The four parts of China included in the recent PISA report on teen financial literacy came up aces, again, in this important area of knowledge. Now, global leaders are taking a closer look at why financial education seems to work so much better in Beijing, Shanghai, Jiangsu and Canton.
There are no simple answers. But we might begin with education in the broadest sense. Former U.S. Education Secretary Arne Duncan has testified that kids in China go to school “25% to 30% longer” than kids in the U.S. His calculation has been questioned—but most agree it is a matter of degrees, not that there is no disparity.
Formal education generally correlates with greater financial understanding. It’s not one for one. But research supports the notion that college graduates; for example, wind up being smarter about money management, on average, than non-grads.
And more time in the classroom of course leaves more time for financial education. A common theme in U.S. schools and many other nations’ is that introducing financial education would be much easier if it didn’t squeeze out other programs and areas of study.
Bill Montford, a financial education advocate and head of the Florida Association of District School Superintendents, has publicly suggested taking the school schedule to 200 days from 180. That would make room for financial education without pushing out, say, the arts.
But China’s children aren’t just going to school longer. The nation has a more cohesive and aggressive national strategy for financial literacy, according to a report from international finance giant BBVA. That is what leads it to the top of class. China’s 15-year-olds had an average financial literacy score of 566; the average was 481.
In a report, the bank cites six key factors:
Measure before acting China’s financial institutions, headed by the People’s Bank of China, update a macro survey every two years to determine the financial education level of its citizens. This survey guides the nation’s practices and targets.
Relevant campaigns The national financial literacy policy in China targets both kids and adults with specific campaigns pegged to current issues. These campaigns are highly influential and reach all regions of this massive and culturally nuanced population.
Consistent exposure Financial literacy instruction begins in pre-school and accompanies students through college. Age appropriate material is established for each stage of development, growing more complex as students move up.
Strong fundamentals The PISA report points out that financial literacy is directly related to math and reading comprehension, where Chinese students also perform well.
Bank involvement China is now determining the role that financial institutions should play, recognizing that they are best positioned to share financial knowledge but also potentially conflicted. In China the financial knowledge of professionals in the sector is highly valued but always supervised to guarantee neutrality.
Gadgets and apps China has made a great effort to offer content adapted to the age of students and reach them through comics, films, theater, videogames and digital devices.
These are not revolutionary approaches. Many of these strategies are in force in the U.S., Canada, the U.K. and many other nations. But perhaps more than any other nation China has succeeded in employing them all. And with an educational system that demands longer school hours and emphasizes critical related skills like math and reading, it has carved out an edge that leads to more impressive financial literacy scores.