XI’AN, China—A vast labor pool once powered China’s economy. Low-paid workers kept factory costs down, while expansion-minded companies relied on college graduates for basic accounting, sales and other entry-level white-collar tasks.

Now, as China’s economy matures, low-skilled labor is a spent resource. It can’t be a spur for the kind of easy growth China has enjoyed as an emerging economy, and could be a drag in a future likely to be defined by specialized services and smart manufacturing.

For...