Chinese students pouring billions into US local economies

A December 13 front-page story in the Wall Street Journal reported that Alabama’s Auburn University is offsetting an estimated 7,000 factory jobs lost to China in surrounding Lee County by serving as a local employer, workforce trainer and magnet for new businesses.

College towns like Auburn, according to the Journal, account for half of the 16 “resilient” areas in the US where job growth was strong, despite a precipitous drop in manufacturing in the last decade. Many of these academic nerve centers are situated in the counties of southern states where blue-collar workers voted overwhelmingly for Donald Trump in the presidential election.

But one relevant point the Journal left out is that students from China, as well as those from other Asian nations, are giving a big revenue lift to Auburn and other US universities. They do this in the form of tuition fees, board and other payments. These largely affluent foreign students also energize local economies through personal spending.

A study by five US economists that was frequently quoted during the recent presidential race, asserts that Chinese imports were responsible for the loss of 2.4 million US jobs over a dozen years. But it’s also arguable that well-off Chinese students, who typically don’t need financial aid, are providing a sizable revenue boost to the very US universities and communities that the Journal says are helping to counter economic fallout from China.

The US Commerce Department estimates that Chinese students contributed US$11.4 billion to US colleges and universities and their locales in calendar year 2015. The figure includes tuition and costs paid out to local landlords, stores, restaurants and the like.

Steady increase

China has the largest number of students in the US of any nation. The Institute of International Education (IIE) says there were 328,547 Chinese students studying in the US in the 2015-16 academic year, up 8.1% from the previous period.

“There has been a very steady increase in Chinese students studying in the US,” noted Ming Jer-Chen, a professor at the Darden School of Business at the University of Virginia. He says such hefty outlays by Chinese students should be viewed as a form of bilateral investment in the US, especially since it cost between US$215,000 to US$250,000 to send one student to a major US university for four years with tuition and board.

Peggy Blumenthal, IIE’s senior counselor to the president, says the financial contribution from Chinese students goes well beyond helping to keep university departments and local businesses “whole.”

“Very often [Chinese students] will end up in a long-term research or business relationship with those academic communities in the US where they study,” Blumenthal said. “The relationship — both professional and economic — can extend for many years to come.”

Blumenthal says having so many Chinese studying stateside also allows the US to reap a big geopolitical reward.

“Many of these students from China will go back to leadership positions in a range of fields and they will go back understanding much more about US ways of doing business, US culture, and appreciating our differences,” Blumenthal said.

Auburn’s China boon

According to the Auburn University website, there were 749 students from China at the undergraduate and graduate levels during the fall 2015 academic year. They accounted for close to half of Auburn’s foreign student body of 1,639. Another 261 were from India.

Chinese make up only about 0.03% of Auburn’s total enrollment of 27,287 students, but their financial impact is magnified when their ability to pay full educational costs are factored in. According to the school’s website it currently costs US$39,445 a year for a Chinese international student to attend Auburn as an undergraduate, and US$39,427 on a graduate basis if tuition, fees and board are included.

Using the fall 2015 enrollment numbers, this means Auburn’s Chinese students added about US$29.5 million in annual revenue to a university in the heart of America’s Deep South. The school’s nearly 300 Indian students added another roughly US$10.3 million to the till.

Auburn University didn’t respond to direct requests from Asia Times for information about the school’s Chinese students and their financial contribution to the university.

Doug Tsuruoka is the Asia Times Editor at Large