• There will be a drop in the number of Chinese students starting degrees overseas in 2020, because of travel constraints and concerns over personal safety amid the coronavirus (Covid‑19) pandemic.

• The Economist Intelligence Unit forecasts that outbound student numbers will recover in 2021, however, as Chinese households view studying abroad as highly valuable in improving their life prospects.

• Governments’ ability to manage the coronavirus and geopolitical risks will become increasingly important to Chinese households when choosing their study destinations.

• The US and Australia are likely to lose share of the outbound Chinese student market as a result, while some European and Asian economies may benefit.

Students from China form the largest international student group globally. According to China’s Ministry of Education, there were 662,100 Chinese students studying abroad in 2018. However, we expect the number of new Chinese student enrolments to contract steeply in 2020, as many will delay their study plans amid concern over their health, in addition to campus closures and travel restrictions. Universities will experience a huge loss of income as a result, necessitating bail‑outs from governments. Given that most courses last three or four years, a fall in applications this year will have lasting effects on schools’ incomes.

Unrivalled value proposition of overseas education will underpin recovery

We forecast a rebound in outbound Chinese student numbers from 2021, underpinned primarily by students who have deferred their admission. A survey conducted by New Oriental, an education company in China, found that while the pandemic has significantly affected Chinese students’ plans to study abroad in 2020, it has not diminished their long-term interest. This is due to the unique value proposition of degrees earned overseas.

Recovery in household income growth in 2021 will also play an important role in supporting the recovery in outbound Chinese student numbers. We forecast that the number of high-income families (which we define as those earning more than Rmb240,000 per year and therefore able to afford overseas education) will rise by an average of 16.4% a year in 2021‑30, reaching more than 350,000 by the end of that period.

Studying abroad is attractive to Chinese students for many reasons. Many see an international degree as helping them to secure a better job after graduation, while also gaining the opportunities to study in a foreign language and to broaden their perspective. Many families also see studying abroad as a path to emigration. Some are driven abroad by dissatisfaction with the gruelling domestic education system. There is also a lack of top-tier universities in China. Quacquarelli Symonds, a higher-education analytics company, ranks only 12 Chinese institutions among the global top 100 universities in 2020.

English language training and joint-degree programmes will be relatively cushioned from effects of pandemic

Students already enrolled in programmes are likely to accept online tuition in order to finish their courses, given the sunk cost invested and uncertainty over when in-person courses will resume. Most students who plan to go overseas in 2021 or after will continue with their preparations. English-language examinations and training programmes will therefore also be disrupted, but only mildly. Following the pandemic, students are likely to apply to schools in multiple countries, in case of an outbreak in one of their chosen destinations. This will support demand for widely recognised English-language qualifications.

In 2020 overseas institutions had 2,300 joint-degree programmes and nine jointly invested campuses with Chinese universities. Although these initiatives will not be affected by travel restrictions, they are still likely to record lower enrolment rates in 2020, because of their relatively high cost; such programmes can be up to 30 times more expensive than the average degree in China. Households will suffer income losses as a result of the economic slowdown this year, and are therefore likely to be put off by the price tag, either choosing to apply for cheaper domestic options or delaying their plans. However, we expect demand for joint programmes to grow strongly in the long term, given that they are protected from the risk of future disruption to international education.

Japan and Singapore likely to gain market share, but US remains hard to replace

Geopolitical risks and governments’ ability to manage the coronavirus will become increasingly important considerations for Chinese families when selecting their study destination. The US-China tensions that have risen since 2017 have slowed growth in the number of Chinese students choosing to study in the US. Although that country remains the top destination for Chinese students (it has many top-ranking universities), its market share will continue to decline gradually alongside deteriorating bilateral relations and the tightening of visa policies. Australia, whose education system is more dependent on Chinese students than the US, will also see enrolments decline amid frictions with China.

The UK has been the main beneficiary of US-China frictions, having gained the greatest share in the Chinese outbound education market since 2017. The UK’s decision to reinstate its post-study work visa programme and its cost-effective one‑year master’s degree offerings have also made it increasingly attractive.

There has also been a noticeable rise in students’ eagerness to study in Japan and Singapore, according to New Oriental. Those two countries also have many top-ranking schools offering high-value diplomas. Their geographical proximity, solid healthcare infrastructure and robust governance systems will also play in their favour. Hong Kong universities are also likely to perform well in the next academic year following the passing of the national security law in June, which many Chinese households regard as having restored security to the territory.

Universities will have to work harder to attract Chinese students

Competition to attract Chinese students will become fiercer in the wake of the pandemic. Students are likely to accept offers from schools that open their campuses earlier; delaying their expected graduation date will affect their lifelong career and earnings. The failure of foreign governments to contain the pandemic has left many students doubtful about those countries’ administrative capacity. Institutions in countries that have suffered severe coronavirus outbreaks will need to offer more benefits to students to counterbalance these health fears.

Apart from lowering tuition fees and examination score requirements, schools will need to tailor their courses to fit student needs. Interest in information technology, micro-electronics and scientific research programmes will increase, as the Chinese government’s efforts to strengthen self-sufficiency in core technologies will rapidly push up demand for workers in such industries—and their salaries.

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