China needs more high-skilled workers.

Source: ChinaFotoPress/Getty Images

China Should Make It Easier to Become Chinese

Adam Minter is a Bloomberg View columnist. He is the author of “Junkyard Planet: Travels in the Billion-Dollar Trash Trade.”
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China, the nation that invented border walls to keep out foreigners, is getting ready to open its first-ever immigration office. According to Bloomberg News, the goal is to attract highly skilled foreigners to help China become a global center for innovation.

QuickTake China's Pain Points

Details are sketchy as to who will qualify, the numbers envisioned and what might be required during the immigration process. What is clear is the fact that world's most populous country needs people: China's working-age population has been shrinking since 2012. And despite years of warning and official efforts to stem the tide, the Chinese government has yet to figure out a way to compete for the globe's top talent -- including its own.

Successfully addressing that problem will require more than a few carrots for would-be immigrants. At some level, China is going to have to rethink what it means to be Chinese in the first place.

China's shortage of workers isn't unexpected. Upwardly mobile, urbanizing societies tend to see lower birth rates and rising job expectations. In China, both factors have been felt in once-booming manufacturing zones, where employees are scarcer than they used to be, wages are higher and some employers are turning to illegal immigrants.

In the case of high-skilled labor, China faces an additional challenge: Many of its most-qualified citizens are leaving the country outright in search of better opportunities. According to a February report from the Migration Policy Institute, since the late 2000s, the wealthy and highly skilled have been emigrating from China at a rate five times that of low-skilled workers, and the gap is widening.

The exodus is driven by a range of factors, including pollution, expensive and overcrowded cities, red tape, a slowing economy and frustration with corruption. To try and lure back some emigrants, China's been offering overseas Chinese (as well as foreigners) a slew of attractive economic and job benefits in exchange for a commitment to a Chinese university or other research institute that might last several years. But these programs have had little success, with academics trained overseas reluctant to give up their careers abroad.

One thing that might change at least some minds would be the possibility of true dual citizenship. Under China's Nationality Law, any Chinese citizen who gains foreign nationality automatically loses his or her Chinese citizenship. Likewise, in the very rare cases that a foreigner is naturalized in China, his or her former nationality is no longer recognized by China.

This is both a problem and an opportunity. Between 1978 and 2013, more than 3 million Chinese went overseas to study and many stayed on in their new countries. China has long tried to put a positive spin on this outflow, viewing the diaspora as a "reservoir of strategic resources for development" that can be called upon if needed.

And it's true that the lure of home remains strong. In 2014, the British recruiting firm Hays surveyed 454 Chinese currently studying or working abroad, who were considering a return home. Four out of 10 cited the desire to live closer to family as their primary reason. An additional 13 percent claimed they missed the culture and lifestyle of China. And, significantly, 25 percent believed that they could get ahead faster in their careers in China, where their foreign-earned credentials are highly valued by local and foreign employers.

Although these migrants can return relatively freely for visits, obtaining longer-term visas or permanent residency is difficult, time-consuming and expensive. And even when such residency requirements are fulfilled, non-citizens don't enjoy all of the same employment and investment opportunities as citizens do. They aren't allowed to invest in certain "sensitive" sectors, for instance, and their equity stakes are oftentimes capped. Meanwhile, real estate purchases remain restricted for foreigners in some of China's most attractive cities. Overseas Chinese might be likelier to return if they could regain their former rights without having to surrender the security of their U.S. or Canadian or other passport.

And while it makes sense at first to focus efforts on overseas Chinese, not least because they face fewer cultural and language barriers to settling down, China should also start thinking about how to attract high-skilled foreigners to do the same. That won't be easy. Naturalization is extremely rare in China and the country's permanent residency program -- in place since 2004 -- averages a mere 248 new "green cards" per year. That reluctance reflects China's traditionally strict view that being Chinese is a function of birth and ethnicity. In 2013 a senior Chinese sports official set off an emotional, ethnocentric firestorm when he suggested that China improve the national soccer team by offering citizenship to imported players.

At a time when the Chinese government is more suspicious of foreigners than at any time in its recent past, changing such attitudes would take considerable political will. That won't happen quickly. But ultimately, if China hopes to be a center of global innovation, it will need to show that can be a home to a global citizenry, too.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Adam Minter at aminter@bloomberg.net

To contact the editor responsible for this story:
Nisid Hajari at nhajari@bloomberg.net