing economies, such as India, which focus on primary or secondary rather than tertiary education.

The transformation has potentially major implications for the global educational system, as China’s changes will have global impacts on relative supplies of skilled labour, academic publications, and trade in ideas and idea-related products. The strategy may also change our perception of the link between education and growth. Previous efforts in other countries to use educational transformation as a mechanism to initiate or maintain high growth have generally been regarded as unsuccessful, but those efforts focused on primary and secondary education. China’s efforts seem to be motivated by a desire to maintain high growth by using educational transformation as the primary mechanism for skill upgrading and raising total factor productivity. If it succeeds, other countries may follow, leading to higher education competition.

Dimensions of China’s higher education transformation

Large increases in the number of students

The number of graduate and undergraduate students in China has approximately quadrupled in the last six years. Before 1999, the number of students both graduating and enrolling was stable. In 1998, the total number of graduates from tertiary education was 0.8 million; in 2005, it was more than 3 million, a nearly threefold increase. The number of enrolments (of new and total students) has risen even faster and approximately quintupled between 1998 and 2005.

More Ph.D. engineers and scientists in China by 2010 than in the US

It is widely recognized that there will be substantially more Ph.D. engineers and scientists in China in 2010 than in the United States, as China produces three times the number of engineers per year.3 In 2001, only 5% of American 24 year olds with a bachelors degree were engineers, compared to 39% in China and 19% or more in South Korea, Taiwan, and Japan. R.E. Smalley, a Nobel Prize-winning scientist from Rice University, recently concluded that by 2010 90% of all Ph.D. physical scientists and engineers in the world will be Asians living in Asia.4 And among Asian Ph.D. engineers and scientists, most will be produced by China.

Markedly improved access to higher education for rural households

China’s higher education transformation has considerably improved access to higher education for rural households. As a result, the gap in access between rural and urban areas is gradually diminishing. In the mid-1990s, conditional upon being in the urban sector (including counties and town), the probability of high school graduates obtaining admission to university was around 0.3. That probability in 2005 is almost 0.5.5 Admission rates are higher than these numbers since not all high school graduates register for higher education entrance exams, and entrance exams are organized all over China. Admission rates for the population in rural areas have risen much faster than admission rates for the urban population.

The promotion of elite universities and consolidation of other universities

Recent Chinese higher education policy promoted so-called “elite” universities and consolidated other universities, reducing their numbers. Elite universities are the top ten universities in China, which receive the largest education funds from central and local governments. They have priority in selecting students through national entrance exams and have the best faculty and research resources in China. The policy focus is to elevate a small number of Chinese universities to world-class status while enlarging them. All universities in China have in recent years been subject to directives from central ministries to substantially increase their undergraduate populations, even if the accompanying significant increases in infrastructure fall behind. As a result, increases in undergraduates of 30% per year have been common in many universities.

A shift from quantity to quality

These higher educational changes have been accompanied by a shift in focus from quantity flow in the pre-1999 period to an elevated emphasis on quality post-1999. Educational attainment in China is now subject to quantity indicators designed to drive continued improvement of educational quality by participating institutions: funding is no longer simply awarded in response to increasing the numbers of students enrolled. Chinese higher education institutions are now subject to extraordinary pressures to upgrade themselves in terms of objective rankings. High priority is placed on international rankings, taken as publications in international journals, citations, and international cooperation. These measures of attainment are directly linked to institutions’ funding. Some of this focus on improved educational attainment in China seems to be spontaneous and accelerated by the policy process that exerts the pressure. Indicators of educational attainments in terms of international rankings across countries, publications of papers, and citations feed directly into annual performance indicators for Chinese faculty in an ongoing process that goes substantially beyond the tenure-for-life system outside China. It is not uncommon for an annual target of three international publications to be set for faculty members, and failure means termination of employment.

Concluding remarks

China may thus be the first case of a lower income country using major tertiary (rather than primary or secondary) transformation in educational delivery as a development strategy. This educational transformation started in the late 1990s and may only be in its relatively early stages. It has the potential to have major impacts on China, the global economy, and for global educational structure. These reflect the increasing global importance of China’s educational system and the competitive impacts of educational attainment. China’s educational transformation will be a central element of its integration into the international economy, but these implications have been discussed little. There is, in our view, a need for further research in the area.


1 See Dani Rodrik (2006), “What’s So Special about China’s Exports?China & World Economy 14(5): 1-19, Peter Schott (2007), “How does China compete with developed countries?” VoxEU, 10 October, and Lionel Fontagné, Guillame Gaulier, and Soledad Zignago (2008), “Quality matters: Everything is (not) made in China” VoxEU, 28 March.

2 This column draws on Li, Y., J. Whalley, S. Zhang and X. Zhao (2008), ''The Higher Educational Transformation of China and Its Global Implications”, NBER WP 13849.

3 See National Science Foundation (2006). Science and Engineering Indicators 2006. Chapter 2. Also see National Science Foundation (2007). “Asia's Rising Science and Technology Strength: Comparative Indicators for Asia, the European Union, and the United States”. NSF 07-319. Arlington, VA.

4 Herbold, R. J. (2006): “K-12 Establishment is Putting America’s Industrial Leadership at Risk”, USA Today (Society for the Advancement of Education), March.

5 We conclude this from data on numbers of high school graduates from “Educational Statistical Yearbook of China” and data on numbers of admissions to universities from Ministry of Education. The probabilities in 1996 and 2005 are 0.30 and 0.45, respectively.

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