how india and china can take their human capital to the next level

At the 75th anniversary of its independence, India has much to celebrate. It has surpassed the United Kingdom to become the world’s fifth largest economy, and by the end of the decade, it is poised to overtake Germany and Japan to occupy the No 3 spot.

While China’s working-age population has been declining for a decade, India’s growing population – which is set to surpass China’s next year – is young; more than half of Indians are below 30. Meanwhile, on both sides of the Atlantic are high-profile business and political leaders of Indian origin. In particular, Indian Institutes of Technology (IITs) have produced a strong pipeline of talent for Silicon Valley.

Yet while Indians at the top of the pyramid are thriving, it is not the case all round. In August, India’s overall urban unemployment rate was 9.6 per cent. The situation is much starker among young people (more than 25 per cent were recorded as unemployed in the second quarter of 2021) and graduates (almost 18 per cent early this year), and particularly acute among women.

Scarcity of good jobs is only one side of the equation. Inadequate training has been a key contributing factor. In 2019, India’s workforce was ranked 107th for skills in the World Economic Forum’s Global Competitiveness Index. Alarmingly, its position is projected to further drop in the years to come.

how india and china can take their human capital to the next level

Job candidates wait outside a packed venue after larger than anticipated numbers turned up for interviews organised by the state-run employment centre in Kochi in the Indian state of Kerala on July 8. Photo: AP

While India saw a decline in the latter half of the last decade in the number of secondary school and university graduates with competitive skill sets, China’s numbers rose in the same period.

In the latest QS ranking, China places eighth for the overall strength of its higher education system. It is joined in the top 10 by South Korea and Japan, epitomising the importance of human capital in East Asia’s economic rise. Strong talent has transformed these nations into leaders of innovation; collectively, they accounted for more than half of all Patent Cooperation Treaty patents filed in 2021.

According to the results of the Organisation for Economic Co-operation and Development’s 2018 Programme for International Student Assessment, 15-year-olds in Beijing, Shanghai, Jiangsu and Zhejiang outperformed their peers around the world. In mathematics, mainland China, Macau, Hong Kong and Taiwan took four of the top five spots. After scoring second to last in 2009, India did not participate in PISA for more than a decade until 2021, with the results still to be released.

India has an adult literacy rate of 74.4 per cent versus China’s 96.8 per cent. With higher education increasingly becoming a necessity in China, students are typically expected to go through around 14 years of schooling, compared to 12.2 years in India.

A fundamental challenge for education in India is the diversity of languages in the country. Among its 120 languages, Hindi is the most widely spoken, but even this is used routinely by just 57 per cent the population.

While China has almost 300 living languages and multiple dialects, the written language is unified – the stage being set more than 2,000 years ago. The vast majority of China’s population can read Chinese.

Since 1949, China has done an exceptional job of increasing access to primary education and wiping out illiteracy, paving the way for the country’s economic shift from agriculture to manufacturing.

Among 112 non-English-speaking countries, India and China are ranked side by side (48 and 49, respectively) in the EF English Proficiency Index. English remains an official language of India and is often seen as an advantage among employers, particularly in global commerce. However, its use is largely restricted to elite circles. A mere 10.6 per cent of Indians speak English, and only 0.02 per cent count it as their first language.

how india and china can take their human capital to the next level

Candidates leave after taking an International English Language Testing System (IELTS) examination in Amritsar, India, on July 9. Photo: AP Photo

China and India face opposite challenges in human resource development. For India, it is currently the base of the pyramid, for China it is the top.

While China has become a top talent producer, it now has to compete with the US and its allies in the Western world, with semiconductor chip production recently becoming a particular focus.

China cannot attract global talent as readily as the US. Its emphasis on ideological indoctrination may be a factor. Critical thinking is taught in Chinese schools, but not nearly to the same extent as other advanced nations such as Israel and South Korea.

Hong Kong has a key role to play here. The city benefits from an open economy and global outlook. Even with large numbers of residents emigrating, Hong Kong remains a magnet for global talent, including mainland China’s best and brightest.

The city boasts some of China’s best universities, and many are now opening campuses in Guangdong. They will benefit from greater openness and meritocracy than most mainland universities.

“Demography is destiny” is only half right. The quality of human capital is just as important to economic development. Just like other East Asian economies, China’s remarkable achievements in education have been foundational to its economic success.

The final step in China’s human development may be the hardest. It calls not for more investment but greater tolerance. Talent thrives in an environment where critical thinking is encouraged.

Allowing diversity in ideas and thought is a sign of national confidence and can only make a nation stronger. To achieve national rejuvenation, China needs only to find that self-confidence and openness – just as it did during the glorious Tang dynasty.

Winston Mok, a private investor, was previously a private equity investor

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