The economic literacy among the Chinese high school students II.

Written by Wu Xintian, Wang Yanglitao and Lu Tongzhong

Ways of drinking tea in ancient China – teavivre
Tea consumption in ancient China

In today’s society, mankind is at a turning point in the context of the fourth industrial revolution and changes in new technologies and production models, which is raising a higher requirement for the future labor. In this article, we look at the economic facets of basic education in China, since the mindset of young people is vital to developing a prosperous and better future civilization for mankind. The main topic of our paper is to analyze economic literary level of the average high school students to assume how they can react and make contribution to the coming fourth industrial revolution and the future civilization. In this part, the paper analysis the learning material of Money, Consumption, and Production.

Chapter 2: Money and Consumption 

In the money and consumption part, some basic economic knowledge related to money, the supply and demand theory, consumption are introduced.  Firstly, high school students learned that the essence of money is its general equivalent. Money is a product of the development of commodity exchange to a certain stage, expressing the value of all other commodities, acting as a medium of commodity exchange. Functions of money can be a measure of value and a means of circulation, as well as a means of storage, a world currency. With the sale of commodities on credit, money is then used to pay debts, such as the payment of land rent, interest, taxes, wages, etc. Also, the amount of paper money issued must be limited to the amount of money needed in circulation; if the amount of paper money issued exceeds this limit, it will cause prices to rise and may lead to inflation; if the amount of paper money issued falls below this limit, it will make it difficult to sell goods and impede their circulation, which may lead to deflation. The equation of money required amount in circulation is:

the amount of money required in circulation =  the total price of the commodity /the rate of circulation of money  

Through the knowledge about counterfeit prevention, students learned that the manufacture of counterfeit money is severely punished by law, that they should not use counterfeit money and even not write on banknotes or destroy them. And with the rapid development of information technology in China, it has become possible to use the electronic computer systems of banks to complete activities through electronic money, and various electronic payment methods such as scanning to pay, WeChat payment and other kinds of mobile phone payment are used in everyday life, and the construction of unmanned supermarket, adding to the convenience. Students also learned about credit instruments and foreign exchange, such as understanding the functions of credit cards, types of cheques, and the stability of world finance and economy by the exchange rate between foreign exchange and RMB. 

Secondly, there are many factors that cause price to change and fluctuate, such as climate, geography and production conditions, which influence the price of commodities by changing the supply and demand for them. Specifically, when demand exceeds supply, there is a shortage of commodities, sellers raise prices and buyers have to accept higher prices to meet their own needs, this is a phenomenon of things being scarce, i.e., a seller’s market; when there is an oversupply, there is a surplus of commodities and sellers have to deal with buyers at low prices, there is a phenomenon of goods being worthless, i.e., a buyer’s market. In addition, they learn that the value of a commodity determines the price, that value is determined by socially necessary labor time, and that the producer of a commodity will be in a favorable position if his labor time is lower than socially necessary labor time, and in a disadvantageous position if it is higher than socially necessary labor time. This motivates commodity producers to strive to reduce the individual labor time used to produce goods and to increase the efficiency of production. 

Thirdly, for the consumption part, students learned about factors that affecting consumption level, different consumption types, consumption structure, and the cultivation of correct consumption view. Consumption levels are influenced by many factors, the most important are the income of the population and the general level of prices. Other things being equal, the more disposable income people currently have, the greater their consumption of various goods and services, so that in periods of higher income growth, consumption also grows faster, and vice versa. Students thus understand that in order to raise the standard of living of the population, it is necessary to maintain steady economic growth and increase the income of residents. 

Consumption types can be divided into direct consumption, loan consumption and rental consumption. Specifically, direct consumption means that “no pay no goods”, while loan consumption refers to spending in anticipation of future income, such as mortgages and car purchase loans. Rental consumption is where the consumer acquires the right to use the goods for a certain period of time without changing ownership of the goods through a short-term lease. 

The consumption structure reflects the share of people’s various types of consumption expenditure in their total consumption expenditure, and it changes constantly in line with economic development and changes in income. The concept of Engel’s coefficient is inserted here, and students through calculating the Engel’s coefficient to deduce the standard of living of households, i.e., a large Engel’s coefficient will inevitably affect other consumption expenditures, especially the increase of development and enjoyment materials, and limit the improvement of consumption level and quality; a decreasing Engel’s coefficient indicates a higher standard of living of people and an improved consumption structure. 

And for the consumption view, the public are encouraged to form correct consumption view under the direction of green consumption theory. 
In recent years, the continuous progress of information technology has led to the emergence of digital currency. From the perspective of playing a monetary means of payment, digital currencies facilitate daily economic payment behavior through electronic payment systems, enhance users’ mobile payment experience, and augment merchants’ operational efficiency. However, digital currencies perform immaturely in performing other functions of money in the traditional sense. 

At present, China’s mobile payment market is huge, with new payment methods and products pushing forward and the level of payment services constantly improving. Biometric technologies are applied to mobile payment, such as fingerprint recognition payment and face-scan payment. As a result, electronic payment has attracted a wide range of Chinese users. We think biotechnology, an important element of the fourth industrial revolution, plays an important role here. Bio payment is the use of human biological characteristics, such as: fingerprint, face, iris, voice and other biological characteristics instead of the traditional password input payment mode, to achieve the application in the payment scenario. 

Conducting research on digital currencies is not the prerogative of China; in fact, several countries have made substantial progress in researching digital currency development, including the European Union, South Korea, Japan, Saudi Arabia, Turkey and others. The Federal Reserve has been cautious about digital currencies: Federal Reserve Chairman Jerome Hayden Powell said at an IMF-sponsored panel discussion on digital payments on October 19, 2020, that for the U.S. version of digital currencies “To get it right than be first”. This shows that while seeing the opportunities of digital currencies, it is also important to see the potential dangers, including legal risk, speculative risk, and credit risk. 

For the type of consumption, we can see that today people are able to use different methods such as credit cards, huabei – a loan consumption method by the company Alipay, now there are almost 900 million Alipay app users of which 300 million are using huabei loans for consumption. And now people are more inclined to enjoy material consumption, which means that the demand for products and services other than necessities is so strong that it can be the driving force of the fourth industrial revolution.  In the students’ textbooks and life practice, they felt that mobile payment, unmanned supermarket, face-scan payment, virtual currency, financial technology, etc. are all hard technology innovations in the economic field. These are all signs of progress towards the Fourth Industrial Revolution and future civilization. At the same time, we need to match the soft technology with the hard technology1. When these new technologies are not ready, the relevant educational textbooks are gradually improving and keeping pace with the times. This is one of the manifestations of the improvement of related soft technologies. At the same time, human civilization has experienced millions of years of development and evolved into an industrial civilization for nearly 300 years. The industrial revolution is a great leap in human history, creating an unprecedented rich material world, highly developed science and technology, and earth-shaking changes have taken place in the economic, political, cultural, and social structure of human society. Most countries and regions in the world have entered a modern society of industrial civilization. However, the industrial civilization based on material supremacy and the omnipotence of science and technology has caused the world to pay an irreversible price for this: the natural environment and ecology on which mankind depends for survival have been destroyed, and natural resources are fully polluted and facing exhaustion; population is the human progress driven by the crazy growth of the values of industrial civilization is unsustainable, and the transformation of civilization is imminent. Correspondingly, in the learning content of high school students related to this unit, we can see the formation of a scientific concept of consumption, and rational consumption and green consumption are one of the key learning contents of students. This is consistent with our concept of sustainable development.

Chapter 3Production and labor 

Production and economic system are an important part of students’ economic study. What is the relationship between consumption and production, how can we increase our productivity, and what are the types of enterprises (state-owned enterprises, collective enterprises, private enterprises and enterprises with mixed ownership) and the role of enterprises in market economic activities? These are what students need to understand before entering society. Human beings are the most decisive force in productivity, and we must accelerate the overall improvement of the quality of workers (ideological and moral quality, scientific and cultural education and physical health). At the same time, students also learned the importance of increasing productivity, which requires us to promote technological progress and independent innovation. In addition, through the course content, we understand the nature of different types of enterprises, the importance of contract law, and the related rights and obligations of workers. Students can also be empowered to use relevant laws to protect their legal rights in the future working life. At the same time, economic study materials will also show students the importance of labor and labor equality, and cultivate students’ concept of professional equality and multiple ways of employment. The problem of NEET and unemployment, to a certain extent, can be optimized through education. The learning materials will be updated in real time to provide students with the latest encouragement policies for innovation and entrepreneurship and related entrepreneurial success and failure cases, and provide students with experience and lessons, which is in accordance with the slogan of “Mass entrepreneurship and innovation”[1] and the concept of professor Jin Zhouying’s book. According to the “Implementation Opinions on Building Mass Entrepreneurship and Innovation Demonstration Bases”, first, we need universities and research institutes demonstration bases to fully tap human and technical resources, promote talent advantages, accelerate the transformation of scientific and technological achievements, and build a support system for college students’ entrepreneurship. Second, enterprise demonstration bases should play the core role of leading enterprises with outstanding innovation capabilities, strong entrepreneurial atmosphere, and strong resource integration capabilities, and improve the configuration of related business incubation parks. In addition to incubators and education support, related financial support policies are also helping everyone to innovate. Take Hubei Province as an example, vigorously develop secured loans for entrepreneurship, and expand the target of loans to all types of urban and rural laborers who set up individual industrial and commercial households in Hubei according to law, independently, in partnership, and start small and micro enterprises, the loan amount is up to 100,000 yuan for individuals and 500,000 yuan for partnerships, and full financial discounts are given within the loan period. In order to encourage college students to innovate and start businesses in Hubei. College students who start a business within 3 years of graduation can apply for a one-time business subsidy of 5,000 yuan at the place of business. Within 5 years of graduation and undergraduates who start a business in an accredited business incubation base, they can enjoy an annual subsidy of up to 18,000 yuan for water and electricity fees. There are also contents of investment and financial management choices: savings deposit and commercial bank, stocks, bonds and insurance. Students thus can find it appropriate to become a rational investor. Via the learning roles of commercial banks, they understand daily economic behaviors and shape an economic-related thought on financial matters. By understanding the central bank’s functions, they know the various types of considerations of the government as it faces both domestic and foreign economic conditions. The young also learn different bonds, shares and other financial instruments to help them become more rational about money management.

The Fourth Industrial Revolution is a progressive revolution, and the era of great emancipation of the workforce that it has brought about is beneficial to the goal of achieving equality for all and distribution according to need. Although it can have a significant impact on the workforce in the areas replaced by artificial intelligence, the high level of development in technology, industrial and agricultural production, education, medicine and transport is intended to enable people to stop relying on manual labor to support themselves and contribute to the society, it can safeguard people’s lives more comprehensively, safeguard human health, and serve the progress of society and humanity. Therefore, even though the Fourth Industrial Revolution may bring temporary and widespread employment difficulties, it is only a transitional phase in this regard. Furthermore, in order to respond to the Fourth Industrial Revolution’s growth and needs, we must strengthen our own abilities to keep ourselves in employment or in education, as well as lay the groundwork for a more advanced civilization for the Fourth Industrial Revolution’s development, which is why education is key to the Fourth Industrial Revolution’s development. We need to change the behavior and mindset of young people through education and indoctrination, to develop them into a new type of talent for the development of the Fourth Industrial Revolution, and to use this invisible means to develop elites that will gradually influence the consensus of the general public. In this view, it is important to learn self-management, the practical economical and financial knowledge, to make a financial budget for the future of our talented startup company. For example, a qualified engineering graduate is trained through many courses to acquire enough knowledge to design his or her startup company’s financial plan. It is in accordance with the trend, since engineers become central to the development of the 4th Industrial Revolution. And improve the professional skills, learn economic and financial knowledge, acquire the ability of innovation and entrepreneurship, can contribute to the sustainability development and play an important role in the 4th Industrial Revolution.

To be competitive in the Fourth Industrial Revolution, technology is the most important factor to focus on. The Fourth Industrial Revolution enables companies to leverage the Industrial Internet of Things, digital technology and automation to enhance operations, marketing, product development, and create innovative business solutions. The way to achieve industrial structure optimization and upgrading is through technological innovation. The innovation of the fourth industrial revolution has brought many new technologies, whether they are hard technologies such as 3D/4D technologies, intelligent robots, new energy sources, or soft technologies such as new solutions to problems (transportation solutions, e-commerce, new business organizations, new financial technologies, etc.) that are changing or even disrupting the shape of industries and forming new business models (Zhouying, Jin, 2016), thus enhancing China’s international competitiveness and reshape the global economy of the future. In addition, business alliances, also known as “mega-mergers”, are certainly a great way to improve a company’s competitiveness. In the context of the fourth industrial revolution, companies can use the convenience of technology, especially digital analytics, to match data from different companies and find the right partners or upstream and downstream companies. Self-employment can not only bring profit to yourself, but also create more jobs to bring to more people. China has introduced a series of preferential and supportive policies to support graduates to start their own business. For example, in 2021, the government of Guizhou, China, plans to support 5,000 college graduates to start their own businesses. Preferential policies include: tax incentives, business start-up subsidies, and business training (Xinhua News Agency, 2021). China not only supports university graduates to start their own businesses, in 2014, Premier Li Keqiang proposed “mass entrepreneurship and innovation” to release more space for market players with the reform of simplifying and decentralizing the government. For example, in August 2015, the Hubei Provincial Government published the document “Opinions on the Implementation of Employment and Entrepreneurship in the New Situation”, which mentioned that the support targets not only include college students, but also scientific researchers, rural workers, unemployed people, low-income family members and other groups. Self-employment also requires an innovative spirit and the ability to innovate on one’s own, and to be able to steer flexibly in the context of the rapidly changing fourth industrial revolution.

Chapter 4: Income and Distribution

Today, China’s innovation culture still needs a lot of improvement. In fact, in developed countries, R&D investment is already the key to innovation. Just as the film Kung Fu Panda caused a similar reflection in China, the American producer’s use of a panda learning Chinese kung fu to convey an element of humor at the same time caused many similar reflections on whether there was something wrong with China’s soft environment[2] or whether the Chinese were quite lacking in a sense of innovation. It is necessary to create an innovative country with a culture of innovation, the root of which is to build a soft environment conducive to creativity and innovation. Therefore, to promote a soft environment for innovation and to stimulate and encourage more innovative talents, an effective work-based incentive mechanism is particularly important.

In the chapter on distribution and taxation, Chinese high school students will learn that China is dominated by the distribution of labor and that multiple forms of distribution co-exist, and that it is important to deal with distribution and social justice and the relationship between efficiency and fairness. Also, students will understand the role of state finances, as well as the significance of collecting taxes and paying taxes as a civic duty according to the law.

Firstly, one of the main statements in the book is that production determines distribution, and ownership of the means of production determines the mode of distribution. Distribution according to work is the basic principle for the distribution of personal consumer goods in a socialist public economy. It requires that in a public economy, after all necessary deductions have been made from the total product of society, personal consumer goods are distributed according to the measure of the labor provided by workers to society, with more work being paid for more and less work being paid for less, where “work” means the result of personal working, including productive work as well as innovative work. We think it is fair because this system of income distribution directly links the time and quality of one’s labor to one’s income, and is conducive to the full mobilization of workers’ motivation and creativity. Embodied in the fourth industrial revolution, it can be a way to strengthen enterprises to encourage innovation, stimulate innovative talents and create a relaxed soft environment. In key technological areas, it is necessary to emphasize original technological innovation, so workers are required to improve their labor skills and enhance the results of scientific research, which, together with corresponding incentives, can promote the development of social production.

Secondly, dealing with the relationship between fairness and efficiency is also one of the main statements in the book. Generally, people may think that fairness and efficiency are in conflict, but in fact efficiency and fairness have consistency. On the one hand, efficiency is the material prerequisite for equity because the gradual realization of social equity is only possible on the basis of developing productive forces, improving economic efficiency and increasing social wealth. On the other hand, fairness is a guarantee for improving economic efficiency. This is because only a fair distribution can safeguard the rights and interests of workers and stimulate their motivation to develop production and improve economic efficiency. The relationship between efficiency and fairness should be dealt with in a way that opposes egalitarianism while preventing the disparity in income; the policy of distribution should be implemented while promoting the spirit of contribution.

Moreover, by learning about state finance, students are able to understand the role of state finance in facilitating the rational allocation of resources. The market cannot fully allocate resources, and state financial support is needed to enable industries to function and develop in a comprehensive manner, contributing to a rational allocation of resources. In times of stagnant economic growth, the government can adopt an expansionary fiscal policy to stimulate aggregate demand growth, reduce unemployment and boost economic growth by increasing spending on economic construction and reducing taxes, and vice versa.

Taxation is an important source of national financial revenue. Where there is a country, there is taxation, and the state organizes its revenue through taxation; where there is taxation, there is law, and taxation law is the legal basis and legal guarantee for taxation. Taxes are compulsory and fixed. If a taxpayer commits tax evasion, he or she will be held criminally liable by the judicial authorities. In reality, it seems to me that tax evasion or compliance with tax laws is a very interesting issue in China. The central SOEs[3] do not go out of their way to avoid tax evasion and these large companies have special legal regulatory framework that will push them to pay their taxes on time. However, for more small businesses, the profit margin may be smaller. Tax avoidance may be a reasonable possibility, so there may be collusion with tax officials or some kind of bribery to avoid tax. However, based on the existence of tax laws, with strict monitoring by the relevant authorities and the implementation of the electronic tax filing system, such practices are now gradually reduced.

The distribution system refers to the general term of how labor products are divided and rationed in the main body of society. There are distribution systems in which distribution according to work, distribution according to capital, distribution according to needs, and multiple distribution methods coexist. China’s distribution system is a system in which distribution according to work is the main body and multiple distribution methods coexist. Combining distribution according to work and distribution according to production factors can mobilize the enthusiasm of all parties, promote economic efficiency, and promote the development of productivity. These related systems are the basis for the construction of civilization. The income distribution system is a long-term and stable basic system of a country, which is related to the health of the national economy and the sustainable development of the society. The establishment of a fair and reasonable income distribution system is not only a concern of the people, but also an important foundation for the country’s long-term stability, prosperity and stability.

The English politician, writer and utopian socialist Thomas Moore completed a controversial but great work in 1516-Utopia, which describes the imaginary island based on the travels of a fictional navigator Raphael. The political system of Utopia in China introduced an ideal society. Moore points out that it is private ownership that has caused all kinds of social evils. He firmly believes that the social basis of utopia (ideal society) is public ownership of property. Private ownership is eliminated, everything belongs to the society, and the principle of distribution on demand is implemented. Italian thinker and writer Campanella described an ideal social system in his publication The City of the Sun, where there is no private property, no exploitation, everyone’s labor, production and consumption are organized and arranged by a unified society, and products are distributed according to the needs of citizens. According to Campanella, his ideal state of life is described as: “I work four hours a day, and the rest of the time is spent on researching interesting academic issues, holding seminars, reading books, telling stories, writing letters, walking, and doing sports that are beneficial to the body and mind”. The theory of utopian communism he put forward was the embryonic form of many utopian socialist systems that were followed. It is a precious heritage in the history of human thought and has left precious spiritual wealth in the history of socialism. Datong is an ancient Chinese thought. It refers to the ideal world that mankind can finally reach and represent mankind’s beautiful vision for the future society. The basic characteristics are that everyone loves and helps each other, every family life and works in peace and contentment, there is no difference, no war. This state is called “the world of great harmony”, and this kind of world is also called “the world of great harmony”. Modern times have joined the idea of fusion of politics, economy, technology, and culture on a global scale. Although Datong thought is a Chinese thought, Western utopias, modern communism, and the global village are also very similar to Datong in many places.

From these representative ideal appeal works, we can conclude that there is a commonality, that people have a fair appeal for the income distribution system. In order to achieve relative fairness, we should first ensure efficiency. Efficiency and fairness emphasize different aspects, and there is indeed a contradiction between the two. But the gradual realization of social justice is only possible on the basis of developing productivity, improving economic efficiency, and increasing social wealth. Fairness without efficiency as the premise and foundation can only lead to egalitarianism and general poverty. On the other hand, fairness is a guarantee for improving economic efficiency. Only fair distribution can safeguard the rights and interests of workers and stimulate the enthusiasm of workers to develop production and improve economic efficiency. National finance plays a role in promoting the rational allocation of resources, and tax revenue is one of the main channels of fiscal revenue. State finance plays a huge role in social and economic life. The promotion of the fourth industrial revolution and the improvement of the renewable development system are inseparable from the economic construction expenditure of financial funds and the expenditure support of science, education, and culture.


The two compulsory subjects of Politics and History contain a lot of enlightenment knowledge in economics. In this Part 1, the main topics of the textbooks concerning with economics are “money and consumption”, “production and labor”, as well as “income and distribution”.Overall, the goal of our research is to investigate how we can make preparations or changes to apply to the Fourth Industrial Revolution based on an analysis of economic literacy among Chinese high school students, so let’s take things a step further by making each chapter in accordance with our goal.

Firstly, by analyzing the first part of the related Politics textbook money and consumption, we found that we could apply green consumption culture. Since it is also an indicator of soft technology, to advocate the youth to form a right consumption view. In addition, credit card payment, mobile payment, face-scan payment and even unmanned supermarkets and other payment methods and shopping methods using technology have made us feel the wide application of hard technology in payment and consumption.

Furthermore, we analyzed the production, labor and management, and came to those different social problems could be occur in the development of the 4th Industrial Revolution, such as the NEET problem, technologies replacing labor problems, and so on. We found that a good labor structure, an equal labor theory and some technological innovations are especially important in the future. What is more, in the analysis of income and distribution system, we came to the conclusion that we need more innovative talents and innovation progress to promote the growth of soft environment.

Through our process of research, we found that, on the one hand, Chinese students did learn basic economics knowledge during the middle school period, and to a certain extent it intersects with students’ daily life. On the other hand, the economics knowledge learned by middle school students tends to be fragmented, and economics knowledge is scattered in different subject textbooks, which is not enough to form a complete thinking about the economic system and in the textbook the proportions of the innovation for the Fourth Industrial Revolution is relatively small. Therefore, due to innovative knowledge of youth the relevant high school economics textbooks should be more keeping up with the times and provide more systematic and professional economic knowledge.


  1. Data source about course schedule:
  2. Jin, Z.Y. (2016): The Future of Humanity: Global Civilization and China’s Rejuvenation. Hunan science & technology press, pp.139.
  3. Xinhua News Agency (2021): Guizhou: 2021 plan to support 5000 college graduates to start their own business. Retrieved May 14, 2021 from

[1]  “Mass entrepreneurship and innovation” comes from the speech of Premier Li Keqiang at the Summer Davos Forum in September 2014. Li Keqiang proposed that a new wave of “mass entrepreneurship” should be set off on a land of 9.6 million square kilometers to form “Millions of Innovations” and the new trend of “everyone’s innovation”.

[2] Soft environment is a concept which is opposed to the “hard environment” such as geography, resources, infrastructure and basic conditions. For example, in economic development, soft environment can be as ideology, worldview, cultural atmosphere, institutional mechanisms, policies and regulations, as well as the level of government administrative capacity and attitude, etc.

[3] SOE: an abbreviation of state-owned enterprises, where the state has ownership or control of their capital.

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