This paper describes the current level of human capital in China and seeks to identify a number of education-related challenges that may slow down the nation’s economy from transitioning to high-income status. Relying on recent census-based data from OECD for the rest of the world and using data from the 2015 Micro-Census for China, the authors show that the low levels of education of China’s labour force is really a problem that has its roots in the past (in the 1970s, 1980s, and 1990s). In recent years (since 2000), China has been investing heavily in education as shown by the increasing the share of youth, including rural youth, attending high school. Despite this recent effort to raise the nation’s human capital, the education system still faces several challenges in trying to provide high-quality education for all youth. First, the government must figure out a way to overcome the relatively low rates of participation in high school by rural students. Second, there is concern that many vocational schools, especially those in rural areas, cannot deliver quality education. Finally, the paper will show that many rural students may be unprepared due to poor early childhood development outcomes.