A Great Disruptor?
Worldwide geopolitical, economic, societal, and health disruptions will disrupt international higher education. The coronavirus revealed just how much the global economy is linked and, by extension, how much international student mobility is linked to the world economy.
Covid-19 statistics as of 2.15.20
Note: The numbers change daily and by the time this article is published the numbers of affected and deceased persons will be different.
The Asian analyst and Time magazine contributor, Ian Brenner, reports the following:
More than 2,000 Chinese are infected daily with the coronavirus and more than 1665 Chinese have died.
A report from Lancet estimated that the number of coronavirus cases in Hubei province alone was 75,815.
The virus has spread to at least 30 countries and more than 500 people have died. Japan reported 326 cases, Singapore recorded 72 infected people, and in Hong Kong 52 people have contracted the coronavirus. 14 Americans on a cononavirus-striken cruise ship in Japan have tested positive for covid-19.
BY the end of January, the World Health Organization declared covid-19 as a “global health emergency.”
Impact of covid-19 on China’s economy and the world’s economy
The economic impact of the virus on China’s economy and the world’s economy cannot at this point in time be definitively measured or imagined. Regardless of when the virus is contained, the supply- chain of Chinese goods has been disrupted for the foreseeable future and history provides little guidance on the effects of disrupted supply chains.
The Chinese private sector, the source of most of the country’s economic growth and employment, has been hit the hardest. On February 2, 2020, the Kering Group, owner of Balenciaga, Gucci and other luxury brand items announced it was closing dozens of stores in China because customers were staying home. (Note: Chinese shoppers spend $100 billion annually on luxury brand goods.)
Small and medium size companies, which contribute more than 60% of China’s GDP and provide 80% of the jobs nationwide, fear foreign customers will shift orders from China to other countries because of the disruption and uncertainty of their goods and services. The duration of the coronavirus, not the severity, will determine how quickly suppliers can replace their inventories.
The center of the epidemic, Hubei province, where Wuhan is located manufactures most of the parts used in smartphones. An article in The Economist, predicts that global shipments of smartphones could be reduced by as much as 10% this year.
Starbucks has shut half of its 4000-plus stores in China.
Chinese tourists spend $250 billion a year on travel. Covid-19 has halted tourism in and out of mainland China. An estimated 400,000 Chinese tourists are forecasted to cancel trips to Japan by the end of March. Singapore’s visitor arrivals have fallen between 25%-30% due to covid-19.
Slowed domestic activity and the curtailed movement of people and goods around the world has already disrupted the economies of countries worldwide. Japan, New Zealand, Singapore, Italy and the United States have already reported disruptions. Hyundai has halted some of its car production in South Korea due to a lack of parts. So has Nissan in Japan.
Foxconn, which makes smartphones for Apple and Huawei, is working with a skeletal staff.
Global commerce hinges on China’s $14.55 trillion economy, one that represents 16% of the world’s economy, up from 4% when the SARS virus disrupted trade in 2003. According to some estimates, SARS took one to two percentage points off China’s GDP, which then cost one-quarter to one-third of a percentage point in global growth. Some analysts estimate covid-19 will cause at least four times as large a loss to China’s economy than did SARS.
A growth rate of 5.6% GDP, critical to China’s achieving its centenary economic goal, now seems unlikely. Moody’s predicts a rate of growth closer to 5.3%. Zhang Jun, Dean of the School of Economics at Fudan University, painting a worst case scenario, predicts that the virus may slow GDP growth in the first quarter of this year by a third or by half. Cary Huang, writing in the South China Morning Post paints an even gloomier picture of financial collapse, foreign exodus and large scale bankruptcy.
Jerome Powell, head of the United States Federal Reserve Board, in a speech made before legislators and business people on February 12, stated covid-19 has the potential to impact the world’s economy.
The virus will likely slow the implementation of the trade deal reached with the United States in January. It is unlikely that China will purchase an additional $200 billion of American goods over the next two years.
The Chinese government has cancelled the East China Import and Export Commodity Fair in Shanghai and the Art Basel Show in Hong Kong. The Canton Fair, China’s oldest and biggest trade exposition, has suspended exhibitions. Contagion fears have forced cancellations of trade fairs across Asia.
Impact of covid-19 on Chinese student mobility
According to a recent report by Yojana Sharma, published on February 13, 2020, in University World News, a survey of counselors of the Beijing Overseas Study Association, two-thirds of those surveyed are forecasting a decline in the number of Chinese students studying abroad next year. Almost three-quarters of the agents reported fewer student consultations than in the previous year.
On January 27th, The Chinese Ministry of Education announced that English proficiency examinations, allowing Chinese students to apply to international colleges and universities, has been cancelled for February. ACT GMAT and GRE testing in mainland China has also been postponed.
100,000 potential Chinese students, scheduled to begin classes in Australia in February are now restricted by travel bans and may not be able to begin their studies for the current semester. Australia could lose up to a third of Chinese students if the travel ban continues.
Travel bans and visas blocks in Singapore, the United States, New Zealand and the United Kingdom will delay or cancel many of the Chinese students scheduled to study abroad in those countries for summer programs and in the fall semester.
Enrollment of students from China’s $1 trillion Belt and Road Initiative countries has slowed.
Depending on the longevity of the virus many Chinese families, negatively impacted by curtailed business activity, may no longer have the financial resources to send their children abroad for tertiary education.
Christopher Ziguras, a professor of global studies at RMIT University, and Ly Tran, a fellow at Deakin University in Australia described the coronavirus outbreak as “The biggest disruption in international student flows in history.”
Impact of the covid-19 on international student mobility worldwide
Many readers this article are too young to recall what happened in 1978 when the Iranian Revolution occurred. Prior to that time the largest cohort of international students studying in the United States were from Iran. Georgetown University had one of the largest number of Iranian students. Overnight they were gone. As a young admission officer I never forgot that lesson and all these years later I am an advocate of “cohort marketing” and an opponent of overreliance on a single student market.
More Chinese students have enrolled worldwide over the past two decades than any other group of students in history. While the coronavirus may slow down Chinese student mobility there were many signs before the virus hit that slower Chinese student mobility growth was occurring. Economic and geopolitical signs were everywhere. I am surprised to read of the surprise and panic of some international colleagues over the likely negative impact of the coronavirus on future Chinese enrollments. The headwinds of change in China were evident for a long time. Strategic international plans written for this year and next, should be scrapped in full or in part. Most are no longer valid.
Reliance on a single student market for meeting enrollment and financial goals is never sustainable.
No one can predict with certainty what the long-term effects of the coronavirus virus will be on China’s economy, the world’s economy, and Chinese student mobility. What we do know is that geopolitical, economic and societal disruptions are occurring throughout the world and international higher education is not immune to these worldwide disruptions.
In his book, On China, former secretary of state, Henry Kissinger, explained the differences between American and Chinese foreign policy. American policy, he wrote, is similar to a game of chess and controlling the center of the board. Chinese foreign policy is closer to wei qi, or strategic flexibility.
Which policy would best serve the international community of colleges and universities, international deans and recruiters, researchers and Chinese and international students in the time of the covid-19?