China's campus exports.

Photographer: MARK RALSTON/AFP/Getty Images)

How Chinese Students Saved America's Colleges

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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There’s a long tunnel connecting the Haidianhuangzhuang subway station in northwest Beijing with the Gate City Mall, and it’s plastered with advertising displays. I was about halfway through it Wednesday when I noticed that every last one of the ads was for classes to prepare students for the ACT or SAT, the two main U.S. college entrance tests.

EF English Schools has classrooms in the mall, so that’s a partial explanation. But EF has 24 such outposts just in Beijing; in Shanghai there are 27, in Guangzhou, 17, and so on. I’m guessing there are a lot of subway corridors in China like the one I saw.

A survey released this week by Bain and Kantar Worldpanel found that Chinese shoppers are increasingly turning to domestic brands and abandoning foreign ones. That’s not happening with post-secondary education, though! The number of Chinese students at foreign universities rose from 417,351 in the 2005/2006 school year to 712,157 in 2012/2013 (the most recent year for which I could find data). The U.S. is by far the leading destination:

China has been among the top senders of students to the U.S. for quite a while, but things have really taken off since 2007:

This rapid rise in the number of Chinese students crossing the Pacific is the product partly of rising affluence in China and frustration with the relative inflexibility of the Chinese higher-education system. But it's also been driven by U.S. colleges and universities looking to counter a decline in the number of college-age kids in the U.S. and, in the case of state universities, big cutbacks in government aid, especially since the financial crisis of 2008.

A couple of weeks ago, I wrote that Americans couldn’t have Christmas without China because we’re so dependent on exports from this country for our tree ornaments, Christmas lights and such. I wasn’t being entirely serious about that -- like the Whos in Whoville, I’m sure we could find a way to get by. But when it comes to American colleges and universities, I really don’t know how many of them could survive without foreign students in general and Chinese students in particular. The flow of money from foreign students has become so big that it even has some impact on the overall economy.

That's not to say the huge increase in the number of Chinese students in the U.S. has gone off without a hitch. Many Chinese students at U.S. universities are struggling to learn English and fit in. They're displacing local students at some cash-starved state universities, which is engendering understandable opposition. And back in China, the government has been trying to slow the exodus by investing in improving domestic higher education and reining in programs that prepare students for overseas study.

All in all, one gets the feeling that, while all those Chinese students aren't going to suddenly go home, the big enrollment increases are probably over. Then again, one might have thought that three or four years ago, too -- and been totally wrong.

  1. There's been an even more spectacular percentage increase -- although the absolute numbers are much lower -- in the number of kids from China attending high school in the U.S., from 632 in 2005 to 38,089 in 2014.

  2. The trade surplus in education-related services amounted to 0.1 percent of GDP in 2014. Which isn't huge, but isn't exactly nothing either.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Susan Warren at susanwarren@bloomberg.net