At a glance: The National Development and Reform Commission (NDRC) is seeking to address the mismatch between China’s education system and the personnel needs of the manufacturing sector with a three-year action plan. It includes 19 measures for 2023-2025, such as:
- Launch 50 pilot cities to trial reform initiatives for the integration of industry and education; cultivate more than 10,000 education-industry integration enterprises
- Promote the integration of industry and education in key industries such as integrated circuits, artificial intelligence, “Industrial Internet” and smart manufacturing
- Encourage vocational colleges and universities to establish internship training bases with enterprises, and to jointly construct and manage industrial colleges
- Provide financial incentives, such as grants of up to CNY 80 million to invest in training bases as well as preferential access to land and credit.
MERICS comment: According to a report by Deloitte and Chinese firm Renrui Human Resources Technology, China’s talent shortage in the smart manufacturing sector will widen to 5.5 million by 2025, with job positions more than double the number of available workers. While more dedicated training colleges could boost the supply of talent in this area, the broader shortage facing China’s manufacturing sector is due to structural problems which goes beyond the emergence of new sectors.
First, Chinese students are primarily focused on attending top universities, disregarding practical skills and the job market. Second, the manufacturing sector does not provide attractive working conditions. Assuming wages are more or less equal, most young people would prefer a job in the service sector rather than a factory. The action plan does not include any measures to improve pay for factory workers.
Manufacturers in China could respond through increased wages, automation, or outsourcing to low-wage countries. Raising wages risks sacrificing profits or undermining their competitiveness, while automation cannot be implemented in all areas and older workers may struggle to adapt to new work processes. Outsourcing is gaining ground among companies in sectors ranging from electronics and cars. Although this runs counter to calls from President Xi to keep manufacturing in China, the new action plan is unlikely to change this dynamic.
Article: Notice on the Vocational Education Industry-Education Integration Action Plan (2023-2025), (国家发展改革委等部门关于印发《职业教育产教融合赋能提升行动实施方案（2023—2025年）》的通知) (Link)
Issuing bodies: NDRC, MOE, MIIT, MOF, etc.
Date: June 13, 2023