A 1999 decision by the Chinese government to massively expand its system of higher education had an unexpected consequence on the other side of the world. A new analysis shows it triggered a flood of Chinese students pursuing U.S. graduate degrees in science, technology, engineering, and math (STEM) fields—and that influx in turn allowed U.S. universities to increase opportunities for domestic students over the next 15 years and also strengthened local economies.
The new study challenges one justification U.S. President Donald Trump’s administration and congressional Republicans have offered for curbing student immigration from China, namely that those students crowd out domestic students. In fact, the large number of qualified Chinese students able to pay the full cost of tuition fueled a rapid growth in U.S. STEM master’s programs, creating more seats for domestic students. For every four additional Chinese students, one more U.S. student gained a spot in such programs, according to a working paper posted this month by the National Bureau of Economic Research (NBER). That impact, which the authors call the crowd-in effect, was most pronounced at large public research universities.
The paper also points to other benefits from enrolling more Chinese graduate students. They expand the pool of teaching assistants, allowing universities to offer more undergraduate STEM courses. And the additional revenue subsidizes all manner of university activities and eases the need to raise tuition.
“What’s really cool about this study is that it documents, for the first time, how the Chinese government, in growing higher education at home, also contributed in a significant way to the growth of U.S. graduate education, especially at the master’s level in STEM,” says Kevin Shih, an economist at the University of California (UC), Riverside who was not involved with the research. Previous work by Shih and others had pointed to the increasing wealth of Chinese families, along with fewer trade barriers, as the main drivers for the large influx of Chinese students.
Two of the authors, Ruixue Jia and Hongbin Li, economists at UC San Diego and Stanford University, respectively, figured out a way to use Chinese college admissions data to track that flow of STEM talent to the United States and its impact. Students gain admission based on their scores on a highly competitive examination called the gaokao. But the size of the freshman class at each university is determined by the central government based on an allocation to each of the country’s 31 provinces. The government also drives a student’s choice of a major by establishing an overall quota for each institution based on its assessment of the country’s workforce needs.
Those top-down quotas have changed over time, Jia notes. “At first the government thought biotech was the future, so you saw a huge number of biology majors going to the U.S. after graduation. Then it switched to computer science, and now AI [artificial intelligence].”
The authors compared those fluctuations with information from a database within the U.S. Department of Homeland Security that tracks where foreign students came from, where they are now enrolled, and what they are studying. “We could isolate the entirety of the variation as coming from the different allocations at the provincial and municipal levels, excluding other factors,” says UC San Diego economist and co-author Gaurav Khanna. That analysis made it clear that China’s higher education policies were driving the influx of Chinese stem students to the U.S., he says.
From 2003 to 2015, the U.S. STEM master’s programs grew by 23%, to nearly 10,000. Based on a statistical analysis finding that universities launched a STEM master’s program for every 100 additional Chinese students on campus, the authors estimate that roughly 15% of that growth can be attributed to the spillover effect from the expansion of higher education in China. In addition to being a major source of tuition revenue for universities, the additional Chinese graduate students stimulated local businesses. “They rent apartments, buy cars, and go to restaurants,” says Khanna, who found the correlation by mining U.S. surveys tracking economic activity in those communities.
But those positive impacts may be waning. The NBER paper stopped collecting data at the start of the first Trump administration, which quickly cracked down on student visas and has continued a larger campaign to limit immigration in his second term. Preliminary results from a more recent unpublished analysis suggest there’s been a significant decline since 2017 in the number of STEM master’s programs, Jia says, with the steepest drops at large public universities in Republican states.
Anecdotal evidence suggests some of those Chinese STEM students who previously might have come to the U.S. for graduate training are now looking elsewhere. “Other countries now recognize that they are an important source of revenue and talent,” Khanna says, citing Australia, the United Kingdom, Singapore, and Hong Kong. “And China itself is saying, ‘Hey, we’ve expanded our graduate offerings a lot. You don’t need to go abroad.’”
Even so, Jia thinks the paper’s findings remain relevant for U.S. policymakers. “We’re providing some hard evidence for the positive spillover effect on universities and communities of the increased number of Chinese students,” she says.
At the same time, she’s not optimistic the study will tone down the strident anti-China rhetoric coloring the current national debate over immigration. “I’m always skeptical of being able to persuade anyone with data.”