Li Yang, a PhD marketing student at Columbia Business School in New York, faces a tough choice when he graduates next year - whether to stay in the United States or return to China to look for a job.

"Several years ago, the answer would have been simple. Of course, I'd prefer to stay in the US maybe long enough to enjoy some immigration benefits. But now China offers equally competitive opportunities for overseas returnees, which many will consider and accept," said Li, 28, who has been studying in the US for more than six years.

In 2008, the government launched the Thousand Talents Program to improve China's capacity for innovation in the next five to 10 years. It hopes to boost the recruitment of talented people who are willing to return to China for top salaries.

A follow-up initiative, the Thousand Young Talents Program, was set up last year to recruit about 2,000 jobseekers from abroad over the next five years to work in the natural sciences and engineering.

Under the National Medium- and Long-term Talent Development Plan (2010-20) released in June, the government will adopt favorable policies in taxation, insurance, housing, children and spouse settlement, career development, research projects, and government awards for high-caliber overseas Chinese who are willing to work in China.

Li is encouraged by the programs. "More Chinese students and young professionals around me are considering returning to China. The program is a good start and it shows the government has recognized the role these overseas returnees can play.

"There is not much difference between China and the US in terms of employment opportunities now," he said. "That's where it makes the choice difficult."

More Chinese students have returned home in recent years - 134,800 from the US last year, a 25 percent increase from 2009, according to the Chinese Ministry of Education. While many returned because of the difficulty in obtaining a non-immigrant work visa, it is thought that the better employment prospects in China also played a role.

Shaun Rein, managing director at China Market Research in Shanghai, said most of the people his firm hired in the past two years had gone abroad for business school and returned to China.

Some are benefiting from favorable policies set up by the government, Rein said. "This is a very positive development for China. We need these top-flight students to return home."

Keeping the foreigners

The United States, meanwhile, is trying to keep the foreigners. Speaking in El Paso, Texas, in May, President Barack Obama said an overhaul of US immigration laws is needed to secure highly skilled and high-tech foreign talent.

"So we don't want the next Intel or the next Google to be created in China or India," he said. "We want those companies and jobs to take root here."

In May, the Obama administration extended the Optional Practical Training program to allow students graduating from programs in several dozen additional disciplines, including soil microbiology, pharmaceuticals and medical informatics, to be able to find a job or work up to 29 months (instead of 12) after graduation. The move was intended to address the shortages of scientists and technology experts in some high-tech sectors.

New York City Mayor Michael Bloomberg said recently, at a Council on Foreign Relations event in Washington, that "the one thing" that can spur job growth is to encourage more legal immigration to the US.

He said the changes should include allowing foreign graduates from US universities to obtain green cards (permanent residency), ending caps on visas for highly skilled workers, and setting green card limits based on the country's economic needs, not an immigrant's family ties. About 15 percent of all green cards go to employees and their dependents, while the rest go largely to immigrants, families and relatives, Bloomberg said.

Last year more than 70,000 Chinese applicants obtained permanent residency in the US, placing second behind Mexican applicants, according to the US Department of Homeland Security.

"That American dream cannot survive if we keep telling the dreamers to go elsewhere," Bloomberg said. "It's what I call national suicide - and that's not hyperbole."

Immigration limits

Groups that favor tighter immigration restrictions think the US already has a system that allows 8 million foreign workers to hold jobs when nearly 14 million Americans are unemployed in a slow-growing economy. Republicans, in general, support a tighter immigration policy to preserve more jobs for Americans.

A recent Gallup survey showed that Americans continue to show a slight preference for lower immigration levels over maintaining current levels, while a much smaller percentage favors increased immigration.

Li does not agree, saying immigrants have contributed so much to the United States, historically an immigration country. "It makes sense to make the immigration policies more friendly to foreign workers. The thing is, how can (the US) attract more Chinese students to stay when more opportunities are rising at home?"

Li changed his major from biomedical engineering to marketing, a field he said is much more open in China because of a large number of domestic companies' branding needs. Meanwhile, many US companies are cutting back on marketing and advertising budgets and on personnel to save costs.

What companies want

The reality in China now is that talented people, especially those who have a foreign education, are in high demand at both Chinese and foreign multinational companies.

New Corporate Executive Board research indicates that many Chinese are increasingly interested in working for domestic rather than Western companies because of China's economic growth and compelling career opportunities.

"Our Western multinational clients are increasingly concerned about their ability to attract and retain highly skilled Chinese talent," said Conrad Schmidt, executive director of the board's Corporate Leadership Council.

Rein, from China Market Research, said the majority of the Fortune 500 companies his firm interviewed said their biggest obstacle to growth in China was recruiting and retaining talent. Rein, who is bullish on China's economy for the next decade, is concerned about the weak talent pool in the country.

"The university system here does not train people to think analytically enough for a global business world," he said. "Many students realize this so they travel to the US, UK and Australia to study.

"Fifteen years ago, many Chinese who studied abroad stayed abroad because the opportunities in China were limited. However, many are now starting to return to China because this is where the great growth is and job opportunities abound."

Readjustment

Culture shock, he said, is a new hurdle these returnees are facing because they have spent so much time abroad. "China has changed so much in the last 10 years that many who went abroad are basically seeing a different country."

The major challenge for Li, if he chooses to return to China, would be the high living standard in big cities like Shanghai and Beijing, where he prefers to live.

"But it is just like if you live in cities like New York," he said. "True, housing in China is a big issue, with the rising prices. But I am not able to get a house here in the US anyway if I choose to stay."

Fang Zheng, 23, from Chicago University doesn't see a promising employment picture for students like him, with a major in applied math.

"I think the job market for my major in the US is better than it is in China," he said. "The US needs science and high-tech graduates, and it has a more transparent system and more opportunities in that field."

Fang is looking into getting a green card when he lands a job after graduating, and he said about 80 percent of the Chinese students around him have the same idea.

"I prefer the lifestyle here," he said. "After spending several years in the US, if I return, I will have to spend more time in adjusting myself to the new environment."