Chinese international students are pumping billions into Canada's economy
Canada has become a top destination for Chinese international students, with tuition and other expenses a major revenue driver; however, more needs to be done to ensure that the industry is sustainable.
Just the Basics
Canada has seen a massive increase in the number of Chinese international students over the past decade, with China now Canada’s top source of foreign learners
International students contributed over $15 billion in 2018, filling empty seats in Canadian school and helping to subsidize domestic learners in the process
Changing demographics and the risks associated with ‘gold rush’ thinking will pose serious challenges in coming years as educational institutions juggle local needs and lucrative international students
Every September, hundreds of thousands of students across Canada make their way into the classrooms of the nation’s universities. Among this cohort are the growing number of international students - particularly from China - which are changing Canada’s education landscape and pumping billions into the national economy in the process. Despite slowing domestic demographic growth, student enrolment continues to climb as educational institutions turn to foreign learners in order to compensate for institutional over-capacity.
The influx of international students into the Canadian education system has led to education services becoming a major income generator, with international student fees and ancillary living expenses injecting over $15 billion (and supporting 170,000 jobs) into the Canadian economy in 2018 alone. International students earn the country more than many traditional exports, such as wheat, seafood, coal and iron; education services are now Canada’s largest export to China, behind only commodities. Ottawa has recognized the goldmine that international students represent, with Immigration Minister Ahmed Hussen stating that “we’ll do whatever we can” to increase the number of Chinese international students.
Canada is a major destination for international students, ranking fourth globally in terms of the number of international students received. In little more than a decade, there has been a substantial increase in the number of international students coming to Canada, with over 572,000 in the country as of December 31st, 2018 compared to 150,000 in 2007. With international student numbers growing by twenty-five percent annually, Canada has already surpassed its International Education Strategy launched under the Harper government in 2011 to boost international student numbers to 450,000 by 2022. China and India are by far the two largest source nations for Canadian international students, with Chinese students constituting around one-third of Canada’s international student population.
Canada’s reputation as a multicultural and tolerant nation is a major selling point when marketing the nation to prospective students. Canada is also seen as a safer and cheaper alternative to the United States, with Ottawa enjoying an up-tick in applications in the wake of the Trump presidency and rising nativist sentiment in America. This so-called ‘Trump Bump’ in international student numbers has been an added boon for Canadian universities hoping to steal top-talent from their more famous American rivals. A report by RBC notes that “some Canadian universities have moved to capitalize on the shifting sentiment in the U.S., for instance waiving application fees for potential students from countries that were subject to the immigration ban imposed by the U.S.” Similarly, Australia’s image has been tainted by rising anti-Asian prejudice and the ongoing Brexit fiasco has marred Britain’s attractiveness to foreign citizens: all these trends only help brighten Canada’s international image.
Canada outcompetes U.S, UK, others in education quality
Canada benefits from higher education standards - the country ranks second in the world behind South Korea in terms of the percentage of the its population with tertiary (university or college) education at 60.9 percent. This is significantly higher than Canada’s main competitors for international student enrolment: numbers for Australia stand at 52 percent, 51.6 percent in the UK and 47.8 percent in the United States, with the average among Organization for Economic Co-operation and Development (OECD) countries of 44.5 percent. Similarly, Canada also outperforms the aforementioned countries in the Programme for International Student Assessment (PISA); the latest data from 2015 sees Canadian students ranked seventh overall in the world, compared to Australia (14th), the UK (15th) and the United States (24th).
Given Canada’s impressive educational credentials, the country is well placed to attract international students, particularly those from China. A brief historical aside is warranted here to highlight the fact that this appeal to Chinese learners is not a new phenomenon, one that only came about due to China’s meteoric rise. Rather, Canada has been engaging Chinese scholars for decades, as the Canadian government established diplomatic relations with the People’s Republic of China in 1970, years before the United States’ famous rapprochement under Nixon. Far-sighted investments from the 1970s to 1990s saw the Canadian International Development Agency establish a two-way flow of scholars between China and Canada, as well as helping the Chinese government increase its educational capacity.
Canada’s long standing connections with Chinese higher education combined with Ottawa’s world class education credentials has created the perfect recipe for a mass influx of Chinese international students. When it comes to courting Chinese students, Canada outperforms its larger neighbour to the south, as on a per capita basis Canada hosts eight times more Chinese students than the United States. Some 186,000 Chinese students are currently in Canada, up from 140,000 in 2017, according to the Chinese consulate in Toronto. Overall, Chinese students account for one-third of all international students in Canada, with conservative estimates showing that they are injecting around $5 billion into the Canadian economy every year.
Select Canadian Exports vs. International Student Revenue (ISR) for 2018 (billions of dollars)
The number of international students has increased fourfold since 2000, with both Liberal and Conservative governments implementing changes to encourage this rapid growth: forty percent of economic class immigrants are now international students who have graduated and wish to stay in Canada. Young and educated, these students are precisely the kind of people the government is trying to attract; individuals who are not heavy users of social services, with decades of tax paying ahead of them. Canada makes it easier than other countries to acquire a post-graduation work visa, which helps retain more foreign talent: a 2018 CBIE survey found that sixty percent of international students in Canada plan to apply for permanent residency. Of particular interest is the streamlined Express Entry immigration program, which is extremely popular among Chinese parents - the Canadian government opened seven new visa offices in China in 2016 to keep up with demand.
Chinese parents see the Express Entry program as a means to give their children better chances of learning English and integrating into Canadian society. As such, many Chinese parents are willing to pay for their children to live in Canada and attend Canadian public school with the idea that their children will become permanent residents or citizens and thus be able to eventually sponsor their parents to come to Canada. Whereas the growing number of Chinese students on university campuses has received media attention, comparatively little has been reported on the growing number of Chinese international students in primary and secondary education in Canada, whether in private institutions or in the public school system. For instance, there are approximately 50,000 Chinese students attending public high schools, colleges and private language institutions in British Columbia alone.
International students are not taking spaces from Canadians, quite the opposite
At this point some readers are surely questioning the potential detrimental effects of this international recruitment drive, particularly on Canadian students. On the face of it, Chinese students coming to Canada threaten to take away spots from domestic learners; however, Chinese students are actually helping fill places that would otherwise be vacant. In the wake of the baby boomers and slowing population growth, Canada’s education system has for years been facing a glut of school places. Infrastructure once designed to accommodate the post-war demographic tsunami now faces a slowing birth rate, with some 100,000 school places disappearing between 1998 and 2016, according to the Journal of Public Economics.
By paying to fill these vacant spots, international learners from China and elsewhere are helping to subsidize education programs and places for Canadian students, thanks to high international fees. By helping fill vacant seats, international students are are helping to prevent the shuttering of more schools and the loss of teaching jobs which would necessarily result. This trend is most noticeable at the post-secondary level, as Chinese international students increasingly help fund higher education in Canada.
Canadian institutions are capitalizing on Chinese interest in Canada, with two-thirds of international students at the University of Toronto coming from China - Chinese students comprise one-third and one-quarter of foreign learners at UBC and McGill, respectively. Not that this trend is confined to the nation’s leading universities, even smaller institutions such as Simon Fraser (over fifty percent) and the University of Prince Edward Island (one-quarter) boast substantial Chinese student populations. There is a risk that international students are seen as a panacea for a university’s financial woes, with Chinese students a seemingly inexhaustible goldmine. This gold rush mentality risks damaging the quality of education afforded to international students, especially those who are seeking opportunities to learn English.
As the Vancouver Sun reports, “even though Western universities welcome Chinese students as a ‘particularly lucrative market’ [...] many of the young Chinese [students] struggle with English and integrating into Western culture - partly because they are ending up in classrooms and living situations dominated by other students from China.” Having left China to experience life in the West and learn English, many Chinese students find themselves in ‘Chinese bubbles’, a fact which has led some to opt for other destinations which have comparatively few Chinese students, such as the Netherlands.
By viewing Chinese students as a blank cheque, Canadian universities threaten to undermine the very qualities which are drawing students to them in the first place. The emphasis on continually growing the international student market has turned student enrolment into a numbers game. One unfortunate side effect of this state of affairs has been the growth of independent overseas recruiters claiming to represent Canadian universities. Most Chinese students engage the services to such agents to help them navigate their complicated journeys to Canada, generally paying thousands of dollars in the process. While many agents are legitimate, some provide inadequate or false information to students in order to secure sales.
Take the travails of Qingqing Yao, who paid an agent more than $2,000 to help her get into a Canadian university. Her agent told her to apply to Algoma University in Sault St. Marie, which he told her had the best computer science program in North America. Prior to attending Algoma, Yao was to attend Kennedy College in Toronto, a private language institute to improve her English. After spending $12,000 on tuition at Kennedy, she was informed that Algoma was not accepting students from Kennedy due to concerns about the quality of education on offer: Kennedy College voluntarily gave up its accreditation soon thereafter. Yao sought a refund, but did not speak enough English to get one, she tried contacting her agent but he had disappeared. Yao soldiered on, spending another $18,000 in tuition at Algoma, only to quickly realize that she (a native of Nanjing, population eight million) found Sault St. Marie (pop: 75,000) boring, and felt lonely in the small northern community, noting that Algoma’s Chinese counsellor was too busy to spend time with her.
Yao eventually found her way to Humber College in Toronto where she now works as an international recruiter for the college, helping other Chinese students avoid the same headaches she experienced. Yao’s experience was an outlier, yet the problem of disreputable agents is widespread enough that an international code has been developed by Australia, Ireland, New Zealand and the UK to root out fraud and increase trust among the families of Chinese students studying overseas; however, Canada has not signed onto this protocol, a failing which must be rectified if Ottawa wants to maintain its allure.
Canadian universities increasingly reliant on international fees
International student fees are on average four times higher than rates for domestic students, providing universities and colleges with a much needed cash injection: one international learner can help pay for the costs incurred by multiple Canadian students. The rise of international student admissions mirrors the decline in government education subsidies over the past ten years, as universities augment their income with student fees. In 2009-10 combined transfers peaked at $19,350 per full-time equivalent student, yet by 2015-16, transfers equalled $15,687 per student, a nineteen percent decrease, despite growing enrolment during this period. As salaries (which due to tenure and collective bargaining are not easily changed) account for around seventy percent of university expenses, the one to two percent annual decrease in government funding should have caused major problems for Canada’s higher education organizations; yet it did not; international students filled the gap, negating the potential damage from lower funding.
On average, international fees now account for twelve percent of revenue and thirty-five percent of all fees collected by Canadian universities. Some universities like the University of Toronto now get more money from international student fees than they do from provincial government operating grants. In 2018, thirteen percent of university and seven percent of college students in Canada came from overseas, and this trend shows no signs of abating any time soon. International tuition fees have also risen twice as fast as domestic rates, with the $1.5 billion in international tuition revenue almost matching the $1.7 billion decrease in government transfers during the same period.
“While no one took a specific decision to cut government funding for post-secondary education and let the Asian middle-class take up the slack, an accumulation of decisions by governments and institutions has brought us to more or less that point,” explains Alex Usher, president of consulting firm, Higher Education Strategy Associates.
This reliance on international students has taken the sting out of reduced government funding, yet other problems have emerged as Canada’s education sector continues to change. Firstly, any calls by universities for more government funding (or to protest future cuts) is increasingly answered with a one-size-fits-all retort - “get more international students.” This undermines efforts at reforming Canadian education spending, making universities ever more reliant on income sources over which they have little control. Moreover, the well of extra university spots is not bottomless, and institutions risk planning for the future based on contemporary demographics. This glut of places is inevitably going to change as the next generational wave starts making its way through the system. By the early 2020s (and the late 2020s in Ontario) the number of eighteen year-olds in Western Canada is going to start to increase, raising difficult questions about lucrative foreign students and the needs of domestic learners.
Diplomatic fallout from China and immigration quotas potential headaches going forward
Another demographic conundrum will be the growing numbers of Express Entry children, now adults, seeking to acquire permanent residency. “The math says you’re soon going to end up with 250,000 people who came here when they were aged seven, nine and eleven and now they’re 22, 23, and 24 and they’re going to college and they’re going to get a three year work permit and most of them are likely to apply for permanent residency,” explains Richard Kurland, editor of the Lexbase immigration newsletter. The problem facing these individuals is that the number of annual permanent residency acceptances is capped, and they are going to be competing with the approximately 400,000 people who are in Canada at any one time on various foreign worker visas, not to mention the hundreds of thousands of more recently arrived students.
Too many qualified candidates is going to result in many individuals who have been in Canada for a decade or two not being able to acquire the ultimate goal which brought them to Canada in the first place, namely permanent residency for themselves and families. Many of these minors have already experienced years of loneliness and separation anxiety from their parents, not to mention the stress of an entire family’s hopes resting on their academic performance. If they are unsuccessful, how are they to return to their country of origin having grown up in Canada with few connections to their homeland? As a result, Kurland posits that the government may seek to increase the number of skilled workers it allows in a permanent residents: “I think the government will be flexible on this, depending on the job market,” he argues.
From the problem of too many students to that of not enough, a further concern for Canadian universities is the potential fallout if China recalls its students due to poor relations with Ottawa. Credit rating agency Moody’s has already warned that the country’s top three institutions, McGill, University of Toronto and UBC all face financial risks should this come to pass, due to their reliance on Chinese student fees. Canada’s 2018 diplomatic spat with Saudi Arabia and Riyadh’s decision to recall Saudi students offers a preview of just such a scenario. While Saudi students accounted for only two percent of all international students, China is Canada’s top source for international students. If nothing else the Saudi example has at least caused Canadian institutions to wake up and take such risks seriously.
Fortunately, despite Sino-Canadian relations being at a historical low, “we haven’t seen any indication that the number of [Chinese] applications, the number of acceptances will change,” explains Paul Davidson, president of Universities Canada. “[...] We look forward to continuing to work both with the government of Canada and with officials and counter-parts on the Chinese side to make sure that this remains a robust relationship.”
This optimism appears to be reflected in statements by Canadian China watchers, with a recall a la Riyadh a distant possibility. “I don’t think that the Chinese will be as petulant as the Saudis were, or as unsophisticated, although they [might[ make more subtle changes over time,” notes Andrew Griffith, former senior director in Canada’s Immigration Department. UPEI education professor Tim Goddard makes a similar argument, “I personally would be very doubtful that as an official policy, China would recall its students. I wouldn’t see that happening. But what I could see happening is it becoming more difficult for people to get a study visa. They might be encouraged not to go.”
The Bottom Line
International student have become a major revenue source for Canada, as Ottawa capitalizes on its positive global image and world-class education infrastructure to attract top talent from around the world. China has emerged as the top source of international students in Canada, students which collectively add around $5 billion to the Canadian economy every year. Both the Canadian government and the country’s education institutions continue to make concerted efforts to entice even more Chinese students to study in Canada, with international student fees working to offset reductions in public funding.
Up until now Canadian universities and colleges have been capitalizing on demography-driven overcapacity, yet the number of empty seats is not unlimited, nor will there always be such a glut, as Canada’s youth cohort will resume growing in the 2020s, potentially raising pressing questions regarding the reliance on international tuition fees and the needs of local learners. There are already signs, from disreputable agents to an over-emphasis on Chinese recruitment, that a boom mentality has taken hold in Canadian education, a development which ultimately threatens the quality of education on offer.