I wanted to point everyone’s attention to a small article in the Chinese People’s Daily last Wednesday, which is potentially of enormous significance.
Apparently, of the country’s 31 Provinces, Municipalities, and Autonomous Regions, only seven have disclosed their figures with respect to higher education recruitment. Every single one of them missed their targets, some by over 10%. And these seven provinces represent a mix of economic backgrounds: Anhui and Quinghai are relatively poor interior provinces; Shandong and Fujian are richer coastal ones, and the balance are somewhere in between. It’s a broad, broad swathe of the country – which makes it unlikely either that it’s a one-off fluke, or that the trends are much different in other non-reporting provinces.
Some are suggesting this is a demographic thing – but this is frankly nonsense. Youth cohorts have been shrinking for several years now, and that hasn’t stopped the flood of students heading to higher education. This is different. This is a change in the participation rate. It’s a change in the proportion of people who want to go to higher education. It’s families finally starting to react to the high level of graduate under-employment.
This was the kind of thing the Chinese government was trying to forestall when it announced plans to convert 600 universities (out of 2400 in total) into polytechnics. Indeed, given that the data was for 2013, it might actually have been the cause of the Party’s decision to transform these institutions. But there’s no guarantee that, in fact, students want that kind of education either; as I explained back here, a major demand-driver for education in Confucian societies is the perception of moral goodness attached to higher studies, which may not be present in more technologically-oriented programs. The party’s assumption that families skeptical about university education will head to polytechnics is unproven: it may be university or nothing.
What are the knock-on effects of this? Remember that Chinese public universities took on $41 billion in debt to expand. If they don’t have fee-paying students filling those seats, the chances of some universities defaulting is going to rise. Ultimately, none are likely to fail – the prestige hit on local government would be too big – but you can see it leading to a general reining-in of university finance.
And the effect on Chinese students heading abroad? Well, the era of scarcity in Chinese universities is already well and truly over – even before this drop, over 76% of gaokao-takers now get a place in universities. Foreign universities don’t fulfill a demand-absorption function anymore – they are very clearly simply competing on quality with domestic institutions. So far, there is no indication that this demand is slackening, which implies a great hunger in China for quality education, which not all local universities can yet provide.
But take it as a warning. Youth numbers are declining. Demand for university education even within the youth cohort is declining. Eventually, this may translate into lower demand for foreign education as well. Institutions who depend too heavily on this market may get burned.