China Pushes Forth on Vocational Education

Below is a complimentary Demography Unplugged research note written by Hedgeye Demography analyst Neil Howe. Click here to learn more and subscribe.

NH: Last month, the Chinese government issued ambitious new guidelines and goals for vocational education.

By 2025, no less than 10% of the total student enrollment in higher education institutions will be for vocational schools. And by 2035, China wants its vocational education system to be among the best in the world.

Some of the initiatives policymakers laid out include the creation of a vocational college entrance exam similar to the one that’s long been used for university admission. The government also wants to encourage students in elementary and middle school to receive vocational training and for existing vocational schools to tailor their majors toward market demand.

These ideas build upon an earlier plan introduced in 2020, in which the government pledged to subsidize 75 million vocational training slots by 2025.

Why is China doubling down on vocational education now? Its rapid growth has slowed, and its once sky-high productivity has slowed to a crawl.

The World Bank estimates that China's total factor productivity (TFP) averaged a mere 0.7% annually between 2009 and 2018, compared to an average of 2.8% in the decade prior to the Great Recession.

The slowdown in part reflects utterly redundant capital spending projects. But it also reflects a mismatch between credentials and demand: The country has a lot of so-called "golden babies" who graduate from elite schools and "copper babies" who work in construction.

But it doesn't have enough "silver babies" who make up the middle class: the teachers, the engineers, and the highly skilled factory workers.

What's more, it's been getting harder to even enter the middle class.

A recent paper from researchers at the National University of Singapore and the Chinese University of Hong Kong found that social mobility in China has been decreasing over time. Children born to poorer or rural families in the 1980s have been less likely to move up in society than those born in the 1970s.

Many of Xi Jinping's recent reforms--from cracking down on after-school tutoring to putting a ceiling on soaring housing prices--have been driven by concerns over the growing economic divide. The push for vocational education is one more effort to close the urban-rural gap and thus help jump-start the economy.

But this will be a hard sell. Since the early 2000s, China has invested huge amounts of money in education. But comparatively little of it has gone to vocational ed or been targeted to rural residents, who make up the vast majority of the population.

What vocational programs do exist are mostly of poor quality. (See “Will China Ever Become a Developed Country?”). Such schools have long been seen by skeptical parents as a last resort.  

China is also facing a numbers problem. As of 2020, just 21 out of its nearly 1,500 higher education institutions are vocational colleges. That's around 1%. It wants to emulate Germany's world-famous voc-ed model, but it wants to do in four years what took Germany decades.

Realistic or not, China's push for vocational education won't be the end of its attempts to rebalance the economy.

Earlier this summer, authorities announced they would be testing out policies in the eastern province of Zhejiang that promote "common prosperity." This includes adjusting "excessively high incomes," setting a higher minimum wage, and encouraging philanthropy.

China is experiencing many of the same structural economic issues that the West is confronting. The big question is whether a non-democratic society where the elites call the shots can ever be truly motivated to respond to the demands of the middle class.

Its new initiatives could truly ease inequality--or they could simply end up shrouding it so that opportunities appear more equal on the surface, but elites still end up at the front of the line.  

*  *  *

ABOUT NEIL HOWE

Neil Howe is a renowned authority on generations and social change in America. An acclaimed bestselling author and speaker, he is the nation's leading thinker on today's generations—who they are, what motivates them, and how they will shape America's future.

A historian, economist, and demographer, Howe is also a recognized authority on global aging, long-term fiscal policy, and migration. He is a senior associate to the Center for Strategic and International Studies (CSIS) in Washington, D.C., where he helps direct the CSIS Global Aging Initiative.

Howe has written over a dozen books on generations, demographic change, and fiscal policy, many of them with William Strauss. Howe and Strauss' first book, Generations is a history of America told as a sequence of generational biographies. Vice President Al Gore called it "the most stimulating book on American history that I have ever read" and sent a copy to every member of Congress. Newt Gingrich called it "an intellectual tour de force." Of their book, The Fourth Turning, The Boston Globe wrote, "If Howe and Strauss are right, they will take their place among the great American prophets."

Howe and Strauss originally coined the term "Millennial Generation" in 1991, and wrote the pioneering book on this generation, Millennials Rising. His work has been featured frequently in the media, including USA Today, CNN, the New York Times, and CBS' 60 Minutes.

Previously, with Peter G. Peterson, Howe co-authored On Borrowed Time, a pioneering call for budgetary reform and The Graying of the Great Powers with Richard Jackson.

Howe received his B.A. at U.C. Berkeley and later earned graduate degrees in economics and history from Yale University.