As China sees its population decreasing, the country needs to better educate its people to sustain long-term growth, said experts.
A Chinese couple will have, on average, only 1.4 children next generation, and calculated at that rate, the population as a whole would be reduced by a fourth after four generations, said Li Hongbin, a visiting professor of economics at the Stanford Center for International Development.
"If we can't increase the quantity, we can improve the quality, which is through education," said Li, at an annual conference of visiting scholars on Saturday at the university.
"China's problem in a sense is how to deal with a stable population or an aging population when you've lost a stimulus that comes from constantly having to provide for new entrants, new generations, new jobs, new students to be trained," said Nicholas Hope, director of the center and its China research program.
Last October, China initiated a second-child policy, putting an end to the one-child policy instituted in the late 1970s. The new policy is expected to address the country's aging trend and potential future labor shortages due to the low birth rates of recent years.
"Many women choose not to have a second child despite the policy, because the cost for women is too high," said Li.
Hope agreed. Once women have experienced the freedom that comes from not having to deal with half a dozen children and being constantly engaged in childbirth, many decide that one child is enough, he explained.
"To enable the process to continue in a country that's now emphasizing innovation and entrepreneurship, and movement to the front-tier and cutting-edge technological advancements, you need to educate people much better," said Hope.
He said while he was working with the World Bank as country director for China and Mongolia, he used to visit the rural areas of Guizhou, Gansu, Jiangxi, in the underdeveloped west of China.
"When you looked at where people were living," he said, "this was not a place that would support people in a decent standard of living 25 years from now."
So the question that immediately arose was how to equip the children currently living there to take jobs in cities and towns, he said.
"They need education and you need to prepare to invest in schooling, and help those people get the sort of grounding that enables them to work in a secondary industry or service industry," Hope said.
"It's not enough to simply say we are going to stuff the universities full," said Hope. "You need more efficient investment and education that is high quality and produces people who can contribute positively."
Hope's experience taught him it would not be easy. He said he used to squabble with Chinese officials on planning commissions over the allocation of funds.
"In some of the projects in rural China where we were lending concessional funds, my position was that at least 50 percent of the money had to be spent on education and health," said Hope. But the planning commission would want to spend it on roads and the industries that might be successful.
It takes a long time to see the rewards of investment in education and local governments are more concerned with GDP growth, said Li. "So it depends on the central government's efforts to improve education, not the local governments'," he said.
Reallocation of jobs complemented by better education can raise the productivity of the workforce, according to Hope.
China has an enormous number of people in rural areas and a lot of rural workers are moving to the manufacturing and service industry, but the potential for increase in productivity in agriculture is still huge, he said.
"There are plenty of people to be released to more productive employment opportunities," he said.
