A central element of China’s unconventional development strategy has been industrial policies aimed at building domestic capabilities in sophisticated industries, though whether these have succeeded remains controversial.

As currency reform and global economic malaise have hit parts of the Chinese manufacturing sector, there has been a great deal of discussion of where things are headed. Some of this talk focuses on the realization of the "Innovation Society" and the ability of China to create new tech, home-grown IP, and gradually move towards the high end of the manufacturing sector and then having a knowledge-based economy.

This is a huge step in economic development, and it's anyone's guess whether it's all going to work out the way the planners in Beijing want it to. In the past, I've essentially thrown my hands in the air on this issue. No one knows how to spur on innovation, not really. There are some fairly well-established policy guesses, such as education, access to capital for startups, infant industry protection and so forth, but those things are still guesses. It comes down to fostering creativity – that's hard to get at.

Anyway, the article excerpted above introduces a cool NBER paper on the transformation of China's tertiary educational system, the linkage between this and broad economic development policies, and where all this is headed. The full paper can be downloaded here. Of the major changes discussed in the paper, including the huge increase in students and access to education by the poor, the most important one in my mind is the shift from, as the article describes it, "quantity to quality." You can train zillions of engineers, but if it is done in a traditional manner (i.e. rote memorization), it's hard to see how that is going to foster creativity.

All of this holds true for lawyers, by the way. The amazing increases in the numbers of graduating lawyers in China is astonishing, but the practical training they receive in school is non-existent. It appears that the upper tier of law schools here is going for that "quality" approach, but it will take some time. Old habits die hard – I remember the long fight in U.S. law schools over practical training, bar exam prep, legal writing, etc.