By: Edwin Fuller
Founder and President of Laguna Strategic Advisors
Tourism has many faces. Some of the 77 million international visitors who traveled to the US last year came to experience our geographic beauty; others came to shop and be entertained; still others came for medical purposes or to attend a convention or an exhibition; and others to visit friends and family. A major, but lightly noted purpose, last year, however, continues to be Education. Since I retired from Marriott International, I’ve spent a good portion of my time teaching at the university level here in California and at my alma mater, Boston University. I’ve been struck by the growing impact our foreign students are having in our classrooms, elsewhere on campus and in surrounding neighborhoods of these institutions. Today, I’d like to share some of observations with you.
More than one million foreign students are matriculating in our 4,000 universities and colleges today. They represent over 5% of the more than 20 million students enrolled in these institutions and China accounts for about 370,000, or a third of these students, six times more than a decade ago. These Chinese students are a significantly larger cohort than comes from any other country. The NY Times reports, Chinese students contribute about $11.4 billion to the US economy in tuition fees, school supplies, housing and other personal expenses. Called “Sea Turtles” or “Parachute Kids” back home, our Chinese students are helping to turn Education into one of America’s top “exports” while contributing mightily to our tourism receipts and influencing the real estate market surrounding many university communities.
Wave of Chinese students won’t end anytime soon
As the Times recently noted, “it is a strange historical moment when the elites of a rising power send their only sons and daughters, products of China’s former one-child policy, to the schools of a geopolitical rival. Yet the idea of a liberal Western education exerts an almost talismanic hold over China’s ruling classes….Even President Xi Jinping, who is presiding over a crackdown on Western influences in China’s schools, allowed his daughter to attend Harvard.”
And the wave isn’t likely to end anytime soon.
A Shanghai-based research firm last year reported that 83% of China’s millionaires are planning to send their children to school abroad over the next five years. The average age, according to the report, has dropped to 16 now from 18 in 2014, reaching the high school level for the first time. Yu Minhong, founder and CEO of the New Oriental Education and Technology Group, estimates that the number of Chinese studying abroad each year will peak between 700,000 and 800,000 in the years ahead, then will fluctuate in line with the annual birthrate and the economy. He noted that last year, 544,400 Chinese studied abroad, more than triple the 179,000 that sought out education overseas almost a decade ago. Mr. Yu estimates that at its peak about 80,000 to 100,000 Chinese students will be in primary and secondary schools abroad; 400,000 to 500,000 will be in colleges and universities; 100,000 to 200,000 will be pursuing post-graduate education; and 50,000 to 100,000 will be undergoing skills training or be at vocational schools.
Not surprisingly, most of the international students in US universities and colleges tend to be concentrated in states with some of the largest populations or most well-known higher education institutions: California, New York, Texas, Massachusetts and Illinois. Most pay for their American education, which is the most expensive in the world, with personal or family funds. Some 20% receive funding from their respective American institution and a smaller percentage receives funding from colleges or governments in their home countries. Last year, 90% of the Chinese young people studying abroad were self-sponsored and had no financial support, according to China’s Education Ministry.
Explaining the high popularity of America’s universities and colleges for families exploring education abroad for their off-spring, Institute of International Education president Allan Goodman earlier this year said that other countries can’t accommodate all their students and American institutions have the capacity to absorb this overflow. “In addition, the booming economies in countries like China…have created a middle class that can afford American schools and may value education more than the average American.” For his part, Mr. Yu explained that “Universities in the US were greatly affected by the 2008 recession and many ran short of funding. Among all international students, the Chinese have been the most eager to pay to go to school abroad so it quickly became a collaborative relationship,” Mr. Yu adds.
Chinese students are a positive presence on campus
Whichever school they matriculate in, Chinese students bring multiple benefits. For one thing, they are generally hard-working, smart and excellent at adapting to US culture.
Secondly, the Chinese along with the other international students bring tuition revenues to US universities and create jobs for local businesses around these campuses. Further, it’s no secret that the survival of our institutions of higher education partly depend on their ability to accommodate these students.
Third, Chinese students play a positive role in contributing to stable US-China relations. A recent study found that most Chinese students have a positive image of the US, including our political system, economic institutions and environment. Since more than 80% eventually return to China after completing their studies to become educators and entrepreneurs, the potential they have on Chinese society in the future should not be underestimated.
Fourth, the presence of all international students in American schools provides US students with exposure to different cultures and ideas, enlivening classroom discussions with their perspectives and experiences. This exposure has practical value. When only a fraction of American college students studies abroad, sitting in a classroom with someone from another country might be the only exchange that American students have with people from other countries and the only chance to develop skills critical to a globalized workforce.
Beyond the campus
Beyond their impact on campus and the fact that they represent a sizeable portion of the foreign visitors who come to America every year, this growing wave of Chinese students is providing a potent revenue source for local communities across the country. Why? Because unlike students from other countries, increasingly, the parents of our Chinese students are accompanying their offspring and buying up local properties or investing at least $500,000 in local businesses to try to qualify for a green card.
According to the National Association of Realtors, these Chinese moms and dads now make up a majority of all Chinese buyers in America’s housing market today. The Chinese international property website, juwai.com, confirms that education is the prime motivator for their interest. This is important because the Chinese are now the top foreign buyers of US residential properties, purchasing more than 40,500 housing units worth about $28.6 billion last year. On average, Chinese buyers spent $782,000 on a home in the 12 months prior to March 2017. Here in Irvine, CA, about 70% – 80% of buyers of new-builds are Chinese parents whose children attend, or plan to attend nearby colleges, reports Peggy Fong Chen, the CEO of ReMax Omega Irvine. Other college towns such as Los Angeles, Seattle, Boston and Dallas are seeing a similar trend.
This makes a lot of sense. For the rising Chinese middle class, parking their wealth overseas makes for wise business judgement. Back home, housing prices are at near-bubble levels and the Yuan has depreciated, so diversification has become prudent. As housing prices rise in some college towns, ownership, rather than renting, becomes even more attractive. Their children can rent extra bedrooms to classmates to cover utility costs and taxes, while also being able to benefit from future price increases. It’s also been reported that some tiger moms also try to help their children get married by making the down-payment or even paying in full for the house. In Chinese culture, owning a property provides a sense of security and helps attract a spouse.
However the families work it out, attending a US college or university usually is a family affair, involving multiple visits to the US throughout the college experience, including graduation. In New Haven, CT, this involvement even includes parents who have become grandparents during the experience. Yale University now boasts a “Yale Chinese Grandparents Village”, with 15 residents. Reportedly, the grandparents live under the same roof as their children, mostly PhD and post-doctoral students, who are now too busy to take care of their young offspring.
So, let’s welcome our Chinese students. They’re an important, and growing, source of tourism for our country; they’re providing a globalizing influence in our classrooms and their parents are having a positive economic impact in our communities. Educational and real estate tourism are not always credited accurately when the receipts of the US travel industry are tallied each year. But, rest assured, our Chinese education-motivated visitors are having an impact that’s a win-win for all.