Mirabile dictu: Beijing cuts cord on international students

China’s trade war on itself via Australia has steadily worsened over the past year. It began with coal, shifted to barley, then moved quickly to lobsters and other rural products, followed by wine. A total of some $20bn in Australian exports to China annually.

Yet none of these is a problem at the macro level. All commodities are fungible are will go to other markets after an adjustment to prices. We have seen barley to Thailand, wine to the UK, coal to India so on, and so forth.

What is not so easy to substitute is services exports like students and tourists which amount to another $14.6bn. That is why I have been expecting the Chinese hammer to come down there as well. To wit, at the AFR:

  • International student agents in China have been directed to block Australia.
  • The reports are largely from rural sources, not the big cities.
  • Alan Tudge is aware of the reports.

Here is the split of student and tourist revenue courtesy of Salvatore Barbones:

This is very likely to be to the thin end of the wedge. There is no reason for Beijing to rush it. Given the goal is to break Australian morale and turn us into a satrap. But we should expect international students and tourists to diminish into the future.

This has implications for all kinds of sectors. Most obviously, university revenue derived from China is not going to rebound much. There will also pain for the Highrise Harry sector and no immediate solution for the ghost cities currently haunting the centres of Sydney and Melbourne. Tourism will be hit next.

All of these things will not become apparent in the short term given these trades are already shut down. But it means the recovery will be much weaker after the current flush of high bulk commodity prices passes.

At that point, the solution to the problem will present itself in a lower Australian dollar than otherwise which will backfill the missing Chinese via increased competitiveness in other markets (for all tradeables). Thus there is a solution if it is needed even if it will take a little longer than the case of commodities.

To my mind, although this will cause some pain, it is another great outcome for Australia. One that our corrupt elite would never pursue. The trade in Chinese students has horribly corrupted the ethics of our universities. In the long term, repaired pedagogical standards and freedom of thought will make us all much richer, not to mention freer.

Finally, this move will severely retard Chinese immigration, something that our elite haven’t even mentioned even though it is a no-brainer to protect the existing Chinese diaspora from Beijing’s relentless attack, aimed at dividing its loyalties.

Once again, the marvellous CCP has delivered for the Australian people when our own shoddy plutocrats wouldn’t dare.

David Llewellyn-Smith
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  1. From a demographics perspective china was always going to reduce students around this time. There are almost half as many people in china student age now as five years ago.

    • Exactly, was always going to happen, well unless the CCP significantly upped number of kids leaving high school with good grades who could go on to Uni, but they haven’t 70% don’t graduate high school. The CCP can’t just pump them all into high education levels to fill Uni’s as they would then have to provide even more high skilled jobs, which is hard & could then lead to their biggest fear, social unrest as lots of young men have no job & struggle to find wives. So easiest solution is keep students at home to keep uni’s full. Would be funny though if they still allow city kids to come as they would be richer & have higher academic standards, another shot in foot?

    • Strange EconomicsMEMBER

      Why would any city apartement investor bother lto ower rents – its not a real market, just speculation.
      And as Meriton proves, hold the rent high and leave empty if no customers . Drop rents and everyone will.An empty apartment goin up 10% a year is a great investment. Neg gearing gives 50 % off the cost, and prices are going to go up.
      Try docklands in melbourne, there were never any lights on at night before.
      Soon super will be abolished to support another 20% up in apartment prices.

  2. There is logic hiding here, our elected elite have declared war on the constituency, the enemy of my enemy is my friend.

    • TailorTrashMEMBER

      And perhaps our world class education industry
      could offer among all those wonderful online courses
      one on bicycle repair …..great for the food
      transportation sector ….a growing sector for sure

    • Yes, Todger will ensure our Uni’s are full of poorer students who have to work here and who have lower education, which will lower our pedagogical standards further but they will still claim big “export” numbers.

  3. The revenue graph misses out a big component of “exports” – the selling Australian houses and units.

  4. Arthur Schopenhauer

    If you don’t manufacture stuff there is no stuff, obviously.

    All the spreadsheets and trading systems in the world, do not make material things.

    Without indigenous manufacturing, Australia is on the back foot.

  5. “Finally, this move will severely retard Chinese immigration.”
    Not necessarily. The Chinese aren’t stupid, and they know that the lifestyle in Australia is way superior in many ways to the Chinese lifestyle. Sure, less will come in through the student->skilled migration route, but the government will find them new ways. The two majors love migration (coincidentally, as do their political donors).

  6. Next election I’m going to draw an extra box on the paper, write Xi Jinping next to it, and write a “1” in it.
    He’s doing a great job of running Oz. Better than any of the other people on the ballot.

  7. Great outcome, their impact on the property market was sluggish at best. Recent history tells us we do better without them.

  8. Hopefully the CCP will soon offer our VCs et al high paying jobs in China too. That would be very helpful.