Is China up to the Test? A Review of Theories and Priorities for Education Investment for a Modern China

This paper reviews the key theories relating to the role of education in economic development and social change and how education, as a critical component of total factor productivity, contributes to sustained economic growth. It examines how China's education policy reflects the country's unique dual economy. Focusing on the post-reform period, the paper contends that while progress has been made, there are risks to China's future growth prospects from failing to reap the benefits of sound education policy. It argues that if the Chinese education system is to continue to be a driver of rather than a drain on economic growth, and if China is to successfully manage its transition towards more inclusive, sustainable and equitable growth, reforms will be needed to improve the quality of education at all levels and to create an environment in which China's extensive human capital is duly recognized and respected. Crucially, the education system should be transformed to ensure it promotes a comprehensive range of human capabilities, including those that go beyond the part humans play in augmenting production possibilities.