China, People's Republic of: Chongqing Innovation and Human Capital Development Project

Education / Technical and vocational education and training

Industry and trade / Industry and trade sector development

Public sector management / Social protection initiatives

The project is located in Chongqing, a centrally administered municipality in the Chengdu-Chongqing city cluster at the upper reaches of the Yangtze River. Chongqing's resource-based inefficient economy is impacting the environment, and it prioritizes innovation in promoting sustainable development to shift from heavily polluting industries to innovation-driven industries across all economic sectors. The project will (i) help the people in Chongqing gain industry-relevant and innovation-oriented skills and capacities for employment; and (ii) support institutions to create an enabling and inclusive environment that helps build an innovative, diversified, efficient, and green economy in Chongqing.

The project will work with seven subprojects managed by seven implementing agencies in Chongqing's innovation ecosystem to pilot interventions. To support Chongqing's innovation-driven economic transformation, the project will enable graduates to gain employment within Chongqing in strategic emerging industries, and skilled technicians working in enterprises and R&D institutions in Changshou and Dianjiang's economic and technological development areas to gain improved skills on entrepreneurship. Inclusiveness is the main feature of the project, as it considers vulnerable groups in society that are most affected in Chongqing's economic transformation, including unskilled workers, returning migrants, farmers, and women. The project's activities for these groups demonstrate the key features of an inclusive innovation ecosystem model. The project will contribute significantly to institutional strengthening and project sustainability.

Chongqing's per capita disposable income for both urban and rural residents was below the national average in 2017. The gap in income growth and industrial development between Chongqing and the PRC's eastern coastal cities led to a massive population out-migration from Chongqing and caused severe social and economic problems; given the scarcity of matching local jobs in Chongqing, about 4.82 million people from Chongqing left their hometowns and families to seek work in the coastal cities or outside of Chongqing in 2017. The Chongqing Municipal Government (CMG) is under immense pressure and has issued policies and directives to support the migrant workers to return to their hometown in Chongqing for employment and entrepreneurship. However, the support mechanisms are still at the pilot stage and Chongqing lacks the capacity in facilitating the integration of returning migrants into the labor market and enhancing their access to public and social services.

Chongqing's economic growth slowed from 9.3% in 2017 to 6.5% in 2018. The CMG prioritizes innovation in promoting sustainable development to shift from heavily polluting industries to innovation-driven industries across all economic sectors. However, the skills mismatch between the local human resource supply and industry's demand prevails because of a lack of relevant education and training. Among university or college graduates from Chongqing, only about 65% find employment in Chongqing, with the others mainly finding jobs in the eastern PRC. The economy and industries of Chongqing have been developing through imitation or replication, but the intelligent industry has no model to imitate. Chongqing's innovation level was ranked 19th among 20 major PRC cities.

Chongqing has steadily expanded access to higher education, which helps lay an essential human resource foundation for the development of the YREB's upper reaches. However, Chongqing's higher education institutions (HEIs) still face financial challenges; human resource challenges; and modern teaching and learning challenges, including the need for facilities to introduce and deliver new programs and courses aligned to evolving skills demands in the local economy. Local skilled workers, farmers, and returning migrant workers, in particular, need to continuously update their knowledge and gain new skills to integrate modern technologies in their jobs to improve their livelihood. Education programs take many years to have an impact; there is, therefore, an urgent need to invest now.

Industries are striving to shift to less-polluting and efficient operations through research and development (R&D). However, despite high returns, there is underinvestment in long-term, high-risk R&D activities because of limited private financial resources. Public investment in R&D is a crucial catalyst to boosting private R&D activities, innovations, long-term productivity, and economic growth. Chongqing aims to create an enabling and inclusive economic environment by providing public services assistance at an early stage for R&D and start-ups. Chongqing lacks the capacity to support business incubation; institution-industry partnerships; mentorships for entrepreneurs and job seekers, including returning migrant workers; intermediary services on legal, finance, or intellectual property; and spaces for networking and collaboration.

Women made up 48.6% of the total population in Chongqing in 2017. Female students' representation varies from 16% to 70% in the project HEIs. Education patterns remain segregated along gender lines, with women underrepresented in engineering, information technology, and science and technology studies at all educational levels and in the workforce. The female entrepreneurs in the economic and technological development areas (ETDAs) in Changshou District and Dianjiang County account for only about 3% of all entrepreneurs in the ETDAs in Changshou and Dianjiang. HEIs' female teachers and students lack knowledge and skills in innovation and entrepreneurship as well as the confidence to start their own businesses. The employment rate of returning migrants who are female is about 20% lower than that of returning male migrants. Training programs, networks, and support targeting women are insufficient. There is a gender imbalance in labor division-even when women start their own businesses, they are primarily responsible for child and elderly care and housework.

Chongqing lacks capacity to help create an enabling "innovation ecosystem" where HEIs (teachers, students, researchers, administrators, and managers); enterprises (entrepreneurs, engineers, skilled workers, returning migrant workers); intermediary services (business incubators; and professionals on legal, tax, finance, and intellectual property); and government (officials, policy makers, advisors) are interconnected and transfer knowledge, ideas, human and financial capital, and policies to provide an enabling environment for innovation and create jobs and benefits for both men and women. People need spaces that facilitate capacity building and networking to generate new ideas to start businesses. Chongqing also needs to build institutional capacity to manage the planned interdisciplinary capacity building activities.

Strategic fit. The PRC formulated the YREB development plan, which envisages the establishment of an innovative and modern industrial system in the YREB, making the YREB a strategic economic region for national economic and social development by 2030. The PRC also issued the YREB innovation-driven industrial transformation and upgrading plan in 2016, which identifies obsolete industries and economic activities to be upgraded and diversified by YREB cities through entrepreneurial and innovative approaches. The project is aligned with five out of the seven operational priorities of ADB's Strategy 2030. The project is in line with ADB's (i) education sector operations plan by strengthening quality, inclusiveness, and relevant skills in higher education and contributing to filling labor market gaps; (ii) country partnership strategy for the PRC, 2016-2020 by supporting skills development and education; and (iii) country operations business plan for the PRC, 2019-2021, which refers to ADB's contribution to human development to promote innovation and improve service delivery, and to create an enabling environment for innovation and new industries to support the green transformation of the local economy. The project supports the achievement of the United Nations' Sustainable Development Goals.

Relevance and quality of higher education and vocational training strengthened

Supporting mechanisms for innovation and entrepreneurship established

Institutional and project management capacity enhanced

A virtual loan inception mission was conducted intermittently from 14 -22 October 2020.

Following trainings conducted from June to August 2020, the seven implementing agencies have obtained fundamental knowledge on ADB's procurement requirements and procedures for the recruitment of consultants and procurement of goods and works under ADB's new procurement framework. Eight consultant selections have been advertised. The first consulting contract for the procurement agent was awarded in December 2020 and the project implementation consultants were fielded in March 2021. Recruitment is ongoing for five consultant selections (the sixth will be procured using domestic funds). The engineering survey, design, and cost consulting firm for Chongqing Jiatong University was fielded in July 2021. Both ADB- and counterpart-financed civil works packages are at the design preparation stage, and the procurement process of the design institutes has started in Q3 2020.

A total of 106 (35.85% women) CPMO and IAs' staff have been trained in project management (including social and gender development) by end of June 2021.

A virtual review mission was held in August-September 2021.