A worker prepares an order for export light filters at a workshop in Nantong, Jiangsu province, China.
MERICS Briefs
MERICS China Industries
12 min read

China's talent gap + Shipbuilding industry + Foreign investment in manufacturing sector

In this issue of the MERICS China Industries Brief, we cover the following topics: 

  1. The CCP is getting worried about China’s talent gap 
  2. Beijing pushes inland shipbuilding industry to get smarter, greener
  3. China seeks to upgrade manufacturing through foreign investment
  4. NEA to speed up standardization of clean energy
  5. Quenching China’s industrial thirst: Pilot program targets industrial wastewater recycling  

The CCP is getting worried about China’s talent gap 

At a glance: In a new high-level document the Central Committee of China’s Communist Party and the State Council called for greater efforts to create a system conducive to the training of highly skilled workers. Goals for 2025 include:

  • Increase the skilled workforce to 30 percent of China’s total workforce, one third of which are meant to be “highly skilled” [no specific definition is given]  
  • Encourage and reward enterprises for cultivating high-skilled talents [SOEs will be evaluated on this]
  • Improve the high-skilled personnel training system by strengthening the cooperation between industry and vocational schools
  • Promote the training of workers in sectors experiencing acute worker shortages and improve digital literacy

MERICS comment: For China, promoting skilled labor is crucial to boost labor productivity – as economic growth wanes – and for the success of an ambitious science and technology agenda centered on self-reliance. In the critical semiconductor industry, the talent shortage is forecast to grow from 250,000 to 300,000 people by 2025. That existing shortage coupled with geopolitical conflict, sluggish GDP growth and difficulties to access foreign talent due to China’s strict Covid-19 regulations and US export controls have put the talent question at the top of the political agenda: President Xi Jinping highlighted skilled labor in his report to the 20th Party Congress.

Despite the high-level support, major challenges remain: Improving vocational education has been a government priority for decades. But it remains attached with great social stigma, and those pursuing it often face worse employment opportunities than their peers in higher education, making it difficult to catch-up to other advanced economies in non-academic skills. In addition, staff turnover is high, disincentivizing employers to invest in training.

Foreign companies could benefit from this policy through increased recognition of their training efforts by the Chinese leadership. Many multinationals are already investing heavily in the training of their Chinese staff. Still, it might also increase government expectations to do even more. Foreign vocational education institutions in China might also benefit from increased cooperation and investment opportunities.


Beijing pushes inland shipbuilding industry to get smarter, greener

Article: Opinions on Strengthening the Construction of a New Era of Highly Skilled Personnel (关于加强新时代高技能人才队伍建设的意见) (Link)
Issuing bodies: CCPCC and State Council  
Date: October 7, 2022

At a glance: Five government agencies led by the Ministry of Industry and Information Technology (MIIT) released a plan to develop the inland waterway shipbuilding industry. The document applies to river ships used for passenger, cargo and engineering purposes. The government aspires to create the foundations of a modern inland shipbuilding industry by 2030, with ships fully incorporating green and smart technologies. Intermediary goals set for 2025 include:

  • Achieve breakthroughs in key green power technologies such as liquefied natural gas, batteries, methanol, and hydrogen fuel
  • Significantly improve the level of smart technology in ship equipment, including related to navigation, berthing, cargo loading and engine room equipment monitoring
  • Cultivate influential inland shipbuilding enterprises that can lead on green and smart ship design, construction, equipping and operation
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