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China: Going for Growth 2019 priorities Ensure a better match between skills available and those demanded in the market. Tertiary graduation rates have increased in recent years but the share of graduates in the labour force is still low compared to OECD countries. Moreover, many graduates do not appear to have the skills required by the labour market. Accessibility to academic higher education depends on household registration (hukou) status, weakening the degree of meritocracy of the higher education system.
Actions taken: In 2018 the State Council issued the implementation details of a lifelong VET system for groups such as the unemployed, university graduates and rural workers. In 2017, colleges introduced 2311 new undergraduate majors across the country, such as big data technics, robotics engineering and data science. Foreign capital participation has been made easier in vocational schools since 2018. Integration and cooperation of vocational schools and colleges with industry is being enhanced, for example, by adjusting curricula. Guidelines published in 2017 set the same building standards for urban and rural schools and aim to improve the supervision of private schools.
Recommendations: Review the criteria for establishing the number of students that can be admitted to existing programmes. Make vocational education more attractive by improving teachers’ qualifications and the reputation of such programmes. Streamline licensing procedures for all qualifications and ensure country-wide minimum standards. Enhance accessibility to universities, including top-ranking ones, for students coming from regions with fewer higher education institutions.
Strike a better balance between liberalisation and regulation in financial markets. Financial liberalisation brought to life a number of market players that are not subject to the same extent of regulation as traditional financial market participants.
Actions taken: Steps to open up the financial sector taken in 2018 include allowing majority foreign ownership in the sector. Banking and insurance regulators have been merged and the central bank was equipped with additional powers as the lead financial regulator. Regulation was tightened on high-leverage and risky asset management products. Steps have been taken to lower financing costs for SMEs. The State Council published guidelines for improved statistics of the financial sector. Restrictions were put into place limiting illegal and unauthorised financing of subnational governments.
Recommendations: Remove implicit state guarantees to public entities to enhance risk pricing by financial markets. Enhance financial literacy through financial education from an early age. Increase disclosure and transparency of all company accounts.
Reduce barriers to labour mobility and strengthen social security and public service provision. The registration system preserves an urban-rural divide, curtailing labour mobility and leading to persistent income inequalities. Social security coverage and the quality of public services differ significantly between urban and rural areas.
Actions taken: Portability of health insurance is being made easier, with the number of medical facilities accepting direct payment exponentially increasing in 2018. Equalisation of public services across regions (i.e. urban-rural) is manifested in concrete measures: new documents have been released, defining the areas of public services to be covered and specifying financing responsibilities across government levels.
Recommendations: Ensure more equal public service provision for all, regardless of registration status, to avoid overcrowding in the largest cities. Allow private practice in public clinics after working hours by charging rental fees to reduce queuing and arbitrage opportunities for blackmarket sales of hospital registration numbers.