China's 'engineer dividend' Is paying off big time

Graduates from lower-tier universities and smaller cities are coming up with dazzling innovations.

- Shuli Ren

DeepSeek has changed how the world sees China. Worries over the country's "3D" problem - that deflation, debt and demographics are structurally hampering growth - have melted away.

Instead, investors are talking about how the world's second-largest economy can take on the US and challenge its technological dominance.

There is the prevailing sense that China's "engineer dividend" is finally paying off. Between 2000 and 2020, the number of engineers ballooned from 5.2 million to 17.7 million, according to the State Council. That reservoir can help the nation move up the production possibility frontier, the thinking goes.

In a way, DeepSeek shouldn't have come as a surprise. Size matters. A bigger talent pool alone gives China a better chance to disrupt.

In 2022, 47 per cent of the world's top 20th percentile artificial intelligence (AI) researchers finished their undergraduate studies in China, well above the 18 per cent share from the US, according to data from the Paulson Institute's in-house think-tank, MacroPolo. In 2024, China ranked third in the number of innovation indicators compiled by the World Intellectual Property Organisation, after Singapore and the US.

What this also means is that innovative breakthroughs can pop out of nowhere.