The Economic Impact of Chinese International Students in the United States

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Since the 1978 economic reforms were implemented, China has become the world’s fastest-growing major economy, with growth rates averaging in the double digits over the past 34 years. In 2010, China became the world’s second largest economy by nominal GDP, second only to the United States. It is also the world’s largest exporter and importer of goods.

Given the country’s traditionally high regard for education, it is natural that Chinese students comprise the lion’s share of the international students studying aboard in the United States, Canada, Australia, and other European countries.

Economic Impact of International Students 

During the global financial crisis and subsequent slow recovery, many colleges in the U.S. and other western countries faced financial difficulties as their economies became stagnant and nationals faced difficulties paying high post-secondary education expenses. Yet during this time period, international students still flocked to American institutions.

The 2012 Open Doors Report on International Educational Exchange indicated that in the 2011-12 academic year, a record high of 764,495 international students were studying in the U.S. education system.Increasing in number nearly 6% from the prior year, these international students spent almost $16 billion on tuition and fees and $8 billion on living expenses, making a net contribution of $22.7 billion to the U.S. economy.

Figure 1. 2012 Expenses & Net Contributions of U.S. International Students (Data Source: Association of International Educators)

The growing number of international students in the United States is largely driven by the large increase in the number of Chinese students, particularly at the undergraduate level. In 2012, international Chinese undergraduate student enrollment increased by 31% (compared to the prior year), while the total number of international students rose by 23%. In the U.S., international undergraduates now outnumber international graduate students, for the first time in 12 years.

Figure 2. Distribution of Chinese International Students (Data Source: Institute International Education; Note: UG=Undergraduate, GRD=Graduate student, ND=Non-degree student)

Chinese Student Impact 

Before 1978, there were very few Chinese international students in the U.S. This number grew dramatically over the next 34 years as China became one of the world’s economic powers. Of all international student groups, Chinese students have become the largest group in all nations, especially in the U.S. (25.4%), U.K. (15%), Canada (15%), and Australia (30%).

As China became an economic power, the increasing incomes of the Chinese people allowed more parents to send their children abroad for post-secondary education. In the 2011-12 academic year, Chinese international students spent about $40 billion dollars, including $5.7 billion in the U.S. alone.

According to China’s Education Department, over 2.5 million Chinese students studied abroad in the last 34 years. Between 2007 and 2012, Chinese international students increased about 20% annually, with nearly 400,000 Chinese students abroad in the U.S. in 2012.

Canada has become a new hotspot for Chinese nationals, with 70% of  Chinese high school students that went abroad selecting Canada as their destination. Overall, 25,000 Chinese students studied in Canada in 2012, a 15% increase from the prior year. Meanwhile, the total number of Chinese international students in Australia also increased 13.5% from the prior year.

However, the United States, with its high academic reputation, continues to be the most desirable destination for Chinese international students. In the 2011-2012 academic year, Chinese students in the U.S. grew by 23.1% to 194,029. (Including students from Hong Kong and Macau pushes the number to 226,000.) This increase greatly surpasses the average international student growth rate of 5.7%.

The total number of Chinese students comprise about 25.4% of all international students in the U.S. (with the second largest delegation, India, at 13.1%).

Figure 3. Chinese Students & Their Percentage of Total US International Students

Figure 3. Chinese Students & Their Percentage of Total US International Students (Data Source: NAFSA and Institute International Education)

As more Chinese students pursue education internationally, their destinations will benefit their host countries economically.

Younger Chinese Students Heading Abroad

In the first couple of decades after 1978, most Chinese international students that went abroad to study were graduate students. Over the years, the average age of Chinese international students has decreased, as more students began studying abroad at the undergraduate or high school level. Since the expenses and tuition of these non-graduate students are usually funded by their families, the increase in Chinese international students poured income into the United States and other countries.

75% of Chinese international students study in United States, UK, Canada, or Australia. Though the United States is the most desirable destination, it is also most difficult to get a U.S. student visa.

Figure 4. Chinese International Students Distribution (Data Source: Ministry of Education of China)

Figure 4. Chinese International Students Distribution (Data Source: Ministry of Education of China)

Despite increasing tuition hikes in foreign countries, Chinese students continue pursuing international study experiences and academic degrees from western countries.

In the 2011-2012 academic year, in-state tuitions for public U.S. universities increased about 9% while out-of-state tuitions at these schools increased about 5.6% in United States. During the same time period, private U.S. university tuition increased about 3.9%. In Canada, there was a 4% increase in tuition, while U.K. schools saw a 10% increase.

As fees increase, the rising number of Chinese international students has made a positive economic impact on western countries, especially the United States.

Figure 5. Chinese International Students Growth in Major Destined Countries (Data Source: Ministry of Education of China)

Figure 5. Chinese International Students Growth in Major Destined Countries (Data Source: Ministry of Education of China)

In 2012, a survey by the  Kai Tak International Education Institute indicating that 51% of undergraduates, 38% of high schoolers, and 5% of graduate students in China have plans to study abroad. Among high school students, 59% plan going abroad immediately after graduation.

Based on the Chinese International Education survey, Chinese international students studying in foreign high schools increased tenfold since 2005. In 2010, 19.8%, or 76,400, of all Chinese international students were in U.S. high schools or middle schools. This number rose to 76,800 in 2011.

Before studying abroad, most students must take the TOEFL (Test Of English as a Foreign Language) to verify English proficiency. The percentage share of Chinese students 18 years old or younger taking the TOFEL, which was 12% in in 2010, has increased to over 30% in 2012.

Students must also complete the SAT for U.S. colleges, and many Chinese students travel to Hong Kong to complete this examination. Prior to the transfer of Hong Kong’s sovereignty from the U.K. to China, no mainland Chinese students took the SAT; but this number has seen a sharp incline in the last few years, rising from 7,000 in 2008 to 40,000 in 2012.

Though there were almost no Chinese high school students studying in the U.S. just five years ago, this number rose to nearly 24,000 in the 2010-11 school year. Meanwhile, the number of Chinese middle school students rose from 65 in 2006 to 6,725 in 2011. Over a longer period of time, these younger students will likely spend more money than their older peers and thus contribute more to the U.S. economy.  Middle school number might be unnecessary, although it is dramatic.

Based on U.S. Department of Education estimates, enrollment at American private high schools peaked at about 6.1 million in 2005 and had fallen to about 5.5 million by 2009 in the wake of the recession. Tuition and board costs for private high school students in the United States went as high as $65,870 in the 2011-2012 academic year according to The Association of Boarding Schools (TABS). Most Chinese international high school students studying in the U.S. opt for private high schools over public schools, which have stricter visa requirements for foreign students.

Chinese high school students make up about 24,000, or 15%, of all Chinese international students studying in the United States, and Chinese middle school international students increased 100 times in the last 5 years. The U.S. economy benefits from these increasing numbers of young international students, who will have a long tenure studying in the U. S. education system.

While there were only 65 Chinese students in private American high schools in 2005, this figure has now risen to 23,795, according to the U.S. Department of Homeland Security. This increase may be attributed to Chinese students’ desire to attend U.S. post-secondary institutions and the belief that an American high school degree may help them get into the best colleges. 

The Costs and Benefits for Chinese Families

Based on Institute of International Education, 60% of Chinese students are supported by their families. In addition to tuition, they often spend a large amount of money preparing to study abroad.

According to the Chinese National Bureau of Statistics, the average annual salary is $3,837 per capita, and the annual household income for the top 10 percentile is $10,314, far less than the average cost of a year of U.S. undergraduate education or that of a year of private school expenses. These values indicate that it is difficult for an average Chinese couple to afford international studies for their child.  Shut out of many scholarships for U.S. citizens, it is clear that studying abroad for Chinese students is an expensive journey. Though many education experts question if the benefits outweight the costs of sending children abroad at such a young age, many Chinese families see this as a critical investment.

Figure 6. Total Expenses of Chinese Students in their Major Destined Countries (Data Source: Education Online of China)

Figure 6. Total Expenses of Chinese Students in their Major Destined Countries (Data Source: Education Online of China)

Despite the fact that the U.S. education system is the most expensive, the U.S. remains the first choice destination for most international students, and Chinese families continue to see a U.S. degree as a worthwhile investment. After studying in the U.S., Chinese students can return home with language skills that may help them find a higher-paying job. Furthermore, due to the nation’s one-child policy, more Chinese families may have the the resources to send their child abroad.

Who are the Students?

The most commonly cited reason for younger students looking at options abroad is that  “education in China is very rigid, too conservative, and doesn’t encourage creative thinking,” according to Tian Fangmeng, a professor at Beijing Normal University’s School of Social Development and Public Policy.

There remains the question of what types of Chinese students are the U.S. and other nations attracting: are these students China’s strongest or are these the ones that had lower scores on the Chinese college entry exam and unable get into Chinese colleges?

The consulting firm Zinch China suggests that 90% of recommendation letters for Chinese international students are faked and that many essays are written by other people. Furthermore, about 50% of high school transcripts have been modified.

It is common for students who lack a competitive edge in China to head to the U.S. for secondary schooling, especially those who intend to study English in high school or middle school. For these students, studying abroad brings additional language challenges; and those who struggled to excel in Chinese education systems often continue to face difficulties in the U.S. Many of them may study English for years without much progress; and for some, studying abroad means escaping the pressure of the Chinese education and enjoying the freedom of the U.S., rather than the opportunity to achieve educational goals.

Ironically, these students have a longer and more positive impact on U.S. economy as they may pour more resources into U.S. institutions. Coddled and materialistic Chinese children, however, are often unable to manage the pressures of an American high school. These children may seek shelter within communities of Chinese students while in the U.S. As more Chinese students self-segregate, they separate themselves from the cultural aspects of an American high school experience.

Outlook for U.S. Schools

According to Alan Ruby of the NAFSA, the National Association of Foreign Student Advisers the total number of international students in the U.S. will continue to rise in the next ten years. This will likely be driven by the increasing demand for English language-based post-secondary education.

In the past, students could more easily obtain study visas for Australia, Canada, and the U.K. For the Chinese, political issues and federal policy constraints often hindered them from seeking a U.S. visa. However, moving forward, the U.S. may attract more international students, especially Chinese students. Reports from Australia, Canada, and the U.K indicate that “the Australian market is approaching saturation, Canada is planning for growth at current rates to sustain market share, and U.K. capacity is constrained by price and visa policy,” according to Ruby. This leaves the U.S. the option to increase its market share of international and Chinese students.

Looking forward, private universities and state legislatures that allocate funds for public universities will face a major policy question as they must balance fulfilling needs of domestic students with the increasing demand for education from international students.


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