This week, the results of China’s National Higher Education Entrance Examination, or gaokao, will be released. Within days, candidates will submit their prioritised preferences for universities and majors. Families will have to make the most consequential choices with imperfect information amid uncertainty.

It is a sorting mechanism. Candidates need to find the right match by choosing programmes their gaokao results can gain them entry to. Historical admission marks only serve as indicative guidance. And parents have to make educated guesses as to what the employment market will be like four years hence.

As preferences fluctuate, so do the required admission marks for majors at targeted universities. Candidates essentially commit to a sequence of auctions based on expected odds, with their gaokao results as bids.

The number of spaces offered by faculties each year is set by the state and shaped by two concurrent processes. The first is retroactive: programmes with poor employment outcomes are downsized or closed. Between 2021 and 2025, more than 12,000 programmes were cancelled, particularly in such fields as the humanities and management.

The second is prospective: the education ministry allocates expanded quotas to programmes aligned with the nation’s industrial policy – resulting in new majors in areas such as semiconductors and embodied intelligence. The oversubscription and undersubscription of the different majors thus feed into future planning, making the system self-adjusting, even as it remains unpredictable for individuals.

More than half of Chinese university graduates have a STEM (science, technology, engineering and mathematics) degree and roughly one in three bachelor degrees are in engineering. This compares to about 21-23 per cent in industrialised economies such as South Korea and Germany.