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““Is China a Magnet for Talent?”Is China a Magnet for Talent?”

David ZweigChair Professor, Division of Social Science

Director, Center on China’s Transnational RelationsHong Kong University of Science and Technology

Presented at the Eighth National Canadian Metropolis Conference“Immigration and Canada’s Place in a Changing World”

Bayshore Hotel, Vancouver, 24 March 2006

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Key Points:

1. China’s governments at all levels—national, provincial, municipal—are actively engaged in trying to get overseas scholars to return to China.

2. China’s top leaders recognize the importance of the “reverse brain drain,” publicly support it, and make it important component of the national strategy of “building the country through science and education” (ke jiao xing guo).

3. Universities and research labs under the Chinese Academy of Sciences, using their own funds and government funds, are competing among themselves to attract best talent.

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4. Government’s role is somewhat indirect—only limited number of returnees cite government efforts as their key reason for returning.

5. Since early-2000, rewards from China’s market for those who transfer technology that is new for China is a key force behind “reverse brain drain.” Chinese scholars and entrepreneurs living overseas are keenly aware of the opportunities transferring technology can bring them.

6. Dramatic increases in the number of returnees in past three years belies the fact that many returnees gained only limited skills overseas. They are often as much a burden as a benefit to the Chinese economic system.

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Figure 1. Number of Returned Students, 1978-2004

The numbers are growing!

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5000

10000

15000

20000

25000

1978 1985 1987 1989 1992 1994 1996 1998 2000 2002 2004

Year

Number

Source: China Statistical Yearbook, 2004, p. 781.

30000

2005

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Chinese Government Role: The National LevelCreating a favourable political context:

"Competition in scientific research is competition for talents'‘

—former President Jiang Zemin

Central government puts returnees as key part of national policy to “Build China Through Science and Education” and “Strengthen the Country through Human Talent” (rencai qiang guo).

Being part of national program enhances their role, directs central budgetary funds towards them, mobilizes bureaucracy to work to bring them back.

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Creating a favourable political context

Former P.M. Zhu Rongji, at 6th Session of the Worldwide Chinese Businessmen’s Association (2001), stressed that China would now stress the infusion of human talent with technical skills, rather than attracting foreign capital.

2003, President Hu Jintao and V.P. Zeng Qinghong, in a series of speeches known as the “three talks” (san pian jiang hua), reconfirmed leadership support for overseas study, calling the returnees’ role “irreplaceable” (buke daitide) and of “outstanding historic role” (dute de lishi zuoyong).

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Creating Favourable Political Context

To say something is of “historic” importance carries great weight in China.

More than 10 programs, since 1996, have encouraged people to return.

Other programs, and the year of initiation, include the “Seed Fund for Returned Overseas Scholars” (1990), “Cross Century Outstanding Personnel Training Program” (1991), the “National Science Fund for Distinguished Young Scholars” (1994), and “The One Hundred, One Thousand, and Ten Thousands Program” (1995).

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Government Encourages Educational Institutions

Since late 1980s, Ministry of Education (MOE) program: “Financial Support for Outstanding Young Professors Program” (youxiu qingnian jiaoshi zizhu jihua),

by end-2003, MOE awarded 2,218 returning professors with total of 144 million RMB.

May 1998, Jiang Zemin’s speech on occasion of 100th anniversary of Peking University (Beida), called for China to establish “world-class universities.”

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Government Encourages Educational Institutions

Thereafter, under “985 Plan,” government invested billions of RMB in 9 universities to make them “world-class” and pushed them to hire overseas scholars.

Also, Cheung Kong Scholars Programme (Changjiang xuezhi jiangli jihua), funded by Hong Kong ‘s (and Vancouver’s) Li Ka-hsing.

Between 1998 and 2004, it brought 537 scholars from overseas to become leaders in key research fields.

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Government Encourages Research Institutions

Ministry of Finance gives research institutes at Chinese Academy of Sciences funds under “100 Talent’s Program”

allots 2 million RMB to awardees, 20% can be used for extra salary.

Most must start up a new lab, get graduate students and research staff.

Major emphasis on key scientific sectors such as bio-tech, nanno-tech, energy, environment, etc.

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Local Governments Compete like firms for foreign talent

Discounts on housing, imports on cars, computers, free office or factory floor space, jobs for wives and schools for kids, residence permits for people with foreign

passports. Most cities have “parks for overseas scholars to

establish businesses” (liuxue huiguo renyuan chuangye yuan).

Beijing and Shanghai each have 14 zones for overseas scholars in their city.

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Rewards from marketplace

Key source of attraction is domestic market, which rewards people who bring technology to China.

100 returnee entrepreneurs interviewed in Beijing, Shanghai, Guangzhou in 2004.

We asked why they returned to China: 27% selected—“I have a technology that I believe

will have a good prospect in China”—as their primary reason for returning.

Another 28 percent chose it as their second reason.

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Earlier study showed important rewards to technology importers

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Table 1. Rewards To Technology Importers in

Development Zones, 2001 (in RMB)

Source: Interviews in Development Zones, 2001.

Note: *The differences are statistically significant at p<0.01.

Technology importers include both returnees and people who have not gone overseas.

Yearly Salary* Importers Non-Importers

Under 20,000 2.1 12.3

20,000-39,999 10.4 28.9

40,000-79,999 25.0 18.5

80,000-99,999 10.4 2.1

Over 100,000 20.8 6.2

Can't calculate income 14.6 6.2

No response 16.7 25.8

N=145

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Do Institutional Efforts Work? or

How Good is the Returning Talent? Director of a CAS research institute put most returnees in top

50%-80% of overseas scholars, but top 20% remain overseas. In 2003, Beijing’s High Energy Physics Laboratory under CAS

had attracted no one with a Ph.D. All were abroad or in business in China.

Dr. Rao Yi, at Washington University in St. Louis and an advisor to CAS, argued that in terms of international reputation and prestige, few academic returnees are comparable to those who stay abroad.

800-1,000 scientists of Chinese origin run independent labs in the U.S.

Getting people to stay is also a problem: Stellar CAS recipient of “100 Talent’s” fellowship, (Science

publication), given huge apartment and fellowship for wife, in 2003 said he was uncertain if they would stay in China.

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Returnees to CAS interviewed in 2001-2004 Not particularly successful overseas

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Table 2. Evaluating the Quality of Returnees

Very few leaving stable academic or research positions to return to China.

Most were post-doctoral fellows.

• 3% (2/82) of scientists we interviewed in Changsha, Guangzhou, Wuhan and Kunming, earned over US$50,000/year on eve of returning; • 3/82 earned US$35,000-$49,999. • Very few had patents, although 20% earned Ph.D.s overseas. • 8/109 academics interviewed in 2002 had left behind salary of over US$25,000/year, while 77% earned under US$12,500/year.

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Table 3. Why Scientists Return: Indicators of Government Success

• 22% chose“ changes in the domestic environment” as 2nd reason for returning; • “freedom to come and go”—1st choice of 3%, 2nd choice of 10%, and 3rd choice of 10%. • “Political stability”: 2nd choice of 7%; 3rd choice of 3.4%• “changes in how the government uses people”—3rd choice of 9%.

Source: Interviews with CAS Scientists, 2002 and 2004, N=86

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Asking the question differently increased the government’s role.

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Table 4. Why has the Number of Returnees Increased?

• China’s rapid economic development 58%• good government policy 47%• good opportunity to develop new technology in China 42%• hard to find good opportunities overseas 32%• glass ceiling overseas for Chinese 31%• political stability in China 19%

Note: People could select more than one reason.Source: Interviews with CAS scientists, 2002 and 2004, N=86.

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Problems for Returnees

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Table 5. Why Not Establish Company in China (top 3 reasons)

Source: Data collected by AnnaLee Saxenian, funded by Public Policy Institute of California.

Note: Data was collected in May-June 2001. N=368. We reanalyzed her data set.

Government bureaucracy/regulation 57.5%

Inadequate legal system 50.0%

Political or economic uncertainty 38.3%

Unfair competition 37.0%

Immature market conditions 32.9%

Unreliable infrastructure 19.9%

Lack of access to capital 18.4%

Poor business services 16.6%

Inferior quality of life 13.0%

Poor quality of manpower 5.2%

Rising cost of labour 1.8%

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Problem of “Hai Dai” or Unemployed Returnees:Numbers do not tell the real story

recent jump in returnees suggests great success for government policy and attraction of China.

But, 50% of 30,000 returnees in 2005 were students who had just finished a BA or one-year MA.

Many studied in Britain, which gives one-year MA, but does not allow students to stay on for training or work,

These not-so-well-trained students MUST return to China.

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Problem of “Hai Dai”

Not the well-trained scientists, academics, or entrepreneurs who will propel China’s economy in the 21st century.

China must find jobs for these returnees, now called “Hai dai”—“overseas trained who can’t find a job”—but also means “seaweed.”

Many programs help them, much research underway to explain this phenomenon.

Much anger at Britain for creating this problem by treating Chinese youths as a commodity and a source of foreign exchange for British universities.

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Conclusion

China quite successful in creating a positive environment for returnees.

Expect the number of returnees to continue to grow.

Enormous demand in China for high quality returnees, especially since Chinese and Western firms in China need more middle managers.

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Conclusion

Many Chinese universities try to fill this need, but the quality not high enough.

Great interest among skilled Chinese who are overseas to return to China

But don’t be fooled by numbers, increased flow creates problem for China as well.

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