The
China Challenge
The
United States may dominate the global economy today,
but China is coming up fast. As developing countries
surpass us in scientific and engineering talent, we
lose our biggest competitive advantage in the global
economy.
It
was 1997 when Paul Rocheleau, the Chief Financial
Officer of Albemarle Corporation, first realized
that the world was flat. He was flying from Bangkok,
Thailand, to Kunming, a city deep in China’s
rugged interior. He was startled to find that there
were four flights daily connecting the two cities,
and that his flight was booked. He was the only
Westerner on the plane.
As the Boeing 757
taxied into the Kunming airport, he was struck by
the contrasts. Out one window, he could see a modern
airport that would have been the envy of many
American cities; out the other, he could see farmers
plowing their fields with oxen. As he stepped off
the plane, the sound system played American
Christmas carols sung by Amy Grant and Gloria
Estefan. For ground transportation, passengers had
their choice of everything from limousines to Third
World jitneys. Even his European cell phone worked.
Marvels Rocheleau: “I was getting phone calls in
Kunming.”
That’s when the
truth walloped him: The remotest corners of the
globe were being integrated into the global economy
at a pace unprecedented in human history. One
billion, three hundred million Chinese — not to
mention a billion Indians and hundreds of millions
of other nationalities — were simultaneously
competing for American jobs and creating a market
for American goods. Cell phones, the Internet and
Boeing 757s had leveled the playing field. In the
eight years since that revelation, the world, to
borrow a phrase from Thomas Friedman’s new book,
“The World is Flat,” has gotten even flatter.
A flat world
creates both opportunities and challenges.
Albemarle, a manufacturer of specialty chemicals,
views the Chinese market as a tremendous growth
opportunity. Rocheleau played a key role in a
project, announced in July, to set up a technology
center and repackaging facility in Nanjing. On the
other hand, he sees a quiet crisis brewing. It would
be a huge mistake to think that corporations are
locating in China only to exploit cheap and abundant
labor. The Chinese are investing heavily in
education — particularly in the scientific and
engineering disciplines most in demand in a
knowledge-intensive economy. Increasingly,
multinational corporations are looking at China and
India as sources of skilled labor they cannot find
in the U.S.
Most Americans
don’t see what’s coming. We have dominated the
global economy so long that we almost regard our
high standard of living as a birthright. Young
people seek self-fulfillment in their selection of
college degrees, not marketability in a globally
competitive economy. As a society, warns Rocheleau,
who serves on the Virginia Commonwealth University
School of Engineering board, we are not preparing
the next generation to compete on a global stage.
According to the National Research Council, China
graduated 300,000 engineering students in 2004,
India 200,000 and Japan 104,000. The U.S. graduated
only 59,500 — and many of those were foreign born.
“As a society, we
need to have engineers and researchers in those
fields that drive economic growth,” Rocheleau
says. “I worry about where the next economic
engine will come from in the U.S. I don’t think we
have the capacity to repeat the boom of the 1990s
— a lot of that capacity has gone offshore.”
Dr. Robert Mattauch,
dean of the VCU engineering school, minces no words:
Science and technology are the wellsprings of
economic progress. “Our economy is based upon our
technological superiority.”
As dean of
engineering at VCU, Mattauch says, he’s not
concerned about competition with UVa or Virginia
Tech. He’s working to build stronger relations
with VCU’s sister schools of engineering,
especially in Virginia, convinced that only by
acting together can they help preserve America’s
technological prowess.
Engineering schools
share many of the same challenges, in particular the
shrinking pool of qualified student applicants.
“We’re sitting around blithely, letting other
countries eat our lunch,” Mattauch warns. “As I
prepare to step down from the Deanship I am
convinced that our nation needs another ‘call to
arms’ similar to that issued by President Kennedy
that ushered in the space race.”
Mattauch has issued
such a challenge locally, and the Richmond region
has responded. VCU Engineering has embarked upon a
major expansion: The school’s strategic plan calls
for more than doubling the size of the institution
over the next decade — raising a new building in
the Monroe Park Campus adjoining the existing
engineering building, expanding the faculty by 30,
and raising student enrollment by 800. There is
strong support in the Richmond region for the
engineering school, Mattauch says, because community
leaders understand the link between engineering and
economic progress
But the engineering
school does not exist in a vacuum, Mattauch warns.
VCU Engineering recruits students heavily from the
Richmond region, and secondarily from Virginia. The
pool of students with the aptitude and interest to
attend engineering schools is relatively thin. Says
Mattauch, "It will take a concerted effort at
all levels of society — from parents to guidance
counselors, from school boards to science museums
— to get school children excited about the wonders
of science and engineering."
Virginia, like the
rest of the U.S., is bleeding away its economic
competitiveness as the Baby Boom generation,
inspired by President Kennedy’s challenge to race
the Soviet Union to the moon, begins retiring in
large numbers. The fact that the human capital
crisis is unfolding in slow motion makes it no less
real.
Richard Florida, a
professor of economic development at George Mason
University, spells out the looming problem in his
recent book, “The Flight of the Creative Class.”
A “talent gap,” he says, “is likely to hit
epic proportions by 2010.” He explains:
According to the
Bureau of Labor Statistics, scientific and
engineering occupations are projected to grow at
three times the rate of the overall workforce,
adding 2.2 million jobs by 2010, a nearly 50 percent
increase. At the same time, the average age of the
scientific and technological workforce is rising.
More than half of those in the scientific workforce
are 40 years or older, and the 40-44 age group is
nearly four times as large as the 60-64 age group.
Obviously, many of these people will retire over the
next two decades.
The U.S. hasn’t
been able to cultivate enough of its own,
native-born scientists and engineers for a long
time, Florida says; the country has made up the
shortfall by importing talent from abroad. But there
are troubling signs that this time-honored strategy
is less viable than it once was. In the wake of the
9/11 terror attacks, U.S. authorities have made it
far more difficult for foreigners — even educated
ones — to enter the country. At the same time,
economic development of China, India and other
countries creates more opportunities for foreign
students who once would have considered staying
here. Florida also cites a growing perception of
political intolerance that is driving native talent
oversees.
You don’t have to
buy into Florida’s entire argument to agree with
the larger truth: The U.S. is losing its
unchallenged dominance in the development and
recruitment of human capital. Unfortunately,
Virginia, according to figures published by the
State Council for Higher Education in Virginia, is
no exception to the national trend.
In 2004, Virginia
public institutions of higher education granted
47,745 undergraduate and graduate degrees. Only
3,056, or 6.4 percent, were engineering degrees.
That compares to roughly 40 percent engineering
degrees in China.
Focusing on
absolute numbers does overstate the problem
somewhat. Because so many Americans earn college
degrees, the number of engineering degrees expressed
as a percentage of the population is roughly
comparable in China and the U.S.
But E. Morgan
Massey takes little comfort in that fact. China has
momentum; the U.S. does not. Massey, the 78-year-old
president of Evan Energy Corporation, has been doing
business in China more than 10 years. He assembled
the first American-led consortium to develop a major
Chinese mining property according to U.S.
engineering, safety and environmental standards. His
company employs Chinese mining engineers; he’s
seen the breathtaking change that’s taken place
not just in Beijing and Shanghai but in the interior
of China.
“The secondary
school program in China is far ahead of U.S.
schools,” Massey asserts. “We’re still ahead
in college education, but we’re losing ground
fast. We lead in research, but if we can’t recruit
the technical people, the research is going to India
and China.”
Rocheleau concurs:
“I will argue that the top tier of U.S. students,
maybe 20 to 25 percent, is equal to anyone in the
world. We have very bright young people coming up
— but not in the numbers we would like.” The
Chinese are investing heavily in education.
According to United
Nations statistics, the number of Chinese
enrolled in “tertiary” education tripled in the
three years between 1998/1999 and 2002/2003 to more
than 12 million. In India, the growth rate was
slower, but still significant.
“They may not
have the wealth and capability yet,” Rocheleau
says, “but the sheer mass is something that
Americans cannot appreciate until they’ve seen it.
The sheer mass will drive very rapid change.”
--
October 3, 2005
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