There is a general conviction in the People's Republic of China that vocational education is key to improving economic development and thereby increasing the competitiveness of the nation. During the period of economic transformation at the beginning of a new century, as the state moves from a command economy to one more responsive and market-orientated, the issue of how vocational education might best service social and economic development is of great concern to government and policy-makers. In this article, the authors discuss the importance of vocational education and training in China, its role in supporting social development, and how the development of Chinese vocational education is seriously challenged by economic and societal changes.