Lin Zeyan, Development Research Center of the State Council Research Report No. 066, 2005

Talent competitiveness is a comparative advantage in the quantity, quality, development and efficiency of talents that helps an organization to realize strategy and develop business against other organizations. The organizations that have different strategies and businesses also have substantial difference in talent competitiveness. In terms of size, an organization can be as small as a department or as big as a country. Relevant studies indicated that during the 1980-1998 period, 30 percent of China’s overall national strength could be attributable to human resources, while the ratio of developed countries was as high as over 70 percent and their the interrelationship between the factors of the quality of their nationals and their city competitiveness was higher than 0.9. These features became all the more striking with regard to a city or a region. It is for this reason that in order to implement the scientific concept of development and the instructions of the central authorities on talent work, many government departments are implementing talent development priority strategies and are designing talent development plans in light of the needs of their economic and social development so as to increase their competitiveness. However, a look at the talent development plans of regional and central governments for increasing talent competitiveness, there are the following main problems. 1. The government is "leading" instead of "guiding" talent development, which makes it impossible for enterprises to take up the leading position and play the leading role in the development and use of talent. 2. Too much attention is paid to the "quantitative" accumulation while neglecting the "qualitative" optimization of talents in accordance with regional economic and social development. 3. Too much emphasis is placed on the design of the "abstract", slogan-like strategic plans, lacking the "concrete", highly operable system and technological designs. 4. Too many efforts are being made to import talent, unwilling to create fine working and living environment for talented workers and failing to put talent values into effective play. 5. Some regional governments that regard themselves as the developers of human resources impose on talent their so-called "benefits" for talent development, paying little attention to the "subjective pursuit" of individual talents who have subjective initiatives.

Therefore, it is necessary to deeply explore the measures to increase talent competitiveness that can promote sustainable economic development.

I. Strengthen Market-based Training Mechanisms, Mobilize All Forces to Increase Educational Input and Adopt Various Measures to Attract Talents so as to Constantly Enlarge the Base Figure of Talent Reserves

The first move to increase talent competitiveness is to constantly enlarge the base figure of talent reserves. There are several options to enlarge the base figure of talent reserves. China should import as many talented personnel as possible and develop education. Based on the traditional talent standards (academic credentials), China’s talent reserves are utterly insufficient. For example, university students in China account for only five percent of its population, while the figure is 30 percent in Western developed countries. Even India has a higher ratio than China. In terms of long-term development and national efforts, the key to enlarge the base figure of talent reserves lies in increasing educational input that can help increase the accumulation of human capital. There are three main educational investors in increasing human capital: state, employer and family. The international standard to measure the investment in human capital is primarily to see the size of investment in education, or the educational inputs from public finance. Currently, China’s investment in human capital is grossly inadequate. For example, educational input throughout the 1990s accounted for only about two percent of the country’s gross domestic product, and rose to 3.4 percent in 2003. The figure was 6-7 percent in developed countries, and 4.1 percent in developing countries on average. According to the statistics of the Ministry of Education, the average length of education received by the country’s labor force is only eight years, while that in developed countries is more than 13 years. According to the 1982 standard, corporate investment in further education should account for 1.5 percent of the total amount of the wages for all workers. But many enterprises have failed to reach this standard, with some of them only investing 30-50 yuan for each worker. According to the 2005 Social Blue Book published by the Chinese Academy of Social Sciences, personal spending on child education ranked first in their total consumption, exceeding pension and housing outlays. The spending proportion for education, recreation and entertainment continued to rise. The growth was 16 percent between January-September 2004. During the same period, per capita consumption also rose to 850 yuan, or 12 percent higher. With regard to the investment in the rural compulsory education, the central government bore less than two percent and townships bore 78 percent, which meant that to a large extent, the peasants themselves were funding their children’s education.

The above data indicate that families have in fact become the core investors in education. This has increased family burdens in the area of basic education. In the area of further education, information asymmetry has caused a great blindness to public educational opportunity and to course selection. As far as China’s education is concerned, the true shortage is not in funding. Rather it is the so-called "system shortage" or the state control over educational resources. Currently, the "industrialization of education" is in a distorted state of "macro-control and micro-opening". The result is "macro-rigidity and micro-confusion". Just like the reform that has been realized in the economic sector, the right way should be to gradually break the control over the educational resources, eliminate system barriers and discriminatory policies and vigorously develop private education to meet social demand. Besides, it is necessary to deepen educational reform and clearly define the responsibilities and obligations of the government, employer and family in educational investment. The government should adopt different policies for different types of education, which means the government should mainly invest in basic educational and guide further education. Enterprises should offer different types of education for different occupations, which means they should mainly invest in occupational skills education and guide career development education. Families should invest what they need, which means they should mainly invest in developing their children’s interest and hobbies.

II. Establish "Right" Mechanisms for Talent Allocation, Optimize Talent Composition and Heighten the Matching between Talent Composition and the Demand of Social and Economic Development

The broad concept of talents believes that although the value of talents is relevant to the stages of history, any talent has a value and the key is how to allocate talented workers to the right positions. Increasing talent competitiveness, importing talent and developing education can only solve the issue of the "quantitative" accumulation of talents. A more important move is to pay close attention to the matching between talent composition and the demand of economic development, namely realizing the "qualitative" optimization of talents through rational allocation of talented personnel.

In reality, the existing talent composition does not quite match the demand of economic development and industrial structure. For example, the low employment rate of university graduates is in a sense an indication that the current orientation and curriculums of higher education do not quite match the demand of economic and social development and the market. Some regional governments recently introduced talent development plans. But they only talked about the "quantitative" accumulation of talents and rarely discussed the attraction and allocation of the relevant talents and the guidance of related educational and training activities in light of the unique features of their regional economic development, the state of their resources and environmental conditions and the demand of the local industrial structure.

The industrial distribution of talents in Beijing, Shanghai and Shenzhen (Table 1) indicates that talents in these three leading cities are mainly distributed in the tertiary industry, which quite matches the orientation of their economic development plans. In terms of the degree of concentration of talents in various sectors of the tertiary industry, the sequence of concentration in Beijing is basically identical to that in Shanghai. In Beijing, the first three sectors are respectively education, culture and arts, and radio, film and television (17.38 percent), state organs, party and government organs and social groups (12.33 percent), and distribution and retail businesses and catering business (11.87 percent). The first three sectors in Shanghai are respectively education, culture and arts, and radio, film and television (16.59 percent), distribution and retail businesses and catering business (10.23 percent), and government institutions, Party and government departments and social groups (8.47 percent). The sequence in Shenzhen is clearly different from that in Beijing and Shanghai. The first three sectors are respectively distribution and retail businesses and catering business (13.93 percent), social services (8.17 percent), and state organs, party and government organs and social groups (8.10 percent).

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