Human capital and China

By Ezra Klein

Matthew Yglesias posted last night about our tour guide at the Forbidden City: A guy with a curious accent (Australian? Scottish?) who, it turned out, had "learned English from a native Chinese speaker who himself had learned from a native Chinese speaker who in turn had learned from a guy from Leeds in the UK." As Matt notes, this wasn't just a wacky story of language acquisition: China has made English classes a major priority. But what's striking about Shanghai and Beijing is that few people -- even in the hotels that cater to Westerners -- actually speak much English. Or even a bit of English. It's a noticeable difference from other major cities (like Rio de Janeiro) where English is not the native tongue, but there's nevertheless a longer experience with it.

The reason for this is that there's no one to teach English to a nation of 1.3 billion. The people who are proficient in both Chinese and English have better job opportunities than public school teacher. So you've got a lot of English classes, but fairly few English teachers, and so not much in the way of English proficiency. Maybe computer software will eventually make up the gap, but settling on a program and rolling it out across the country is a major project.

I spent some time tonight with some ex-pats who run a small company trying to spread Western educational techniques. Their argument was that the quality of China's schools was, even more so than in the United States, dependent on the quality of China's teachers. Competing in the new Chinese economy doesn't mean learning about as much as the average person in your town, as it does in much of America. Instead, it means learning way more than the previous few generations, as the 20th Century saw a razing of China's human capital.

In practice, that means learning up to the educational level of your teachers, as your parents and neighbors won't be able to compensate for their failings the way they can in America. But how many good teachers are there? For that matter, how many good teachers can there be in a country where there's enormous demand paying Western-influenced prices for the most skilled and educated workers?

This is the big difficulty as China tries to transition from an economy based mainly on cheap labor to one powered by innovation and knowledge industries. The country has enough humans to do it. What they need is the human capital. But it's hard to go from having few workers ready to participate in the global economy to having a lot of workers ready to lead it. The hope is that the foreign firms will provide a kind of secondary schooling for China's workforce, giving employees skills and perspectives that will allow them to strike out on their own. But the foreign firms are still mainly using China for cheap, low-skill labor, and that translates into a much slower form of economic advancement. China's offering a lot of incentives for foreign investors who want more than that, but they don't have the natural advantages in that area that they had when it came to offering a massive labor force.