China's economy has been built on the back of unskilled labour and now that wages are rising, factories are moving elsewhere and taking jobs with them. The problem is that, in single-mindedly pursuing growth, China basically forgot to educate its people.
Now a middle-income country, but with 500 million uneducated rural poor, China has a looming development trap. Without better skills and education, the country risks corruption, organised crime and economic stagnation. And as unskilled workers lose their jobs and are unable to find new ones, China may come to rely far more on militaristic nationalism in order to stave off social unrest.
Stanford economist Scott Rozelle argues that, even as China has experienced unprecedented growth and deeply embedded itself in the world economy, it has missed a vital component in securing its future. The implications should worry all of us.
