Carrying his baby daughter in his arms, Yang Nan stepped out of the airport and into Beijing's potent atmosphere. Immediately, he was gripped by familiarity: This was home. It was 2001 when Yang finally decided to return and establish an architectural design company.

Related readings: Job market strong for college graduates Graduates struggling with slim job market Minister: Tough employment task ahead

He had spent a decade abroad, living in Germany for three years and Canada for seven.

"I can imagine what my life would have been like in 30 years if I had stayed in Canada," says the 43-year-old, who graduated with an architecture degree in Beijing more than 20 years ago. "What I want is not a stable and carefree life in a foreign country, but to be part of the sizzling economic development of my own country."

Now a major shareholder of a national architectural design company, Yang has proven his decision right.

"In Canada, I designed buildings of 2,000 square meters a year. In China, I design buildings of 20,000 square meters," he says.

Yang admits it took him almost a year to get used to pollution, traffic and people spitting on the streets. But, "like sugarcane, it cannot be sweet on both ends," he says. "You should know what is most important to you - yes, China has its problems due to its large population, but just because of that, there is vast market potential."

Since 1978, more than one million students like Yang have left the Chinese mainland to study abroad. But just one quarter of those had returned by the end of last year, statistics from the Ministry of Personnel reveal. As a consequence, China is now experiencing the most serious brain-drain the world, according to the 2007 Global Political and Security Report, released by the Chinese Academy of Social Sciences (CASS).

China is "in dire need of people of expertise," says Pan Chengguang, a CASS expert who co-authored the report.

"It has been a great loss for China to see well-educated professionals leave after the country has invested a lot in them," he says.

To attract overseas Chinese back to beef up the country's talent pool, the Ministry of Personnel and other central government agencies issued a guideline document in March promising a "green passage" for acclaimed scientists, engineers and top company executives who are willing to return to work in the mainland.

Under this initiative, "high-end talents" will not be bound by the restrictions of hukou - the household residence registration - or the rigid payroll quotas at large State-owned institutions.

They will also receive more flexible pay packages on a case-by-case basis and their families will be given preferential access to jobs and schools. These enticements include the guarantee of privileged university admission for their children.

This preferential treatment, especially for the children of repatriated Chinese, has sparked a debate on the Internet, with some local Chinese questioning the fairness of the move.

"The (preferential) policies violate people's right of equal access to education. What could children of locals do if they don't have the means to leave the country?" asks one netizen on the popular forum of 126.com.

Currently, Chinese students face cut-throat competition for mainland university places. Of the 10 million who will take this June's university entrance examination, almost half will not make the cut.

Another netizen comments: "No matter a turtle or a tortoise, the pivotal issue is to set up an environment for equal competition."

"Haigui", or "turtle", is the Chinese term for those who left China to study and work overseas but are now "swimming home" to take high-level positions at multinational companies; while "digui" or "tortoise" refers to the mainland expertise.

There is concern some returning "turtles" will take advantage of the incentives for personal gain, instead of contributing to the country.

"Some will try to fulfill their own self-interest under the shield of this policy," one netizen writes on sohu.com, a major Chinese news portal.

However, Yang Nan believes all the worry is unnecessary. "I don't see any conflict," he says. "The more talents who return, the more rapidly China develops, and the more people will benefit from it."

Yang admits children's education is the biggest headache for overseas talents. "Actually it's not an easy admission to university, but a relaxing learning environment that I want for my kids to ensure a happy childhood for them," he says.

He says he feels sorry for his 8-year-old son when he sees the child glued to his desk late at night doing homework. "I figure that my decision to come back denied my son his carefree childhood," Yang says. "He would have had less work to do if we had stayed abroad."

Yang adds that, due to their perceived poor standards of Chinese education, some of his friends in Shanghai, who were also returnees, had sent their children to an elementary school where French and English are the two main languages.

By sending their children to such a school, Yang feels his friends seem reluctant to fully re-integrate with Chinese society.

Despite the problems in Chinese education, Yang would prefer his son to continue at a common school but maybe go abroad when he is older. "It's a dilemma," he says. "I also don't want to send him abroad too early, as he needs to learn the Chinese language and culture so as not to get lost in an identity crisis."

As Zhang Ying observes, the loosening of the government's grip on "hukou" will be welcomed by overseas talents. She tells of tasting the bitterness of this policy. After studying an MBA in France for two years, Zhang returned to Beijing in 2005, only to find that she couldn't install a telephone at home due to her Tianjin hukou.

Recalling her troubles, she says: "It is ridiculous that you need a hukou as a proof of identity to live in your own country. Getting a Beijing hukou is even more difficult than fetching a (US) Green Card."

Zhang says when she first arrived in France as a student in 2003, she had a telephone installed in her apartment almost immediately. Zhang, who is now 32, emigrated to Canada with her French fiance at the end of 2006.

"Sometimes it is not self-gain that overseas talents hunger for, but an equal, open and civilized environment, where they can display their full capabilities," Zhang says.

Yang Nan believes the choice to live in China or abroad, is a personal one, and depends on a variety of factors such as personality, timing and academic background.

"As long as China keeps its growing momentum, it will surely become a magnet for talent both home and abroad," Yang says.