China is entering a new phase of development where talent and human capabilities are becoming the core drivers of long-term competitiveness. During the recent Party plenum, the Communist Party of China (CPC) emphasized a strategic shift: balancing traditional investment in physical assets with stronger investment in human capital. This shift will play a defining role in China’s 15th Five-Year Plan (2026–2030) and beyond.
As global competition increasingly centers on innovation, productivity, and skills, China is placing greater importance on building a “human capital dividend” to support sustainable, high-quality growth.
What Human Capital Investment Means & Why It Matters
Human capital investment refers to policies and resources that develop people’s capabilities across all stages of life. This includes:
- Early childhood development and education
- Vocational and skills training
- Healthcare and elderly care
- Talent development, including scientists, engineers, and skilled workers
For decades, China relied heavily on physical investment—transportation infrastructure, manufacturing capacity, and housing—to fuel rapid economic expansion. While still important, these inputs alone can no longer sustain long-term competitiveness in a talent-intensive global economy.
Today, innovation, knowledge, and skills are becoming the primary engines of productivity. Investing in people allows China to:
- Strengthen innovation-driven growth
- Boost labor productivity and income levels
- Increase domestic consumption potential
- Improve nationwide access to high-quality public services
- Build a modern, competitive workforce
This transformation marks an upgrade in China’s development philosophy.
Why Human Capital Investment Is Becoming Urgent
1. Global competition is shifting from “capital-intensive” to “talent-intensive.”
Industries such as AI, advanced manufacturing, green energy, and biomedicine rely heavily on high-skilled workers and leading experts. China aims to deepen its talent pipeline to stay competitive in emerging technologies.
2. A strong human capital base supports innovation-led growth.
Talent is the foundation of scientific breakthroughs and industrial upgrading. A highly skilled workforce accelerates digital transformation, boosts competitiveness in global supply chains, and drives new economic drivers.
3. Enhancing public welfare is central to China’s long-term vision.
Investments in education, healthcare, and elderly services improve quality of life and ensure that development benefits all groups across regions and demographics.
4. Human capital investment stimulates both demand and productivity.
As researcher Zhang Linshan from the Academy of Macroeconomic Research notes, investment in people not only drives economic growth but also increases workforce productivity, which in turn expands employment, raises income, and unlocks consumption potential.
How China Will Strengthen Human Capital Investment
China has outlined several priorities for the coming years:
Expand equal access to basic public services
- Reduce regional and urban-rural disparities
- Improve childcare, education, healthcare, and elderly care
- Build people-oriented social infrastructure
Strengthen talent development at all levels
- Cultivate leading scientists and top-tier innovators
- Support high-skilled and technical workers
- Build a more resilient national talent system
Promote lifelong learning and upskilling
- Broaden vocational education pathways
- Encourage continuous workforce training and digital skills upgrading
Support strategic industries with targeted human capital policies
- Focus on sectors critical to national competitiveness
- Encourage innovation ecosystems and research collaboration
These measures aim to create long-term national advantages in the global technological and industrial landscape.
Human Capital: A Strategic Pillar for China’s Future
China’s move toward larger, more balanced human capital investment reflects a recognition that economic modernization depends on people, not just physical assets. By strengthening education, healthcare, skills training, and talent development, China aims to build a more innovative, productive, and inclusive economy.
As the 15th Five-Year Plan period approaches, this shift will shape the country’s next stage of high-quality, people-centered development.
