It is hard to find potential winners in Donald Trump’s nascent trade war with China. But could European business schools be the beneficiaries? Some suspect so.
So far, the U.S. president has slapped tariffs on Chinese imports to the U.S. worth $200 billion a year, and China has reciprocated for some American imports. But because the U.S. has a trade surplus with the Asian country, China will at some point run out of U.S. imports to tax, and might have to look for other ways to fight back.
One Chinese import that is a big deal for the U.S.: students, especially in the lucrative business education sector. “One option would be for the Chinese to ban students from going to American business schools,” an academic at a European business school recently suggested to Poets&Quants. “That would be very interesting for us.”
RESTRICTIONS ON STUDENTS GOING TO U.S. ‘WOULD CERTAINLY HARM U.S. B-SCHOOLS’
Any ban by China on students going to the U.S. would have a big impact on American education providers. In 2016-2017, over 350,000 Chinese students sought higher education in the U.S., up from just 68,000 in 2006-2007, according to the Institute of International Education, a U.S. government-funded nonprofit. Of the 350,000, 142,851 were undergraduates, 128,320 were postgraduates, and 80,000 were taking non-degree courses. Around 10,000 Chinese students are estimated to be seeking an MBA in the U.S., though many more are seeking specialist master’s degrees.
As we wrote last year, China is financially very important to U.S. business schools. “Without China, many business schools in the U.S. would have been in trouble in terms of meeting their enrollment goals (in recent years),” Rahul Choudaha, co-founder of data analytics website DrEducation, said. “China is too important and too big for business schools to ignore.” If the U.S. lost all that tuition and fees, not to mention the extra costs associated with housing and other spending, it could add up to a significant cost: If schools had to fill their classes with students from elsewhere, it would — at the very least — create a costly administrative headache.
Dean Bill Boulding of the Fuqua School of Business at Duke University agrees that a ban by China on students studying in the U.S. would be an effective weapon. “Just as tariffs reduce mobility of goods across countries, so, too, we could see immigration restrictions that reduce the mobility of students across countries. If China and the U.S. took actions to increase these restrictions it would certainly harm U.S. business schools,” he says.
CHINA DOESN’T WANT TO CLOSE DOOR TO TOP EDUCATION FOR ITS PEOPLE
However, such a ban would likely face domestic hurdles in China. Professor George Yip of Harvard Business School, CEIBS in Shanghai, and London’s Imperial College Business School is unsure that the Chinese government would be willing to block elite students from going to the U.S.. “There are children of the wealthiest and most important people in China,” he says, “and the government would not want to prevent their children going to top-class institutions.”
Those who have set their hearts on sending children to Yale or Harvard would not be pleased if they were blocked from doing so — though as Yip points out, Chinese Premier Xi Jingping has consolidated power so effectively that if he wanted to effect a ban, he probably has the political capital to do it.
The beneficiaries are obvious. According to Nick Barniville, associate dean of degree programs at ESMT Berlin, “For good European schools, this would be a chance to improve quality by having a greater pool of really good Chinese candidates from which to select, assuming these candidates would have otherwise gone to top-10 U.S. schools. A huge increase in the volume of students coming to Europe, Barniville says, might not affect MBA programs as much as others, at least at the leading U.S. schools , as these institutions already have more than enough candidates. But it’s not hard to imagine schools moving quickly to take advantage of such an increase.
‘REALLY HARD TO MAKE ANY PREDICTIONS IN TODAY’S POLITICAL ENVIRONMENT’
Might China really do it? Perhaps more likely than a blanket ban is a reduction in the number of Chinese students heading to lower-level U.S. institutions. American schools might want to brace themselves for a slowdown anyway: A recent article in South China Morning Post suggested that Chinese hunger for U.S. education is starting to wane, partly because some students are put off by news of school shootings and a perceived unfriendliness to foreigners.
In that environment, a ban might be easier to sell to Chinese students with their hearts set on the U.S.
Stranger things have happened — and are happening, as Fuqua Dean Bill Boulding says. “It’s really hard to make any predictions in today’s political environment.”