China's short-chang­ing its fu­ture

The Pak Banker - - OPINION - Christo­pher Bald­ing

It would be hard to ex­ag­ger­ate the short­term chal­lenges China faces as it tries to keep up growth, trim debt, slash over­ca­pac­ity and pre­vent un­em­ploy­ment -- all with­out crash­ing the econ­omy. If any­thing, though, the long-term chal­lenges are even tougher. And the gov­ern­ment's own poli­cies aren't mak­ing them any eas­ier. One of the most crit­i­cal tasks is de­vel­op­ing a work­force for the 21st cen­tury.

China, whose rise has been fu­eled by a mas­sive pool of cheap fac­tory la­bor, much of it drawn from the coun­try­side, faces a fu­ture in which au­to­ma­tion will elim­i­nate many jobs, even as pop­u­la­tion growth slows. The work­ers that re­main are go­ing to need more ad­vanced skills and the abil­ity to shift into new, more tech­no­log­i­cally so­phis­ti­cated in­dus­tries.

Where are these work­ers go­ing to come from? The sons and daugh­ters of China's grow­ing mid­dle class raised and ed­u­cated in cities will be well-po­si­tioned to suc­ceed in this new econ­omy. But many of the mil­lions of mi­grant work­ers who have pow­ered the Chi­nese mir­a­cle have had to leave their own kids be­hind in the coun­try­side, ei­ther be­cause they can't af­ford to house them in China's ex­pen­sive coastal cities or be­cause they can't get the hukou or res­i­dence per­mit that would al­low their kids to at­tend city schools. Most es­ti­mates put the num­ber of these "left be­hind" chil­dren at around 60 mil­lion out of a to­tal of 180 mil­lion kids in China. And re­cent re­search shows that their ex­pe­ri­ence is far from a happy one. Be­ing raised in poor farm­ing vil­lages, by el­derly and of­ten un­e­d­u­cated grand­par­ents, has a dra­matic im­pact on these kids' de­vel­op­men­tal prospects. Scott Rozelle at Stan­ford's Rural Ed­u­ca­tion Ac­tion Pro­gram has led teams of re­searchers study­ing the im­pact of fam­ily sep­a­ra­tion on Chi­nese chil­dren. They've found that these kids suf­fer more phys­i­cal and men­tal health prob­lems than those raised in house­holds with both par­ents present, and show sig­nif­i­cant de­vel­op­men­tal is­sues.

One study found that nearly half of Chi­nese rural house­holds had at least one par­ent who had mi­grated for work. Chil­dren were more anx­ious after that par­ent left and, more sur­pris­ingly, didn't im­prove upon their re­turn. These kids also suf­fered from low­ered self-es­teem and other emo­tional is­sues. In cases where chil­dren are raised by grand­par­ents, few re­ported read­ing or singing to their charges, or even play­ing with them. In­deed, nearly 90 per­cent of el­derly care­givers -who have lit­tle ed­u­ca­tion them­selves, given that they grew up when China was devel­op­men­tally com­pa­ra­ble to Africa re­ported not read­ing to their grand­chil­dren. As a re­sult, more than 40 per­cent of chil­dren be­tween the ages of 18-30 months ap­pear to be devel­op­men­tally de­layed.

The one pos­i­tive find­ing Rozelle's re­searchers dis­cov­ered was that the chil­dren of ab­sent mi­grant work­ers tended to score better on stan­dard­ized tests rel­a­tive to other rural stu­dents in pri­mary and sec­ondary school.

The Stan­ford re­searchers fig­ure that has some­thing to do with rel­a­tive af­flu­ence: "Mi­grant house­holds that ex­pe­ri­ence ris­ing in­comes may be able to pro­vide better nu­tri­tion, im­proved ac­cess to ed­u­ca­tional sup­plies, and bur­den their chil­dren with less house­work." Even so, their scores and job prospects still lag far be­hind those of their ur­ban coun­ter­parts.

China can hardly af­ford to write off a third of its fu­ture work­force, es­pe­cially as the de­mand for cre­ativ­ity and skills con­tin­ues to grow. Even if these kids wanted to fol­low their par­ents and move to cities as nearly 20 mil­lion Chi­nese did last year there's no guar­an­tee they'll be able to find jobs that don't re­quire ad­vanced ed­u­ca­tion and skill lev­els. Chi­nese of­fi­cials have long rec­og­nized that the hukou sys­tem needs fun­da­men­tal re­form. Re­cent changes urge small cities in par­tic­u­lar to open up res­i­dency rights to mi­grants. But they only aim to le­gal­ize roughly a third of the nearly 300 mil­lion mi­grants by 2020. Mean­while, the big­gest cities -- where most jobs are con­tinue to limit ac­cess of mi­grants to pub­lic ser­vices and lo­cal schools.

School­ing is only part of the prob­lem, too. Au­thor­i­ties need to do much more to make ur­ban hous­ing af­ford­able for cou­ples and fam­i­lies. Cur­rently, the av­er­age rural res­i­dent earns about 14,000 ren­minbi an­nu­ally (around $2,100) while ur­ban real es­tate sells for $167 per square foot. (By com­par­i­son, Zil­low es­ti­mates the price per square foot in the U.S. at $119, nearly a third less.) If par­ents can't af­ford apartments big­ger than shoe­boxes, they're not go­ing to bring their kids to live with them.

And fi­nally, es­pe­cially given that many work­ers are choos­ing to re­turn to the coun­try­side or not to leave in the first place, China needs to bridge the yawn­ing dis­par­i­ties be­tween ur­ban and rural areas. Fi­nanc­ing and in­vest­ment is cur­rently steered over­whelm­ingly to al­ready wealthy prov­inces and ur­ban cen­ters such as Bei­jing, Shang­hai, and Shen­zhen. Ur­ban in­comes are al­ready three times that of rural. City-raised youth are seven times more likely to at­tend col­lege.

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