When Shanghai, China, was awarded the number one spot for educational achievement by the Program for International Student Assessment, a number of Western countries began to ask what had sparked the country’s rise. One answer is five years of education reforms that began with the Chinese government’s recognition that it needs to improve its teaching system as the population ages and the country’s pool of cheap labor runs out. The plan, called the Outline of China’s National Plan for Medium- and Long-term Education Reform and Development, aims to significantly increase government investment in education, universalize access to early childhood education and high schools, develop world-class universities, and improve the overall quality of education. The aim is to quickly transform a low-level manufacturing economy into one based on knowledge. But a well-educated workforce does not mean simply more years in school, or more testing—as China’s history of training innovators shows. There is currently a surplus of college graduates unable to find work in innovative but elite private firms or oversubscribed government agencies. Meanwhile, the Chinese service industry, the mainstay of the U.S. economy, remains tiny. Unlocking the potential of that industry is going to take a radical overhaul of how the Chinese think about education.