Yong Zhao is the University Distinguished Professor in the College of Education at Michigan State University. The author of "Catching Up or Leading the Way: American Education in the Age of Globalization," he often blogs about education issues.

There's a frustrating paradox in Chinese education. On the one hand, millions of college graduates cannot find a job -- at least a desirable job that pays substantially more than what a migrant worker makes. On the other hand, businesses that want to pay a lot more can't seem to find qualified employees.

A McKinsey study found that fewer than 10 percent of Chinese graduates are considered suitable to work at multinational companies based in China.

Multinational companies in China are having a difficult time finding qualified candidates for their positions. According to a recent survey of U.S.-owned enterprises conducted by the American Chamber of Commerce in Shanghai, 37 percent of the companies that responded said that finding talent was their biggest operational problem. A separate study by McKinsey Quarterly found that 44 percent of the executives in Chinese companies reported that insufficient talent was the biggest barrier to their global ambitions.

The explanation: a test-oriented educational environment.

China invented the keju system, which used tests to select government officials. It was a great invention because it enabled talents from across the society to join the ruling class regardless of their family backgrounds. Hence, a great meritocracy could be created. But it evolved into a nightmare for China as the system gradually changed into one that tested memorization of Confucian classics.

Associated Press

Keju is dead now but its spirit is very alive in China today, in the form of gaokao, or the College Entrance Exam. It's the only exam that matters since it determines whether students can attend college and what kind of colleges they can attend. Because of its life-determining nature, gaokao has become the “baton” that conducts the whole education orchestra. Students, parents, teachers, school leaders and even local government officials all work together to get good scores. From a very young age, children are relieved of any other burden or deprived of opportunity to do anything else so they can focus on getting good scores.

The result is that Chinese college graduates often have high scores but low ability. Those who are good at taking tests go to college, which also emphasizes book knowledge. But when they graduate, they find out that employers actually want much more than test scores. That is why another study by McKinsey found that fewer than 10 percent of Chinese college graduates would be suitable for work in foreign companies.

Chinese educators are well aware of the problems with the gaokao system and have been trying to move away from the excessive focus on testing. But seeking other valid indicators of strong academic records will take time, especially in a country of 1.3 billion people.