Embrace the Winds of Change and Build New Skills
China will need to build better skills-building infrastructure,and the efforts need to begin now. These are a few of the actions the country will need to take to build a strong talent foundation
Dominic Barton
Dominic Barton is a senior partner at McKinsey ＆ Company. From July 2009 to July 2018 he served as global managing partner,based in London. He is also the chancellor of the University of Waterloo, the chair of the Canadian Minister of Finance’s Advisory Council on Economic Growth and the chair of Teck Resources.
Even in China’s long, glorious and tumultuous history, 1979 stands out. Not because Chinese athletes dominated at the world championships in badminton, although they did. And only partly because China began full diplomatic relations with the United States, although this was certainly important. The reason that 1979 is one of the most important years in Chinese — and world— history is that reform of the economy and opening up to the world began in earnest. Starting with the de-collectivization of agriculture, China took steady, deliberate steps away from what had been an entirely state-controlled economy.
The results have been one of the defining stories in the modern age. In 1979, China was a poor country, with an average per capita GDP of just $156, and national GDP was only $150 billion. Now the numbers are $8,827 and $12.2 trillion respectively. The numbers are impressive, but the human element matters more: More than 700 million people have been lifted out of poverty since 1979.(https://www.daowen.com)
But that was then, and now what about the future? The global economy is changing fast and in unprecedented ways. Specifically, in a little more than a decade, advances in digitization,automation and artificial intelligence are expected to displace 400 million to 800 million jobs worldwide — 100 million of them in China alone. Repetitive, lower-skilled jobs are particularly vulnerable to automation (see Exhibit), and this describes a substantial share of Chinese manufacturing, which accounts for 20 percent of its workforce. Based on today’s technologies,the McKinsey Global Institute estimates that more than 40 percent of all work activities, and up to 31 percent of current work hours in China, could be automated by 2030 (although the more likely scenario is about half that).
This “fourth industrial revolution” or “post-industrial revolution” is different chiefly because of its speed. In previous transitions, the changes took place over decades, allowing older workers to retire and introducing new entrants gradually to growing industries. In this one, mid-career workers will have to adjust, too.
China is no stranger to adapting to economic change, as its recent history demonstrates. It has also proved willing, even eager, to adopt new technologies. There are 800 million internet users in China, and it is both the largest producer and the largest user of industrial robots. Industries ranging from chemicals to real estate to cars to healthcare are already making good use of digital products and services, and almost half of consumer goods are bought electronically.
Even for China, which has made rapid economic progress look almost routine, coping with the post-industrial revolution is going to be a challenge. But unlike 1979, this time China is operating from a position of strength. As the world’s top manufacturer,a leading foreign investor, and a leading recipient of foreign investment, it is positioned well to learn from others, and to offer its own lessons.
Most countries in the world are not prepared for this kind of change, including China. A Chinese government report on higher education, for example, found that “many employers are generally unsatisfied with their new hires’ practical skills and professional ethics”. Many students also feel unprepared. The OECD asked 150,000 recent Chinese college graduates who had been working for six months if their education prepared them for work. On 34 of 35 skills mentioned, there was a gap between how important the students considered a skill and whether they had acquired it at university. The pattern held true for vocational graduates. This does not even begin to include the country’s“floating population” of more than 250 million people — many of whom work in informal and low-skilled jobs.