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Chinese students have helped to transform U.S. universities into a $39 billion export industry. Now, both Washington and Beijing are threatening to use them as bargaining chips in their escalating trade war. (Avalon/Jiji)
Cover Story

Chinese students and US universities become pawns in the trade war

America clamps down on visas while China urges students to stay away

PALO ALTO, U.S./HONG KONG -- Driven by a desire to experience college life in America, 19-year-old Vivian recently took a train for four hours from central China to the southern city of Guangzhou, the nearest place where she could take a visa interview at a U.S. Consulate. Her plan hit turbulence the moment she arrived.

"What is your major?" Vivian recalled the visa officer asking her. "The next thing was that I would have to go through a background check."

A student at a university in Wuhan, who asked to be identified only by her English name, Vivian had won a place at summer school at the University of California, Berkeley, one of the world's leading engineering schools. But being a Chinese student majoring in a subject as sensitive as aerospace engineering opened her up to scrutiny.

"Chinese graduate students in my major are often subjected to additional screenings, but this is the first time I heard anyone taking summer school [being] required to go through such a process," she said. "I was not even applying to study aerospace [engineering] in the U.S.; I just wanted to take a two-month computer course."

It took a month of waiting and a letter of guarantee from the university that she would not be allowed to enter any laboratories before the consulate finally granted her a visa. She was one of the lucky ones; one of her schoolmates, who planned to study automation, was turned down.

David Wu, a Ph.D. candidate in economics at the University of California Berkeley: Despite not feeling any less welcome at his university, he says he is worried about travel activity making him "look suspicious." (Photo by Emma Marie Chiang)

More than 360,000 Chinese students enrolled at American colleges in the 2017-18 academic year -- up from just 100,000 a decade ago. These students, and the universities that host them, now find themselves in the crossfire of the U.S.'s trade war with China. Since last year, Washington has tightened visa rules and intensified scrutiny on research collaborations between the two countries. At the same time, allegations of spying and intellectual property theft leveled by the administration against Chinese students and researchers have contributed to a hostile environment that threatens to undo years of progress.

"The U.S.'s tighter visa controls have sent a signal to Chinese students that we are not welcomed here," said Lavender Jiang, a 20-year-old Chinese who studies electrical engineering at Carnegie Mellon University in Pittsburgh. "It makes me feel bad, as if someone shut the door in my face."

Lucrative trade

Chinese parents are famous for their obsession with education, but the country's growing affluence over the past two decades has given many families the means to send their children overseas for further study. A 2015 study by Hurun Report, which publishes an annual rich list of China's moneyed classes, found that millionaires in the country were willing to invest up to a quarter of their annual spending into their children's education. In 2017, more than 600,000 Chinese students left the country for tertiary education, the majority to study business, engineering, mathematics and science.

Universities from across the globe have rushed to capture a slice of this enormous export market, spending big on educational expos, marketing campaigns and partnerships with their Chinese counterparts.

Undergraduate degrees in the U.S. cost on average $37,000 for international students at public colleges in fees alone, rising to more than $48,000 for private universities -- among the highest in the world -- but the country has remained the most popular destination for Chinese students due to the enduring cachet of an American education.

The U.S. has a product that Chinese students are desperate to buy; China has a huge supply of students willing to spend. However, geopolitics is now getting in the way, as the Trump administration intensifies its restrictions on Chinese businesses and citizens as part of its broader trade war.

In 2018, the U.S. shortened the duration of visas for Chinese graduate students in aviation, robotics and advanced manufacturing from five years to one year, citing the risk of espionage and theft of intellectual property. American intelligence agencies have reportedly warned universities about the risk of spying by students and researchers, and urged that academics and university administrators receive training in how to identify potential threats. The crackdowns are part of a larger pattern of pressure on the exports of U.S. technology and intellectual property to China -- in May 2019, the Trump administration announced strict new restrictions on software and component sales to Huawei Technologies.

There are fears within the U.S. education industry that China may retaliate by cutting off the supply of students. Beijing has done this elsewhere in the past. In May 2017, the Chinese government reacted to a deterioration in relations with Taipei by halving the number of permits it issues to mainland students to study in Taiwan.

U.S.-China rivalry has intensified since U.S. President Donald Trump's first, and only, state visit to Beijing in 2017.   © Reuters

China has no control over the number of student visas issued by the U.S., making it harder to directly restrict the number of students heading there to study. However, Beijing does use propaganda to portray the U.S. as an unwelcoming hostile state and to diminish the benefits of studying abroad.

In May, the Global Times, the Chinese state newspaper owned by the Chinese Communist Party's mouthpiece the People's Daily, published an op-ed titled "Studying in the U.S. is a good option but is not the only option" which detailed the disadvantages of studying in the U.S. and called U.S. universities "too arrogant."

In June 2019, China's Ministry of Education issued a warning to students hoping to study in the U.S. that they may face difficulties and delays in obtaining visas, saying: "The Ministry of Education reminds students and scholars to strengthen risk assessment before going abroad to study, enhance awareness of prevention and make appropriate preparations."

"This warning is a response to recent series of discriminatory measures the U.S. took against Chinese students and can also be seen as a response to the U.S.-initiated trade war," Hu Xijin, the editor of the Global Times, wrote on his Twitter account.

The U.S. does not disclose statistics on the number of visas applications that it rejects. However, applications are already declining in anticipation of future restrictions.

A report from education trade group NAFSA, released in May, showed that new international student enrollment in the U.S. is down 6.6% in the current academic year. "These decreases are in part due to several troubling federal policy changes that have altered the perception of the United States as a welcoming destination for international students, scholars, and researchers," the report said.

U.S. universities have tried to distance themselves from the administration's hostility. Some, including the University of California Berkeley, Yale University and New York University, have sent open letters to students offering support and assistance. Even so, the atmosphere adds a new level of anxiety for students and researchers.

"I don't feel any less welcome at Berkeley, and I think most American universities are quite liberal and need international collaborations to further their [research]," said David Wu, an economics Ph.D. candidate specializing in labor market study, who said that he has started to factor the U.S. government's suspicions into his travel plans.

"I still have some reservations when I choose which country to visit when I go abroad," he added. "I'm worried that visiting some communism-linked areas might make me look suspicious or [lead me to] become a potential spy suspect, which could cause trouble at border control when I reenter the U.S."

With both sides in the trade dispute apparently willing to use students as leverage in their negotiations, American universities are very exposed.

International students generate $39 billion in annual revenues for the U.S. education sector, which is now the country's fifth-largest service sector export. Some universities have become heavily reliant on fee-paying foreign students, and are now taking measures to manage the risk.

International students generate $39 billion in annual revenues for the U.S. education sector, which is now the country's fifth-largest services export. (Photo by Emma Marie Chiang)

At the University of Illinois at Urbana-Champaign, that meant taking out insurance. Students from China make up about 10% of the university's students. Since most pay full tuition, they are a core revenue stream for the school.

In 2015, Jeffrey Brown, the dean of the Gies College of Business at UIUC and a scholar in risk management, came up with the idea of insuring the college against a sudden reduction in the number of Chinese students enrolling at the university due to an unpredictable event, such as a visa crackdown or a pandemic. Two years later, the business school and UIUC's engineering college co-signed a three-year contract with the insurance broker Lloyd's of London. Under the deal, the schools pay $424,000 for cover worth $60 million, triggered in the event of a 20% drop in revenue from Chinese students in a single academic year.

"The insurance is not because of Trump, but his administration definitely makes having such insurance an even better idea," Brown said.

The insurance has yet to be triggered, and enrollment is actually slightly up for the coming academic year, but the schools will be renewing their joint policy.

"We have not yet started renegotiating the new rate with the insurance company, but it concerns me that with the 2020 election coming up and the uncertainties that come with it, we might not get as good a deal as [we did] three years ago," Brown said.

Rising competition

With the threat of new restrictions looming, some students are reconsidering their plans.

"Nothing has really changed [in policy] but there is fear that it may change," said David Lewis, an education counsel who specializes in bringing Chinese students to study computer science and law abroad. "That has discouraged people from applying to the U.S. Instead, they have been rethinking their options. ... They want to keep other countries in play."

The U.K. is already picking up some of the slack. Lewis said 95% of his students applied for both American and British universities last year, up from just 30% when he first included access to the U.K. in his coaching service in 2016.

Canadian universities are also likely to benefit. America's northern neighbor has set out its stall as an open and welcoming environment for international students, with expedited visa processing for some applicants.

Perhaps more significantly, Canada offers three-year post-study work visas, and has made it easier for international students to immigrate -- in contrast to the U.S., where the Trump administration has sought to reduce the number of "H-1B" work visas by increasing the amount of evidence it requires from applicants in order to prove their qualifications, and by suspending a "premium processing" channel, which allowed fast-track applications for a $1,500 fee. That has created a backlog in processing H-1B visas that has deterred companies from hiring international students.

"Why bother traveling all the way to the U.S. just to contribute to their [gross domestic product] without getting any work experience back?"

Lindsey Qian, prospective master's student and marketing employee at a gaming company in Beijing

Closing off the possibility of working in the U.S. after graduation is a major disincentive for Chinese students, reducing the potential return on their sizable investment in fees and costs.

Lindsey Qian is a marketer in a gaming company in Beijing. In 2018, she applied to half a dozen digital marketing master's programs in the U.S., and received offers from several prominent schools, including Columbia University and the University of Maryland, for a place in the fall 2019 class. Qian declined all the offers and decided to reapply for the 2020 intake to colleges in Singapore and Hong Kong.

"For me, getting a master's degree in the U.S. is mostly because I want to use it as a steppingstone in my career," Qian said. "But recent news on the deteriorating China-U. S. relationship and the tightening H-1B policy makes me wonder if I can find a job in the U.S. after I graduate."

A master's degree in the U.S. would have cost more than half a million yuan (over $72,000), Qian said, and the leg up it may or may not have given her in the competitive jobs market in China does not justify the expense. MBA programs in Singapore and Hong Kong cost half as much.

"Since my career plan is working in Asia anyway, why bother traveling all the way to the U.S. just to contribute to their [gross domestic product] without getting any work experience back?" Qian said.

All eyes on 2020

The U.S. government's threats to restrict Chinese students' access to American education have run ahead of actual changes to policies. However, if Donald Trump wins reelection next year, analysts worry that his administration could double down on its anti-immigration agenda.

"Right now, most of it is just rhetoric," said Rachel Banks, director of public policy at NAFSA. That alone is damaging, she said, but warned that "rhetoric could become the reality. [That] depends on which policy direction the country will take, which is going to be decided by the upcoming election."

Anecdotally, universities seem to be preparing by enrolling as many students as possible in advance of any new restrictions.

"For fall 2019, I think my students have received even more offers from U.S. universities than in previous years, and other overseas study consultants also saw the same trend this year," said Haichao Wu, founder and CEO of Kaiyin Group, an education consulting company that helps roughly 500 Chinese high school students prepare U.S. college applications every year. "I think American universities, especially the public ones, are stocking up for winter. They are admitting as many Chinese students as they can this year, because they might not be able to do so next year if Trump gets reelected."

Graduates at Fudan University in Shanghai in 2017: U.S. universities are "stocking up for winter" by accepting large numbers of Chinese students this year, says one consultant.   © Reuters

Even with the election still more than a year away, the result is already the subject of intense interest in China. "Chinese parents are becoming U.S. politics experts now as they closely watch the 2020 election and try to evaluate how it will affect their kids," Wu said.

Yue Gao, a 49-year-old English teacher in Shanghai, has a son studying in California and a daughter at school in China. The U.S. presidential election is already a popular topic among parents in her daughter's class, who share news and updates on their WeChat group. "I wasn't interested in the news before," Yue said. "But now I tune into [international news channel] CCTV-4 almost every day."

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