Less competition for higher ed as China’s population declines

China’s national birth rate hit a record low in 2022, leaving some universities that heavily rely on fees from international Chinese students reassessing what the future may hold. The PIE News spoke to experts in the sector about their predictions for China’s complex prospects – and just how quickly universities may need to diversify their international student bases.  

Although China’s population is declining, the UN forecasts that the number of 20-24 year olds will fall by 6% between 2020 and 2030. This is not “an especially sharp decrease,” said Jazreel Goh, Malaysia director at the British Council, adding that the number of 15-19 year olds is forecast to increase in the same decade. “In a nutshell, HE attainment rates will likely continue to grow,” Goh said. 

But analysts predict that the total number of Chinese students in overseas higher education specifically will peak within five years and then stagnate or decline, in part because the ‘rewards’ of an expensive education abroad are lessening. 

The wage premium – how much more individuals who have studied abroad earn than those who haven’t – is shrinking in China, according to consultancy company Oliver Wyman. 

“A lot of the demand for overseas higher education is overflow”

At the same time, access to higher education in China is growing. As China’s youth population shrinks, there will be less demand for more places. “A lot of the demand for overseas higher education is ‘overflow’,” said Goh. “Many Chinese students would actually prefer to and have options to study in a top university locally.”

“The expansion of domestic places, especially for master’s courses, and improving standards in Chinese HEIs” will create “increasing options at home for Chinese students,” Goh added.  

Susan Fang, co-founder and CEO of OxBridge Holdings, points out that this is only unlikely to make an immediate difference. “At least for the next decade, as students born between 2005 and 2015 enter the higher-ed stage, the number of Chinese students pursuing an overseas degree will continue,” she said. 

For now, it is still “relatively easier for Chinese students to enter a well-ranked university in the UK than a top university in China” at postgraduate level, write UK-based researchers in a new paper on how push and pull factors have changed for Chinese graduate students since 2000. 

The study found that the UK universities could be repelling Chinese families by accepting increasing numbers of students into postgraduate programs, thus damaging their reputations as high quality, selective providers. But Chinese students do see master’s programs in the UK as “a shorter, easier and less expensive way to meet the Chinese job market demand”, according to  the research, which interviewed 20 graduates. 

In particular, “Chinese graduates from Russell Group universities find it easier to have access to the job market in China because of the ranking associated reputation,” said Cheryl Yu, one of the academics behind the research. 

The other remaining push factor is affordability, according to Claudia Wang, partner at Oliver Wyman, referring to China’s growing middle- and upper-classes. But “not all the middle-class can afford to send their children to top overseas destinations,” she said. 

“Economic growth rates will inevitably slow in the coming years”

Economic uncertainty in China could further impact student behaviour. “Economic growth rates will inevitably slow in the coming years, even if 2023 growth will be quite strong,” said Goh. “This will limit demand for overseas study as we often see in maturing economies.”

“We do believe that the majority of the students going abroad were, are, and will still be from middle and upper class families,” added Wang. “We are concerned that some of their wealth will significantly be impacted should the economy go down, and this will exert a negative impact on the demand. Of course, some students may opt for lower-cost destinations instead.” 

Chinese students will “increasingly look to stay within the region,” the British Council predicted in a recent report. “Singapore, Hong Kong and Malaysia will benefit.” 

“More Chinese students will choose to study abroad in general, but they are looking at Europe, Asia, Middle East as their destinations,” agreed Yu. 

For universities and colleges, Wang said that students from emerging countries such as India and Vietnam will “effectively offset the potential loss in students’ numbers”, but that they will be looking for different things than ‘traditional’ Chinese students.  

“The South Asia and South East Asia students are probably more price-sensitive than Chinese students,” Wang said. “If we talk about post-graduate programs, many will opt for the one-year program and they would be more migration driven. So in short, we think other countries’ students may largely compensate for the potential enrolment loss but maybe not be equally profitable on a per-student basis for the universities.” 

Higher education institutions are already beginning to think differently about recruiting Chinese students and they will likely have to continue to adapt to new markets and demographics.  

“The long term trend will be a gradual decline in Chinese student intake in the traditional sense. As China’s population ages and prospers, could there be a new generation of mature Chinese students looking to study abroad?” Fang asks. “I wouldn’t rule out the possibility.”