VOICES FROM THE INDUSTRY: China, higher education and our economic future

In mid-September, I’ll be traveling to China’s Liaoning province as part of a delegation led by Indiana State University, hosted by Liaoning University. We’ll arrive in the country too late for the Olympics, but we’ll be there to talk about another form of global competition-economic development.

It’s appropriate that the two universities are co-hosting a conference on economic development issues, given the importance of human capital in our economy. It’s especially appropriate for China, where higher education has become a central part of the nation’s strategy for growth.

The last time I was in China, a little over two years ago, I was struck by an article in the Shanghai Daily titled “Mayor vows more funds for learning.” The piece reported on Shanghai’s then-Mayor Han Zheng’s plan to spend more than 20 percent of the city’s 420 billion yuan ($52 billion) annual budget on local universities.

Some ‘back of the envelope’ calculations tell us that this represents more than double Indiana’s total appropriations on higher education on a per-capita basis. This kind of investment in higher ed isn’t unique to Shanghai.

Triple the graduates

In the late 1990s, the Chinese government made a conscious decision to focus on higher education, leveraging the country’s vast population into a skilled work force that would provide a critical advantage in our knowledge-based economy. In implementing this approach, the government followed the advice from “Field of Dreams”-“Build it and they will come.” Over the next decade, China added nearly 800 new colleges and universities.

And the students have come. The number of graduate and undergraduate students in China have tripled over the last six years. According to the Centre for International Governance Innovation, the number of graduates from all levels of higher education in China exploded from 8 million to more than 30 million.

The increase in science and engineering graduates has been even more pronounced. Just 5 percent of the U.S. college-educated 24-year-olds are engineers, compared to 39 percent in China.

Because of this disparity, it’s widely recognized that there will be significantly more PhD engineers and scientists in China by 2010 than in the United States. A broader study by Rice University makes the startling projection that, again by 2010, 90 percent of all the world’s PhD-level engineers will live in Asia.

As China’s work force becomes more educated, it becomes more creative and productive: China is developing the capacity to invent and design, not just to produce more cheaply. By the end of 2004, for example, foreign technology companies
had established more than 750 R&D centers in China. This trend strikes at the very heart of the United States’ competitive advantage-our ability to innovate.

At the same time, here in the U.S., execs like Bill Gates are imploring Congress to raise the limits on visas for foreign-born tech workers, or Microsoft and companies will be forced to move more jobs overseas in search of a qualified workforce. A recent survey by the National Association of Manufacturers shows that 80 percent of their members rank “finding skilled workers” as a critical challenge.

As the baby boomer generation nears retirement en masse, enrollment by U.S. college students in technology and engineering majors are down over the last several years. Here in Indiana, the average age of Hoosier manufacturing workers hovers around 50, and we rank 44th overall in our share of college-educated workers.

It all adds up to a significant disadvantage as jobs in our most dynamic industries-manufacturing, the life sciences, technology and logistics-demand more education and training.

Keeping pace

I make the comparison with China not to be alarmist or nativist. Indiana is attracting record levels of foreign investment, much of it from Asia. China is Indiana’s fifth-largest export market. It’s a mutually beneficial and profitable relationship. But as we look ahead, we must keep pace with our trading partners to stay competitive in the global economy.

For Indiana, this means focusing on science, engineering and technology education, starting in K-12. Initiatives like BioCrossroads’ I-STEM network, which provides more resources to science and math teachers, are a great start.

Expanding access for high school students to advanced placement classes in these disciplines is also key to preparing them for a successful college experience-this is the focus of another partnership between BioCrossroads and the University of Notre Dame.

It means boosting the sheer volume of young people in our higher education pipeline. This will require bold actions like the governor’s recent proposal to provide a “free” associates degree at Ivy Tech or $6,000 in aid towards their first two years at a four-year institution to young students from middle and lower-income families.

And we all have a role to play in building the kind of communities that attract and retain top talent after graduation -diverse and welcoming, with vibrant cultural and recreational amenities.

In a world where growth is driven by knowledge and innovation, investments in human capital pay the richest dividends. We saw this first-hand after World War II, when the G.I. Bill helped educate the generation of Americans who laid the foundation for our 21st century economy. China has learned this lesson-and Indiana ignores it at our peril.