A sharply focused study that elucidates clearly why China faces grave problems in shifting to the next growth level.
Economist Rozelle (co-author: From Marx and Mao to the Markets: The Economics and Politics of Agrarian Transition, 2006, etc.), the co-director of Stanford’s Rural Education Action Program, has observed and worked in China for more than 30 years, especially within the vast, poor, rural interior that is worlds apart from the shiny stories of the upwardly mobile and educated in the megacities. In this compelling study that reads like a cautionary tale, Rozelle and researcher Johnson encapsulate the divide between rural and urban in China, underscored by the hukou system (the household registration system), which delineates all residents at birth as either rural or urban, and explain why this discrepancy is a looming problem. The authors note that 36 percent of China’s population is urban and thus fairly well-educated, yet the remaining 64 percent (as many as 700 million people) is rural and uneducated. For many years, there was no glaring crisis with this discrepancy since globalization dictated that factories and industry recruited the legions of low-skilled labor for their needs. However, now that wages have risen, the workforce is fully employed, and factories have moved to cheaper places like Vietnam, China is wrestling with the “Middle-Income Trap,” and it cannot move higher (as South Korea, Ireland, and Taiwan have done) because it has woefully neglected its human capital. Like Mexico, Brazil, Thailand, and South Africa, China is stuck, and as long as the vast majority of its population is not trained for the next level—due to inadequate education, nutrition, and early childhood development—the Chinese may turn to the informal sector and to crime while its leaders are lured to nationalism.
A convincing argument and stern warning—with ample worse- and best-case scenarios—that without investment in human capital, a struggling country cannot rise.