The Benefits of Acing China's Most Important Academic Exam: High Scorers in the Gaokao Go to Better Universities and Earn Higher Wages

"Chinese students hoping for a reprieve from this year’s gruelling university-entrance exams are out of luck. Unlike America, where many top-tier universities have waived standardised testing requirements amid the covid-19 pandemic, China is keeping its students’ noses to the grindstone. On February 20th the Ministry of Education announced that the national exam, which determines which universities students can attend, will be held as planned on June 7th and 8th.

The annual assessment, known as the gaokao, is the biggest in the world. Every summer some 10m students in China trek to 7,000 testing centres around the country to sit the nerve-racking exam, which lasts for nine hours over two to four days. Pupils study for years, and for good reason. Those who score well on the test are eligible to apply to the country’s best universities, a prerequisite for many good jobs. The high-stakes exam is designed to be meritocratic: anyone can take it; for children from poor families, a good score can offer an escape from a life toiling on the farm or in a factory.

The gaokao influences students’ economic prospects for years to come, according to a recent working paper by Hongbin Li of Stanford University and Ruixue Jia of the London School of Economics. The authors looked at the cut-off score for qualification to enter China’s top 100 universities. Using hand-collected data from over 10,000 people, they found that, whereas students who score just below the cut-off have only a 6% chance of attending a top-tier university, those who score at or above it have a 20-40% chance. They also earn 5-9% more in their first job out of school (see chart)."

Read the full article from The Economist. 

On January 27, 2021, the China Program at Shorenstein APARC hosted Professor Hau L. Lee, The Thoma Professor of Operations, Information & Technology at the Stanford Graduate School of Business for the virtual program “The Pandemic, U.S-China Tensions and Redesigning the Global Supply Chain.” Professor Jean Oi, William Haas Professor of Chinese Politics and director of the APARC China Program, moderated the event.

Professor Lee focused on an important question that has only become more pressing due to the COVID-19 pandemic: How, if at all, should businesses redesign their supply chains? Since the beginning of the pandemic, explains Lee, there has been an increase in calls for “redundancy” in supply chains in order to protect them from the problems they faced early in the pandemic, when China was first hit by shut downs and slowed productivity. Advice has been varied, ranging from the “China Plus One” strategy in which businesses simply add a secondary production location, to completely domesticating supply chains.

Lee warns, however, of the perils of overreaction. There are numerous risks that come along with a fully domestic supply chain, not least the danger of “having all of your eggs in one basket.” Instead, says Lee, businesses should move cautiously and, instead of fully divesting from China, should use the country intelligently. 

Professor Lee’s “In and Out Design” encourages businesses to work from the inside out, securing and strengthening their supply chains by starting at home. Companies must first build “internal supply chain excellence,” after which they can move on to making sure their strategic partners are equally strong and can work to their advantage. Eventually, companies can move on to strengthening the extended value chain and, ultimately, their entire ecosystem. Using strategies like dual response, leveraging “lubricants,” and bolstering capacity-building capabilities, businesses can create a more stable future. 

The session concluded with a fruitful Q&A between Professor Lee and the audience, moderated by Professor Oi.

A video recording of this program is available upon request. Please contact Callista Wells, China Program Coordinator at cvwells@stanford.edu with any inquiries.