Main Industrial Development Issues and Challenges

Lack of human resources and social welfare

Low income and high unemployment levels are in part related to the social welfare policies of the Chinese government. Education, for example, is critical to achieving technology-led growth, which increasingly forms the basis of sustainable industrial development. China’s education system suffers serious imbalances. People in rural areas receive on average three fewer years of schooling than in urban areas, and had an illiteracy rate of 11.6 percent in 2000 compared with 4.6 percent in the cities. Experienced workers account for only 3.5 percent of China’s 70 million industrial employees, compared with an average of 40 percent in developed countries. Experts expect the demand for skilled workers in China to grow by 25 percent in the next few years, with demand for technicians and senior technicians doubling. Education levels and labour market policies shape job opportunities and income distribution, explaining the rising income disparities.