If the most recent AmCham China Business Climate Survey is anything to go by, China’s education system is struggling to keep up with the needs of a rapidly developing economy. Shortages of qualified employees and managers were the No. 3 and 4 ranked business challenges for a second straight year, and intense competition for those who are qualified is pushing up their costs. The current system is also corroding the social fabric, accentuating the inequality between those who have access to high-quality education and those who don’t. 

The problems are widely recognized: implementation remains weak, the workload for primary and secondary students is too heavy, students lack adaptability and inter-disciplinary skills, and the teaching curriculum is outdated. The result is a workforce that is unable to deliver on the innovation and productivity improvements the economy will need to continue developing sustainably.

To address these issues, the Ministry of Education in 2010 developed a 10-year plan that emphasized greater fairness and balance in education across China. Reforms include stipends for qualified teachers in rural and remote areas, and increasing autonomy and improving the delivery of funding for schools.

A critical step in this process, however, was the recent review of the dreaded National Higher Education Entrance Examination, or gaokao, which has become a chokepoint in reforming the education system. The review could have a broad impact, including more Chinese students being admitted into Chinese universities rather than going to universities in the US or the United Kingdom.

The exam, introduced in 1977, became the standard for entering into universities such as Peking, Tsinghua, Fudan or Renmin. Students would devote their primary and secondary education to preparing for this single exam, with intense encouragement from their parents. In the 1990s, then-premier Zhu Rongji cut government subsidies to Chinese universities, resulting in increased tuition costs and student enrollment. The effect of this was an increase in the proportion of Chinese college-aged youths attending university from 4 percent in 1991 to 25 percent today. Greater access to tertiary education has been undeniably beneficial, but with more people holding degrees, the downside has been even greater competition to get into the top universities and to stand out from the crowd.

Critics argue that the gaokao has had a negative effect on students, schools and social equality. They contend that the current system has uneven grading from province to province, significant psychological pressure on students and a general failure to capture the talent of some innovative and intelligent students. Those talented students may go off to Western schools that do have ways of measuring these skills.The new reforms announced in September 2014 stemmed from criticisms surrounding the national testing system. As Vice Minister of Education Du Yubo declared, “to put it simply, we are trying to solve the problem of yi kao ding zhong zhen (one exam determines one’s entire life).”

Reforms include an end to the English language requirement, and a new option for students to select three subjects in addition to the standard three core subjects. Furthermore, examinations will be graded on a curve from A to E in each province. Students will also be evaluated on personal and social qualities including hobbies, volunteering, community engagement, culture, morals and physical health. These modernizations are following a similar path to what has happened in the West, where employers value volunteering and hobbies on a résumé as well as academic achievements. AmCham China members such as NBA China are already working with the Ministry of Education to support this new emphasis on sports, culture and civic-minded students. The potential impact on smaller communities may be more significant than in the big cities.

However, reform of the gaokao is only part of a plan that also calls for higher entrance rates for primary, secondary and post-secondary institutions, and greater collaboration with foreign universities. These changes overall may reduce the number of Chinese students attending foreign schools. During the 2013-14 academic year, there were 275,000 Chinese students at US universities, according to the Institute of International Education. The development of stronger Chinese education institutions, with higher entrance rates, will reduce the incentive Chinese students have to study at foreign universities.

This also is true of high schools, with more than 38,000 Chinese students enrolled in the US, according to the US Department of Homeland Security’s Student and Exchange Visitor Program. As these reforms develop, Chinese parents may feel more confident to have their children study in China, rather than abroad.

But the full implications of educational reforms won’t be felt for many years. Even the current 10-year reform process is only half complete, and the next step isn’t clear. But the authorities are hoping that by relieving some of the pressure that the gaokao creates, they will be able to spur further reform, increase flexibility and raise standards in the education system. 

Brett Stephenson is an intern in AmCham China’s Government Affairs Department.