China, explained.
Primary school students interact with a robot dog in Handan, China, as part of their AI education syllabus (Costfoto/NurPhoto via Getty Images)
American high school seniors can’t pass algebra. Meanwhile, China dominates the tech sector with homegrown knowledge capital.
Subscribe to The Informer for monthly expert analysis, and to Events for advance notice of visiting world leaders and distinguished guests.
You may unsubscribe from Lowy Institute newsletters at any time. For information on our privacy practices and how to unsubscribe, see our Privacy Policy.
The sidelining of human capital in Western industrial policyThe sidelining of human capital in Western industrial policy
Western policymakers have made a categorical error that's threatening technological leadership: they treat education policy as domestic social policy (the domain of state governments, local school boards, and teachers) while treating industrial policy as the domain of economic strategists meeting with industry leaders about technological sovereignty, economic statecraft and strategic autonomy.
This administrative siloing is killing the West. When senior government officials convene roundtables on advanced manufacturing, the people running the engineering faculties and setting the school maths curricula aren't at the table. We're designing industrial policy for technologies that require advanced human capital while treating the people who produce that human capital as irrelevant to the conversation.
The damage is measurable.
Consider rare earths, the unglamorous materials that make advanced technology possible. Washington is in a panic about its dependence on Chinese rare earth supply chains. But this frames the problem backwards. The root issue isn't supply chains. It's education.
China operates 39 university programs dedicated to rare earth engineering. The United States has zero. Europe has zero.
The United States depends on China for rare earths because they invested in people who can process them. America didn't.
Rare earth engineering attracts none of the prestige of computer science or glamour of venture capital software startups. It's difficult, complex work requiring deep expertise in materials science and industrial chemistry. It's also absolutely critical to technological competitiveness. Chinese technicians spent nearly a decade perfecting the process to refine dysprosium to extraordinary purity. That decade of patient technical work created a monopoly: China is now the world's sole source of ultra-pure dysprosium, an element critical to capacitors in Nvidia's Blackwell AI chips.
The United States depends on China for rare earths because China invested in people who can process them. America didn't. Australia faces the same constraint: rich in rare earth deposits but lacking the technical workforce to process them domestically, forcing reliance on Chinese refineries for its own minerals.
The rare earths example isn't an outlier. In America, it's a symptom of systemic collapse in technical education while China builds a foundation of human capital for the next century.
Last week, Times Higher Education downgraded Harvard University to No.3 globally. The universities coming up close behind it aren't American peers. They're Chinese institutions steadily climbing rankings that emphasise research volume and quality.
Harvard’s slippage reflects systematic policy failure in technical education. Last September, only 22% of American high school seniors were ranked as proficient in mathematics, the lowest level since testing began in 2005. That pipeline failure reaches all the way to the country’s elite institutions. Harvard now provides remedial support in entry-level calculus courses, citing students’ “lack of foundational algebra skills”.
Meanwhile, China is on the opposite trajectory. With four times America's population and college attendance rates now matching the United States, Chinese students are roughly twice as likely to major in STEM fields (science, technology, engineering and mathematics) and enter university with substantially stronger mathematical foundations.
The result: China produces approximately eight times more engineers and scientists than the United States annually. China produces as many engineers and scientists each year as every other country on Earth combined.
This isn't a temporary demographic spike. China is systematically upgrading its entire workforce at a pace and scale America hasn't attempted since the post-war expansion of higher education. Annual births in China have dropped to 8–9 million, yet university enrolments exceed 10 million annually.
Within a decade, virtually every new entrant to China's labour force will have some form of higher education: workers with only junior high school education are aging out, replaced by a generation with technical training specifically designed for advanced manufacturing and emerging technologies.
Now China is targeting Boeing, Intel, and Apple with the same systematic approach that hollowed out America’s manufacturing base.
Combined with world-leading infrastructure and industrial supply chains, this human capital advantage means China can innovate simultaneously across every strategic technology: AI, semiconductors, batteries, aerospace, biotech, advanced materials, and autonomous systems. Ask experts in any of these fields and they'll tell you China is either approaching parity or has already surpassed the West.
This isn't preparation for the current industrial revolution. It's preparation for the next one. As AI transforms manufacturing over the coming decade, China will deploy it with a labour force trained at scale for sophisticated technical work. The competitive frontier keeps advancing.
The pattern has been consistent: what begins with lower-value goods steadily moves upstream. Furniture manufacturing, then machine tools, then consumer electronics. Each time, Americans were told these losses didn't matter.
Now China is targeting Boeing, Intel, and Apple with the same systematic approach that hollowed out America’s manufacturing base, except this time backed by a workforce where 40% hold STEM degrees. American high school seniors can't pass algebra. Export controls can't overcome that gap. Neither can subsidies. The difference is that losing these sectors doesn't just end American manufacturing. It ends American technological leadership entirely.
Meeting that challenge requires rebuilding American human capital from the ground up and recognising that education policy cannot remain divorced from strategic competition.
About the author
Aylon Berger
Aylon Berger is a Master of Public Policy candidate at the University of Oxford.
The most-pressing world events explained by Lowy Institute experts and global contributors, in your inbox, every Thursday.
You may unsubscribe from The Interpreter at any time. For information on our privacy practices and how to unsubscribe, see our Privacy Policy.
