The lead author of this very serious look at China's economy:
Scott Rozelle is Helen F Farnsworth Senior Fellow and Co-Director of the Stanford Center on China’s Economy and Institutions in the Freeman Spogli Institute for International Studies and Stanford Institute for Economic Policy Research, Stanford University.
The share of uneducated workers in China’s labor force is larger than that of virtually all middle-income countries
According to World Bank data, only a handful of economies have risen from middle- to high-income status since 1960, when economic catch-up growth in many developing economies took off. Examples include South Korea, Singapore, Israel and Ireland. Some countries that were high income in 1960 remain so today, such as Denmark and Japan.
Others, like Myanmar and North Korea, have stayed poor. Many countries have stayed at middle-income status for decades, seemingly unable to reach high-income status. How does China compare to these other countries stuck at the middle-income level?
One key factor that may account for the disparate development paths of countries is education. According to the OECD, in 2015 the average share of workers — people aged 18–65 — that completed secondary education in countries that graduated to high-income status was 72% when they were still at middle-income status. But in countries that have failed to exit middle-income status, the share is much lower — 36% on average.
Having a large supply of educated workers ensures that enough talent exists to meet and drive demand for high-value services, thereby sustaining growth. When too many unskilled workers are squeezed out of upgraded industries their wages stagnate, curtailing demand and hampering growth. This eventually leads to serious social problems, such as higher rates of unemployment and increased crime and social unrest.
Education attainment metrics help reveal China’s potential future development and growth trajectory. The share of uneducated workers in China’s labor force is larger than that of virtually all middle-income countries.
According to 2010 census data, there are roughly 500 million people in China between the ages of 18 and 65 without a senior high school diploma, which is 74% of the labor force. This makes China the least educated middle-income country in the world.
A large population of uneducated workers was not a problem when China moved from low- to middle-income status. Unskilled wages were low and there was growth in low-cost manufacturing and construction. But China’s growth model is changing as it becomes wealthier.
Unskilled worker wages are much higher but the lure of cheaper labor elsewhere and China’s massive push to automate is rendering low-skilled workers redundant. Construction jobs have tapered off as investment in infrastructure cools. These factors suggest China’s unskilled workers may be increasingly unemployable as the economy upgrades....
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The thing to do with a surplus population is to start a war
