What does Xi Jinping have in common with an overseas university international admissions officer? Too many applications to read? Probably. A professed love for baozi? We hope so. More seriously perhaps, both Chinese leadership and global universities are deeply focused on the impact of China’s demographic shifts, as its rapidly aging population will shrink the number of college and workplace-bound young adults in the coming decades. In this piece, we examine these demographic shifts and education policies that have emerged from them, and we assess the net impact of these shifts on the prospects for international student mobility coming from China. And for a broader look at China’s international education landscape, we encourage you to join our webinar on September 8th with two US admissions officers!

Key Takeaways:

China’s top leadership is deeply worried about its rapidly aging population. Expect more policies aimed at making education more affordable in an effort to encourage families to have more children.
China’s international education market is a small slice of its population, so it is insulated from the effects of demographic shifts. The size of China’s middle and upper middle class is expected to grow faster than the population ages in the next decade.
Recent education policies have made international schools more attractive to some parents.

China’s Demographic Shifts

In the past six years, China has gone from a strict “One Child” policy to the much looser “three child policy” it announced in May 2021. New regulations allow up to three children per household. Demographic aging has become a key area of concern for the Chinese central government in recent years. 2020 census data revealed that the population aged 15-59 (working age) dropped 7 full percentage points from 2010, while the number of elderly citizens (defined as those aged 60+) rose by 5 percent. By 2025, one fifth of the population, 300 million people, will be over 60. With fewer members of the workforce and more senior citizens to support in pension systems, the Chinese Academy of Social Sciences predicts the country’s main pension fund will run out of money by 2035. The Chinese government derives its legitimacy from a mix of nationalism and faith in the state’s technocratic competence in maintaining economic growth, so authorities view it as a vital priority.
Chinese policy planners have been working feverishly to boost the country’s birth rate and make having multiple children attractive to young couples. These include expanded maternity and paternity leave benefits and protections, tax breaks, childcare subsidies, and preferential housing access. Authorities are also taking on the cost of education, attempting to curtail the centrality of expensive private tutoring and imposing price controls on private schools.

Impact on Higher Education

Aging populations are bad for universities, judging by the experience of South Korea and Japan, whose population declines started decades ago. As many as a third of Korean universities are at risk of needing to close due to under-enrollment in the coming years. By 2031, Japan’s population of university-bound students is expected to decline by about 52% from 1991 to 2031. Many now claim that these demographic shifts will lead to a reduction in the general number of college-bound children that then translates into fewer students studying abroad and/or being interested in international schools back home. The Canadian Journal of Higher Education, for example, points towards China’s rapidly aging population (which it claims has led to a steady decline in the country’s overall student population) as potential drag on interest in international education.

However, these shifts are unlikely to reduce interest in international education due to a number of endogenous countervailing factors that point us towards recomposition rather than a straightforward, transitive decrease.

Growth of the Upper Middle Class

We must first understand the profile of those who opt for international education. Those who study overseas or attend international schools are a small niche, because the cost is unaffordable for many families. Pre-COVID, about 660,000 Chinese students were studying overseas, out of the roughly 230 million students in K-12 education domestically. International schools make up about 0.18% of all of the schools in the country. Therefore, the relevant participating population is, first and foremost, largely insulated from changes in demographic and family planning policies. What does affect such a group, however, is the uneven distribution of China’s economic growth and its subsequent effects on wealth accumulation. Tier 2, 3, and 4 cities have experienced an economic boom surpassing growth rates in Beijing, Shanghai, and Guangzhou, sufficient so as to create a rapidly growing middle class that spills over into an upper middle class. Robert Lawrence Khun, an investment banker, was quoted by the WSJ as saying China’s “second tier cities” should really be known as “first class opportunities.” By 2030, Morgan Stanley estimates that the average Tier 3 city resident will have the same GDP per capita as a Beijing or Shanghai resident had in 2016. By 2022, the proportion of China’s middle class that resides in those megacities is expected to drop to about 16%, and 76% of the middle class will live in second-tier and third-tier cities. Rising incomes pair nicely with other factors to promote high spending on education among the middle class: a strong cultural emphasis on education, classism and social stigma attached to vocational work, and lower trust of public pension institutions and greater trust on family support networks.

Changes in Education Policy & School Allocation Methods

Simultaneously, public schools across in some cities like Beijing are increasingly allowing for cross-district enrollment and piloting changes in school district admission policies to avoid distortions in the housing market (like a 100 square foot closet-sized apartment that might allow your child access to a famous primary school). Local governments in several international school hubs are piloting new policies that indirectly make international schools more attractive, particularly in areas where competition for good public schools is already fierce, by allowing enrollment of students from outside the school district zone. This means that the domestic public education landscape will—indeed, already has begun to—grow steadily more competitive, as students vying for coveted positions at top public schools face not only competition within their district, but across the entire city or municipality. International schools are thus rendered more attractive alternatives, particularly to wealthy families—who we’ve established previously are growing in number—where parents are worried for their children’s educational fates.

In tandem, these effects-- a growth in the wealthier middle class and an increase in the competitiveness and unpredictability of the public education system-- mean that demand for alternatives to the public education system will continue to grow even as China’s population ages. Therefore, although the number of Chinese college students as a whole may indeed be declining, changes in income distribution and domestic education policy mean we should not expect a similar decline in families opting for an international education.

Decoding Demographics in China: Impacts on International Education