Ignoring the UK’s China reliance is a recipe for disaster

Seven years of fixed tuition fees now sees English universities losing an average of £2,500 a year for every domestic student, according to the Russell Group. They are now increasingly reliant on international students to balance the books, especially those from China.

More than 150,000 Chinese students now study in the UK, roughly 22 per cent of all international students. Estimates suggest that 25 per cent of tuition fee income now comes from China.

But last May, the Office for Students wrote to 23 universities with high numbers of Chinese students regarding their contingency planning should diplomatic tensions lead to a sudden drop in their numbers. The UK’s deteriorating relations with China justify these concerns.

A King’s Policy Institute report published last year outlined how the proportion of UK higher education institutions sourcing at least half of their master’s students from just one country increased from 22 per cent in 2017-18 to 38 per cent in 2021-22. It also found that there was no large new source of doctoral students to replace those from China.

UK universities’ student recruitment infrastructure remains less developed in other regions. India and Nigeria provide the second- and third- highest proportions of international students, but they also provide the highest number of dependants per international student. Hence, the government’s ban on non-PhD students bringing dependants will make it difficult for universities to fill any gap left by diminishing Chinese numbers by recruiting more students from India or Nigeria.

It is not only the government’s determination to tackle increasing immigration numbers that has obscured the strategic imperative of reducing the UK’s reliance on Chinese students. Also to blame is cross-party apathy over fixing the financial model of higher education. With a general election likely this autumn, neither major political party is willing to spend any political bandwidth tackling this issue. Higher education is not even a priority for the Department for Education, and an incoming Labour government will almost certainly focus on early-years education instead.

Luckily for the UK, Canada and Australia are also adopting a stricter approach to international students. Canada has announced provincial-level caps on admissions and Australian immigration officials – who reject up to one-third of student visa applications – have recently downgraded the immigration risk ratings of 11 universities. A more welcoming approach from our English-speaking competitors might have seen the demand for a British education decrease.

Still, we shouldn't take continuing demand for granted. Many in China are beginning to question the value of degrees in general. The country’s youth unemployment rate hit a record-high of over 21 per cent last June, a figure so damning that Beijing chose to no longer publish any more updates for the following six months. The figure for last December was just under 15 per cent, although China’s National Bureau of Statistics did adjust its calculation methods to ensure the number remains low enough for Beijing to defend.

Chinese graduates have been left with limited job opportunities and a sense of disillusionment about their futures. This has been exacerbated by the significant increase of degree-educated people in China, creating greater competition in the job market. The number of students enrolling at Chinese universities increased by 92 per cent between 2012 and 2021, and the number studying abroad more than doubled between 2010 and 2019.

UK universities are well aware of the risks associated with over-reliance on China, but all of them – not just the 23 contacted by the OfS – need to bolster their contingency plans and diversification strategies. This should include more marketing campaigns in target markets and greater participation in international education fairs, both of which the government should help orchestrate.

The government should also ensure that higher education is considered in each of its future free-trade agreements and that consulates in target markets have specific taskforces in place to promote British universities. This will send a strong signal that the UK is a viable option to students in these countries.

But the long-term solution to our over-reliance on China involves fixing the funding model for domestic students. Tuition fee rises and tweaks to repayment interest rates should both be on the table – without increased income, diversifying their cohorts will not be financially viable for many institutions.

Chinese students are currently keeping many of our institutions afloat. We should be grateful for their decisions to study at our universities. But as our relationship with Beijing continues to deteriorate and the value of a university education within China is questioned, it is a situation that cannot be allowed to endure.

Connor Horsfall is a China specialist and senior consultant at Shearwater Global.