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Situation:

Reading Austrade’s Analysis of Offshore Student Visa Applications by Citizens of the People’s Republic of China (2017), there is a very clear good news story. Australia continues to see a strong increase in the number of Chinese international students coming to its shores to undertake tertiary study. From 2014 to 2017, applications from Northern, Eastern, Southern and Western China have each experienced robust, double-digit growth (see Table 1 below).

Table 1: Application growth across China’s different geographic regions, 2012-17

1.jpg

At a provincial level, applications from all but one of China’s provinces have experienced double-digit growth between 2014 and 2017. For locations of China’s top provinces for tertiary education students see Image 1 (below). Australia’s higher education institutions have recovered from a brief shock in 2012 and, thanks to a confluence of domestic and international factors, are presently riding a wave of historic international student enrolments.

Image 1: China's top provinces for tertiary education students

Screen Shot 2018-08-28 at 3.47.09 pm.png

¹As measured by the number of Project 211 and Project 985 universities in the province


Promising provinces:

China, as Australia’s largest international student market, continues to deliver strong growth. Outside of Beijing, Shanghai and Guangdong, several provinces have clearly evident growth trajectories. These include:

  • JIANGSU: Jiangsu is presently the second largest source of Chinese international student applications. It featured the strongest growth of the top ten sources of Chinese international student applications across 2015-16 and 2016-17, at 26% and 16% respectively.
     
  • SHANDONG: Shandong is presently the fourth largest source of Chinese international student applications. Its large student population and relatively low number of top academic institutions will ensure stable growth over the near-term future, potentially overtaking Beijing as Australia’s third largest source of Chinese international student applications within the next three years.
     
  • ZHEJIAN G: Zhejiang’s relatively high per capita wealth and relatively low number of top academic institutions will serve as strong growth fundamentals in the near-term future.
     
  • SICHUAN: Sichuan has featured high double-digit growth across 2015-16 and 2016-17 (23% and 21% respectively). Sichuan’s capital, Chengdu, is now the fifth-largest city for international student applications to Australia, behind Beijing, Shanghai, Guangzhou and Shenzhen.

The application numbers, GDP growth rates and number of top institutions of each of these provinces is summarised in Graph 1 below.

Graph 1: Top four promising provinces with increasing student numbers since 2014

  *GDP growth is for 2016-17

*GDP growth is for 2016-17

As competition among between institutions intensifies for Chinese international students, new sources of growth will be sought. Three ‘dark horse’ provinces with stable application growth, robust economic fundamentals and a relatively low number of high quality higher education institutions include:

  • HENAN: Henan presently sits within the top ten largest sources of Chinese international student applications, but has a lower number of international student agents operating within the province, meaning it is often overlooked.
     
  • FUJIAN: Despite a small growth blip between 2015-16, Fujian’s above-average per capita income and low number of top academic institutions will likely make it an increasingly important source of applications in the near-term future.
     
  • SHANXI: Shanxi is presently the thirteenth largest source of Chinese international student applications, and like Sichuan, posted strong double-digit growth each year between 2015 and 2017. It’s large school-age population and robust economic development provide a strong possibility for continued application growth into the medium-term.

The application numbers and GDP growth rates of each of these provinces are summarised in Graph 2 below.

Graph 2: Three ‘dark horse’ provinces with stable number growth since 2014

  *GDP growth is for 2016-17

*GDP growth is for 2016-17

²Namely, the United States, Canada, England and Australia.
³The People’s Republic of China Ministry of Education, ‘Number of Outbound and Inbound Chinese Students’.

Growth headwinds:

At its core, Austrade’s analysis presents a good news story. However, a forensic examination of applications over the last three years indicates the strongest growth may be behind us. Growth in six out of the ten top sources of Chinese international student applications was slower in 2016-17 than 2015-16 (see Table 2 overleaf).

Six of the next ten top sources of Chinese international applications also experienced a similar slowdown. However, growth continues and is robust. 16 out of the top 20 sources of Chinese international students grew by double digits in 2016-17.

Table 2: Slowing application growth in the top ten sources of Chinese international student applications

Screen Shot 2018-08-28 at 4.05.15 pm.png


More overseas returnees, increased emphasis on employment outcomes:

The number and proportion of Chinese international students returning to China after study abroad is increasing. Stricter immigration policies in ‘target’ immigration countries and relatively strong domestic fundaments increased the proportion of returning students from 68% to 80% between 2012 and 2016.

Higher numbers of Chinese international students taking up employment opportunities in China adds to an already competitive job market. While China’s overseas returnees make up a small proportion of China’s graduate pool, as a cohort, they grew four times faster than domestic graduates between 2012 and 2016.

Within this labour market, graduates from elite domestic universities and international institutions tend to command higher starting salaries and better progression opportunities. However, there is early market evidence that overseas returnees may be losing some of their lustre. In 2016, the average domestic starting salary of a ‘985 Project University’ graduate was RMB 6,228 RMB, RMB 228 higher than the average overseas returnee starting salary.

We expect the ‘overseas returnee dividend’ to continue to narrow. Rising domestic university rankings, greater alignment between field of study and local job market needs and local internship experience will each serve to challenge overseas returnees’ perceived advantages. As a result, we predict employment market considerations will play a more significant role in the study abroad and institution selection decision-making process.
 

Conclusion:

Chinese international student visa applications to Australia are still in a period of robust growth. Relatively vibrant economic growth, coupled with a shortfall in elite institutions across Jiangsu, Shandong, Zhejiang, Sichuan, Henan, Fujian and Sha’anxi will make these provinces key ‘growth engines’ over the next two years. There are indications that the strongest growth is behind the top ten sources of Chinese international students, but double-digit growth was maintained for 16 out of 20 of the top sources of Chinese international student applications. Cautious optimism is the order of the day.

⁴The People’s Republic of China Ministry of Education, ‘Size of Chinese Graduate Labour Market’.
⁵Center for China and Globalisation (2016),(2017)


About the authors:

Dr. David Bowser
CEO, Curio

David has over 20 years experience in education, R&D and financial services both as an academic and leading strategy consultant. He advises clients in highly regulated sectors including education, financial services and healthcare specialising in strategy, marketing, product development, and organisational change engagements.

Michael Norris
Curio Associate and Chinese Markets Advisor

Michael is Research Manager at Resonance, China’s consumer insights, naming and brand strategy team, SMART. He uses world-leading ethnographic research methodology to deliver breakthrough consumer insights to local and international brands.
 

About curio:

Curio is an education consulting, learning design and platform development business established in 2016 by Dr David Bowser, a neuroscientist and business advisor with the aim of bringing together the creative and curious for human improvement driven through the power of education.

Curio has a head office in Melbourne but employs a distributed workforce model. This means that Curio people can work anywhere in the world. In Melbourne we are located at co-working space WeWork and offer all our people WeWork memberships which gives them full access to 160+ WeWork locations worldwide (including meeting rooms, desks, printing, high-speed internet, etc).

Figure 1: Curio's distributed workforce.

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