Bowen Han: Investing in People is Work That Builds Foundations, Benefits the Long Term, and Enhances Future Potential
General Secretary Xi Jinping pointed out at the opening ceremony of a study session for principal officials at the provincial and ministerial levels, focusing on implementing the spirit of the Fourth Plenary Session of the 20th CPC Central Committee [1]: "We must persist in the close integration of benefiting people’s livelihoods with promoting consumption, and investing in things with investing in people." The necessity of adhering to the close integration of investing in things [2] and investing in people represents a deepening of our Party’s understanding of the regularities of economic work under new circumstances. We must profoundly understand the strategic intent of the Party Central Committee’s proposal to invest in people from the height of the overall cause of the Party and the state. We must fully activate the human capital dividend and promote the close integration of investing in things and investing in people to better support the great cause of building a powerful country and national rejuvenation.
From the perspective of development, human capital is a vital variable affecting long-term sustainable economic development. Reviewing the history of world economic development, as a country evolves from a low-income stage to a high-income stage, it invariably undergoes a gradient upgrading of its human capital structure. The entry of certain Western capitalist countries into the ranks of high-income nations was closely related to achieving the universal realization of senior secondary education. Since the 16th century, Italy, Great Britain, France, Germany, and the United States each became global centers of education before becoming global centers of science and technology. In regions such as Southeast Asia and Latin America, countries that failed to leap over the "middle-income trap" share a commonality: they failed to form a human capital structure dominated by high-level laborers, falling into the quagmire of "low human capital–low efficiency improvement–low consumption structure–low industrial structure."
At present, our country is in a critical period of consolidating the foundation and launching comprehensive efforts to basically achieve socialist modernization. To lead the development of new quality productive forces through scientific and technological innovation, there is an urgent need to strengthen the support of talent. The 20th National Congress of the CPC proposed building a leading power in education and a leading power in talent by 2035; the Fourth Plenary Session of the 20th CPC Central Committee proposed coordinating the construction of a leading power in education, science and technology, and talent. This highlights the strategic pioneering status of becoming a leading power in education and talent, and their supporting role in promoting and expanding Chinese-path modernization. It can be said that investing in people is precisely the key point for transforming our country’s population scale advantage into a talent quality advantage.
Investing in things and investing in people constitute an organic whole characterized by mutual support and bidirectional empowerment. Only when the two achieve close integration can they form a powerful combined force to promote the high-quality development of economy and society. Since the 18th National Congress of the CPC, China has built the world's largest education system, providing solid and powerful talent support and intellectual guarantees for the construction of a modernized industrial system. For a period in the past, our country's economic development primarily relied on factor-driven and investment-led growth; the rate of return on investing in things has declined in recent years. To promote the transition of our country's economic growth power mechanism and achieve innovation-driven and demand-led growth, it is urgent to further increase the intensity of investment in people, form a "human capital dividend," and promote the coordination and mutual reinforcement of investing in things and investing in people, thereby continuously cultivating new drivers of economic growth.
Investing in people is both an important measure for guaranteeing and improving people's livelihoods and an important method for smoothing economic fluctuations and strengthening macroeconomic regulation. From the perspective of the goals of development, economic development is ultimately for the realization of the people’s happiness and well-being; investing in people is a major step toward enhancing people’s welfare and promoting all-round human development. From the perspective of the process of development, during phases of economic expansion, investing in people can increase the supply of high-quality labor; during phases of economic contraction, through current-period adjustment, staggered-period stockpiling, and cross-period release, investing in people can perform the roles of counter-cyclical and cross-cyclical regulation [3]. At the end of the last century, facing the impact of the Asian financial crisis, our country launched a large-scale expansion of higher education enrollment. This both eased employment pressure and stockpiled tens of millions of high-quality talents for the economic takeoff of China in the 21st century.
Currently, the changes unseen in a century [4] are accelerating their evolution; the world is intertwined with change and disorder, and turmoil is intensifying. The momentum of the "international circulation," in which our country’s markets and resources were "both external" [5], has significantly weakened. The structural contraction of external demand space has become a long-term trend. Against this background, increasing investment in livelihood areas such as education, healthcare, "the elderly and the young" [6], and social security can not only bring more protection to the masses amidst the uncertainty of the external environment, but also—by accelerating the shaping of modernized human resources—stimulate demand-side vitality, increase demand for improved consumption, and gestate new effective investment. This effectively offsets the demand gap brought by shrinking external demand and slowing investment, promoting a benign interaction between consumption and investment, and supply and demand.
The return on investing in people runs through the entire life cycle of a laborer, characterized by current-period input, long-term appreciation, and multi-party benefits. Unlike physical capital, once human capital is formed, it becomes integrated with the person; it does not deplete with use, but rather continues to appreciate through repeated practice. Investing in people also possesses distinct externalities. By increasing investment in fields such as education, health, and social security, we not only enhance the capacity for all-round human development but also create spillovers in the form of improved corporate efficiency, upgraded industrial structures, and progress in social civilization, which transform into lasting momentum for economic growth.
Therefore, investing in people is a task of "laying the foundation, profiting the long term, and increasing future stamina" [7]. The formation of its value possesses significant long-cycle characteristics, often requiring over a decade or even decades to see results. Our country possesses the institutional advantage of "concentrating resources to accomplish large undertakings." Scientifically formulating and successively implementing Five-Year Plans is an important experience of our Party's governance, which highly accords with the value orientation and inherent laws of investing in people. We must correctly handle the relationship between short-term macroeconomic balance and long-term sustainable growth, maintain historical patience and strategic resolve, take investing in people as a more distinct reform orientation, deeply embed investing in people into the system of economic and social policies, promote the establishment and improvement of long-term mechanisms for investing in people, and comprehensively raise the level of investment in human capital to drive the high-quality development of economy and society.