Imagine the scenario: an increasingly prosperous Asian country, which sends more students than any other nation to UK universities, is suddenly hit by a stock market collapse, a currency devaluation and a deep recession. Students are unable to afford foreign study, leaving academic departments across the UK with a financial black hole.
This is not a fearful projection of what may happen in China after the recent chaos on the stock markets and the surprise devaluation of the yuan in early August. It really happened: the year was 1997, but the country was Malaysia. In that year, the Asian financial crisis wiped almost half the value off the Malaysian ringgit, and the country entered deep recession.
The consequences for British universities were grave. In 1996-97, more than 18,000 students came from Malaysia, making it by far the biggest exporter of international students to the UK. Yet by 1999-2000, this number had collapsed to barely 10,000 students.
Numbers have still not recovered to their pre-financial crisis levels. “The sudden reduction we all felt in students from South-east Asia caused real turbulence in the sector,” recalls Vincenzo Raimo, pro vice-chancellor (global engagement) at the University of Reading. “We’re in a much more dangerous position today,” he warns.
Over the past decade, financial reliance on international students, specifically from China, has ballooned. In 2013-14, tuition fee income from students from outside the European Union was almost £4 billion (Rs.41,106 crore). Of this, Chinese students accounted for about £1.1 billion.
It is unclear exactly where the value of the yuan will end up. But the modest devaluation in mid-August was seen by some as the start of a longer trend towards pre-2008 exchange rates designed to boost exports and revive China’s slowing economy. Recently Bloomberg reported that Chinese economic agencies are already assuming a devaluation of 20 percent against the dollar by end 2016. In addition to currency dangers, a weakening economy, fewer youngsters and better domestic universities imperil this key source of students.
A Higher Education Funding Council for England report warns of an “over-reliance” on Chinese students at postgraduate level. On full-time Master’s courses in England, they make up a quarter of those enrolled — almost as many as British students. It is a different matter in Australia where almost 8 percent of students are Chinese — more than double the figure in the UK.