(Yicai) Jan. 6 -- Chinese graduates are increasingly passing on postgraduate degrees in favor of technical retraining and vocational programs, as shrinking pay premiums for higher degree holders, artificial intelligence-driven changes in hiring needs, and demographic headwinds reshape the calculus of higher education, according to a new report.

The financial benefit of going on to postgraduate study in China has narrowed, the report published on Jan. 1 by the Max Planck Institute for Mathematics in the Sciences showed.

Five years after graduating in 2019, those students who went on to study for a postgraduate degree had an average monthly income that was just CNY1,001 (USD143.40) higher than those who did not, an advantage potentially reduced by tuition and living costs as well as the income lost while studying, the report found.

At the same time, more graduates are signing up to practical skills courses. More than 240 enrolled  in full-time classes at Qingdao Technicians College last autumn, a record number. Taiyuan Wantong Vocational Skills School’s electrical-automation retraining intake rose from about 10 in 2023 to 30 in 2024, while Xuzhou Construction Machinery Technician College enrolled more than 30 diploma- or degree-holding students in smart-manufacturing courses.

With the continuous expansion of postgraduate enrollment, many students now need to consider both the financial cost and the time commitment before deciding whether to pursue a master's degree, said Ding Changfa, an associate professor at Xiamen University's School of Economics.

The report also said that the number of people of higher-education age in China will peak around the year 2032, so the coming seven years are a crucial period for colleges to adjust. Under the dual influence of demographic change and the evolution of AI technologies, higher education is shifting from a degree-centred model toward talent training that emphasizes practical skills and labour market returns, it said.

Polytechnics are also becoming increasingly popular, with admissions at many, such as Shenzhen Polytechnic University and Guangzhou Polytechnic University, on par with those of colleges under China's Double First-Class initiative, the government’s flagship program launched in 2017 to build world-class universities and disciplines.

Some polytechnics have built experience over many years and offer competitive majors with good employment prospects and expectations, so admissions have risen, Ding pointed out.

Editor: Martin Kadiev