Teaching Entrepreneurship to Reshape China’s Economy

October 22, 2015

As creativity finds its place in China’s educational system, entrepreneurship is grabbing hold

This summer, nearly 7.5 million college graduates—a record number—entered China’s labor market. Entry-level positions, however, are in scarce supply, and young people are feeling the crunch.

China’s economy is growing at its slowest rate in a generation, and youth unemployment has risen to its highest—10.2%—since the International Labor Organization began tracking the indicator in 1990.

In fact, according to the China Household Finance Survey in 2012, the rate of unemployment for Chinese youth with college-level degrees or higher, now at 16.4%, is nearly double the rate of those without advanced education.

“The higher education system and labor needs of the economy are structurally different,” explains Bai Gan, a consultant with the Goldman School of Public Policy at UC Berkeley whose work focuses on Chinese private-sector economic development and higher education reform. “There are a number of high-wage technical and mechanical jobs available, but traditional college degrees don’t qualify graduates for those jobs.”

A growing skills gap in the country is evident: While today’s college graduates aspire to work in law and biology, the top five in-demand positions, according to a 2014 study from Peking University, are for salesmen, technicians, agents, customer service staff and waiters.

One way the country is attempting to shift gears and better face coming years is by developing tactical training for its youth. According to Linda Chiu, Director, Licensed Partners, vice president of development at Network for Teaching Entrepreneurship (NFTE), a nonprofit supported by MasterCard that encourages young entrepreneurs around the world, supporting youth entrepreneurship within this new educational strategy would multiply its potential.

“China is responding to the glut of graduates by focusing on vocational and trade education at the university level,” says Chiu. “That’s great if you want to learn a trade, but when you combine that knowledge with entrepreneurship, you are automatically widening future possibilities.”

Certainly, an appetite for entrepreneurship is evident in China today, especially among the young. According to a report issued by the National Entrepreneurship Research Center of Tsinghua University’s School of Economics and Management in Beijing, China’s “early-stage startup index” ranked the country 22nd out of 70 countries, making it an “active” state for entrepreneurship. The post-1980s generation, aged 25–35, has been the most active group of entrepreneurs, with more than 21% of this demographic participating in some form of entrepreneurial activity.

So, how do you cultivate entrepreneurship in a system that traditionally emphasizes rote memorization and is just now testing the waters of vocational training? This is where small, group-oriented trainings can make a difference, for example, NFTE’s innovation game, where students take items such as paper plates, pipe cleaners and construction paper and craft an invention to present and “sell” to the class. Chiu notes that such initiatives are often considered quite “progressive” in China’s educational system, while other NFTE fundamentals such as business-plan development competitions are seen as more complementary to the current curricula in Chinese schools. “It can take time for teachers, and even students to get comfortable with hands-on learning and taking risks. The idea of ‘thinking differently’ and ‘out-of-the-box’ can sometimes be at odds with having the ‘right answer’,” says Chiu. “Cultivating an entrepreneurial mindset with a program like NFTE’s can help young people create pathways for themselves.”


It helps, too, that a growing venture capital scene is showing that entrepreneurial ideas can take root outside the classroom. Since 2010, venture financing in the country has grown more than tenfold, from $1.2 billion in 2010 to The country’s leadership, as well, is embracing entrepreneurialism as a means to grow the economy. This year, the Chinese government set up a venture capital fund of 40billion yuan ($6.5billion) to invest in emerging start-ups across the country.

Developing this evergreen resource is a strategy China should continue to foster. As a wise man once said, “If you want one year of prosperity, grow grain. If you want ten years of prosperity, grow trees. If you want one hundred years of prosperity, grow people.”


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