China has achieved impressive growth over the last three decades and has now become the second-largest economy in the world. To sustain its growth, China is transitioning from an investment-led, high-carbon growth model to a consumption-led, green growth model, less reliant on low-cost manufacturing and more on technology and innovation. Skills development has been a key factor enabling China's unprecedented growth, and will continue to play a vital role in sustaining its ongoing economic transformation and pursuit of a harmonious society. The study is aimed at facilitating policy development leading to a demand-driven, high-quality, and equitable education and training system conducive to lifelong learning. The experience of Yunnan also sheds light on skills development in China, as the analysis in this report situates Yunnan in the broader national context. The intended audience includes policymakers in the Ministries of education, human resources and social security, agriculture, and finance, and the poverty alleviation office and national development and reform commission. The report would also be of interest to researchers and development workers interested in understanding skills development in China. This report consists of three parts. The first part, skills challenges: demand, gaps, and mismatch, examines the sources of the mismatch of supply and demand for skilled labor in Yunnan. The second part, education and training, sets out the challenges facing Yunnan as it seeks to strengthen the Technical and Vocational Training and Education (TVET) system, improve access to education and the quality of educational outputs, encourage more robust work-based and rural training, and invest additional resources in general education. Finally, in conclusions and policy implications, the report lays out specific policy proposals that cross both sector lines and address sector-specific issues.