Travel ban bursts Chinese international student bubble

Advertisement

Over the weekend, Prime Minister Scott Morrison announced that people travelling from China would no longer be accepted into Australia, with the exception of Australian citizens, permanent residents and their immediate families.

This travel ban will very likely badly impact Australia’s education industry, which has by far the highest concentration of Chinese students in the world after their numbers had almost doubled since 2013 to around 255,000:

In addition to preventing new commencements, thousands of Chinese international students that had travelled back home for the holidays and the Chinese New Year will effectively be blocked from returning to study.

Advertisement

Australia’s education industry earned $15.9 billion in fees from international students in 2019 (see next chart), with China accounting for around 40% of this revenue:

Thus, with thousands fewer enrolments from China, Australia’s education industry will be hard hit financially.

Advertisement

For example at Sydney University, Chinese international students accounted for 24% of the student population and contributed $500 million in course fees last year. The travel ban has especially angered Sydney University’s Student Representative Council (SRC), which has labelled it “Sinophobic”:

“I’m disappointed that the current government is just following exactly what the US government is doing,” SRC General Secretary and Chinese international student Abbey Shi told Honi.

“Most students that have been trapped in China understand the virus and are taking preventative methods way more carefully than the institutional instructions.”

SRC President Liam Donohoe condemned the ban as “Sinophobic”, noting that many University of Sydney students and SRC student Office Bearers would be affected by the ban.

Meanwhile, Melbourne’s Monash University has delayed the start of on-campus classes by two weeks in a bid to give its Chinese students more time to enrol and to minimise the financial impact:

Advertisement

Classes were scheduled to commence on March 2, however, in a statement the university said physical on-campus teaching would not commence until March 16. Online classes will commence on March 9.

Monash is Australia’s largest university with more than 80,000 students.

“The novel coronavirus has created an unprecedented situation where some of our community of students and staff will not make it back in time from affected areas or isolation in time for the commencement of semester 1, 2020,” a statement on the Monash website said.

As noted last week, China’s Ministry of Education has already cancelled all English-language proficiency exams scheduled for February in a bid to contain the outbreak. This also means fewer Chinese enrolments (other things equal).

So clearly, Chinese international student enrolments are going to take a big hit in 2020. And this comes at a time when new enrolments from China were already in decline:

Advertisement

The epic Chinese international student bubble may just have burst.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.