According to one report, China has lost 800,000 workers and professionals to other countries since 1987, causing concern about a talent and capital outflow from the mainland.
But there may be signs of a reversal. A study by the Kaufmann Foundation focusing on skilled workers returning to China and India from the United States cites Chinese Ministry of Education estimates that the number of overseas-educated Chinese returning to the mainland in 2009 reached 108,000 - up a dramatic 56.2 per cent from 2008.
The foundation's online survey of 111 returning Chinese professionals conducted between September 2010 and March 2011 revealed that 90 per cent of returnees were drawn home by available economic opportunities.
A recent paper on China's new talent policy for 2010-2020, by Dr Wang Huiyao, director general of the Centre for China and Globalisation and a former visiting fellow at the US Brookings Institution in Washington, states that of the 1.62 million students and scholars who have left China since 1978 to study or work overseas, only 497,000 have returned home. The return rate for US-educated Chinese PhD graduates in sciences and engineering is only 8 per cent, compared with Taiwan's 57 per cent, India's 19 per cent and Japan's 67 per cent.
In June, China released its 2010-2020 medium- and long-term talent development plan, which put the country's talent pool of rencai - the local term for highly skilled and educated individuals - at 114 million as of 2010. Based on the report, Chinese authorities aim to create a pool of 180 million rencai by 2020, partly by attracting Chinese overseas professionals to head home.
On the mainland itself, employers are boosting their hiring and talent development efforts. A survey in the second quarter of this year by international recruitment firm Hudson of 670 executives on the mainland showed that 77 per cent of the respondents planned to hire, up from 72 per cent in the previous quarter, and a 64 per cent increase from the second quarter of 2010.
"Hiring expectations in China have reached a new record level. The downside is that employers are finding it more difficult to attract and retain top talent," says Mark Carriban, managing director of Hudson Asia.
Reports of mainland talent emigrating to foreign countries may be exaggerated, says Lucy Xiong, who heads Hudson's manufacturing and industrial arm in China. "I don't see this trend. Some may be leaving because of the better social benefits and the living conditions. Those who are going are generally nearing retirement or at the end of their career development stage."
Talent is coming back, she adds. "About 20 per cent of our placements are returnees with previous working experience in China. They are locals who may have had about three to five years' work experience in China before going overseas, usually to take up postgraduate studies. The remaining 80 per cent are recruited locally," Xiong says.
She says these returnees are more than qualified to take up managerial positions, and are also flexible about where they work. "If there are very good job opportunities in tier two and three cities, overseas returnees are open to taking these opportunities," Xiong says. "In tier one cities, the top places have already been filled, but in tier two or three cities, these opportunities exist and they are willing to take them up."
Local rencai reputedly spurn offers in tier two and three cities, prompting employers to offer incentives, such as a relocation allowance or paid and frequent personal or family leaves.
Virginia Choi, Hong Kong head of HR consultancy TamtyMcGill, points out that China churns out as many as 6 million university graduates a year against 2.5 million new white-collar positions. But due to a skills mismatch, many employers are focusing on talent development, boosting the growth of training companies. Guangzhou alone has 4,000 such firms, says Choi.
The bottom line in the staffing circles is that there is indeed a talent shortfall in China, but a talent boom may be ahead.