Letters from America: Chinese Students’ Economic Contributions to the United States

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Cultural bridges also help bilateral trade

This is Part VIII of our ongoing Letters from America to Asia Series, featuring opinions and observations on America’s trade relations with China and emerging Asia from Chris Devonshire-Ellis.

Nov. 19 – A lesser known part of the U.S.-China (and U.S.-Asia) relationship is the huge amount of income many American states now generate through the sale of education to students from Asia. Close to US$5 billion was generated last year through the enrollment of students from China alone at American colleges and universities, reports World Education Services, a not-for-profit based in New York. When you take all international students from Asia into account, that number jumps to roughly US$13 billion, according to Asia Matters for America, an information and analysis hub run by the East-West Center and covering Asia-America ties.

This trend is also on the rise, with the number of Chinese students in the country increasing 24 percent year-on-year in 2011 to total some 194,029 – a healthy rise compared to 2004 when just 64,765 similar students were enrolled. Of these students from China, some 64 percent of all international students, and a whopping 84 percent of undergraduates, are funded by their own families – with an average of 60 percent of the total financed independently (compared to the global average of 49 percent).

A breakdown of the economic contributions generated by U.S. states from providing education to students from Asia can be found below.

This phenomenon helps China-America bilateral trade in several different ways. It of course increases the students’ knowledge and thinking in line with their chosen educational field, but it also helps promote the general transparency issues of American society and business values that can so often become obfuscated in Mainland China. Assuming that Chinese students enjoy their period of education in the United States, it also helps bridge cultural differences and misunderstandings between the two nations, while the social intercourse generated between students of different backgrounds additionally assists with mutual exploration of commercial opportunities.

Indeed, I have witnessed firsthand a number of friendships between American and Chinese students that have resulted in the development of good quality joint venture partnerships in China. One notable example I’ve seen is in the viniculture industry in Shandong Province, where a native Californian from Napa and a Chinese student whose family owned a local fruit estate have paired up. The partnership has resulted in a long-term venture and investment into producing quality wines; and they mean it – the premium product is not expected to be launched for at least another 10 years when the newly-planted vines gain some maturity.

I suspect that the U.S. education experience – especially in the engineering and hi-tech fields – will also slowly begin to make inroads into combating China’s systematic theft of copyright materials as students learn to develop their own inventions and (with the help of U.S. education and training) begin to embark on careers more focused on invention and innovation.

Education and culture are the ties that bind, and for America, this particular aspect of its bilateral trade with China can only result in longer term, mutually-beneficial commercial development between the two nations.

Dezan Shira & Associates provides American and international companies with business advisory, legal and tax advice concerning exporting to China and Asia. The firm maintains 17 offices across China, Hong Kong, India, Singapore and Vietnam, and has a liaison office in Charlotte, North Carolina. Dezan Shira also employs a number of American lawyers and tax advisers in their offices throughout Asia.

To contact the practice concerning issues relating to exporting to China and Asia, or for professional advice concerning corporate establishment, tax and compliance issues, please email the firm at asia@dezshira.com or visit www.dezshira.com.

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