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Over the past two decades, international student mobility has exploded, transforming both universities and national economies. While the rise of international education has been a global story, it does have one outsized player. China has accounted for the majority of international enrolment growth in the major English-speaking study destinations, with rapid economic growth, a large youth population and a shortage of university places fuelling a prolonged surge in outbound study. The number of students leaving China to study overseas annually more than tripled over the past decade, with more than 700,000 leaving China’s shores in 2019.

It is hard to imagine what international education – and, for that matter, university budgets – would look like without China as the engine of growth. Yet a close look at the drivers of China’s outbound trend suggests that our imaginations will need to catch up sooner rather than later. At the British Council, our most recent (pre-pandemic) attempt at forecasting China’s outbound study numbers focused on three factors – a shrinking youth population, slowing economic growth and a steadily rising supply of quality university places – which suggest that the number of outbound Chinese students could crest as soon as 2022, before beginning a gradual decline.

While forecasts always leave room for doubt, China’s own outbound study figures point in the same direction. In 2019, the number of Chinese students leaving to study overseas rose by 6.3 per cent (compared to sustained double-digit growth a decade earlier), conforming to the trend of decelerating growth over the past decade. While China will remain the most important student recruitment market for at least a decade to come, weak growth will create a much more competitive environment going forward, with all but top-ranked universities fighting harder to meet their targets.  

To prepare for this environment, universities should realign their recruitment strategies in three ways. The first and most obvious change is a diversification of recruitment portfolios, with universities focusing on a broader range of markets. But the harder part of that proposition is accepting that the acquisition cost per student will rise and that universities will become more reliant on private sector services such as agents. Thinner margins will be a difficult pill to swallow at a time when universities need fee income more than ever, but it is an inevitable development in the post-peak-China era.

In the search for markets beyond their usual stomping ground, universities must also recognise that there is no “next China”. Countries including Indonesia, Nigeria and Vietnam are often mentioned as alternatives, but none has the scale, speed of economic growth and high levels of basic education that China did at the start of its meteoric rise in outbound study. Only India has the possibility to eventually overtake China in sheer numbers of overseas students, but it is starting from a lower state of development and with much weaker economic growth forecasted than China enjoyed during its boom years. This means universities will need to spread their attention over a much wider range of markets in order to meet their targets.

The most crucial change in strategy, however, is increased reinvestment in services for international students. In the boom era of international education, degrees from Western universities were viewed by many Chinese as a ticket to a good job at home or a pathway to immigration. Yet today, scepticism about the value of overseas study is rising and most outbound Chinese students favour their job prospects in China. To succeed in post-peak China, Western universities will have to make a clearer case for their return on investment, particularly in terms of employability. This will mean investment in career services and links to Chinese employers.

A familiar question looms over all of this: how will the pandemic change things? In the short term, recruitment from China may look sluggish for universities, particularly at the postgraduate level. Over the medium to longer term, however, we are likely to return to the pre-pandemic trend line. China’s massive middle class will still be undersupplied with quality university seats (even if less so than before), and foreign study will remain a welcome escape route from the country’s national higher education entrance exam. Meanwhile, the brakes to growth discussed earlier will continue to slow outbound study to an eventual standstill.

What’s clear is that the pandemic has provided a rare opportunity for us to reconsider our strategies and make changes that have long been delayed. Even before the events of 2020, I rarely met a university that wasn’t concerned about its overreliance on China, yet as we learned during and after the financial crisis, institutions struggle to make sound long-term decisions when the short-term incentives for risky behaviour are strong. In this sense, hopefully the disruptions of the pandemic will have the upside of forcing institutions to get their houses in order before we hit peak China.

Matt Durnin is director of insights and consultancy (global) at the British Council, where he specialises in the economics of education.