Universities and PRC-risk

A couple of days ago the prominent US economics blog Marginal Revolution highlighted a university in the United States which had taken out insurance against a significant drop in revenue from Chinese students.   The underlying article was here.  The policy had been taken out last year, but only now has the broker allowed the transaction to be publicised.

Here’s the gist

The University of Illinois at Urbana-Champaign has paid $424,000 to insure itself against a significant drop in tuition revenue from Chinese students.

In what is thought to be a world first, the colleges of business and engineering at the university signed a three-year contract with an insurance broker to pay the annual six-figure sum, which provides coverage of up to $60 million.


Jeff Brown, dean of the Gies College of Business, told Times Higher Education that the insurance would be “triggered” in the event of a 20 percent drop in revenue from Chinese students at the two colleges in a single year as a result of a “specific set of identifiable events.”

“These triggers could be things like a visa restriction, a pandemic, a trade war — something like that that was outside of our control,” he said.

Tuition revenue from Chinese students makes up about a fifth of the business college’s revenue.

Brown said that the insurance would cover the colleges’ losses if the decline was temporary and buy the university time to “make some adjustments to where we recruit” if it became a longer-term issue.

The article refers to the comments, mentioned here the other day, from a former head of Australia’s Department of Foreign Affairs and Trade

Last month, Peter Varghese, chancellor of Australia’s University of Queensland, suggested that universities should put revenues from Chinese students into a trust fund to insulate themselves against a future drop in enrollments from East Asia.

A few thoughts came to mind reading the article:

  • on the one hand, the insurance seems quite cheap (less than 1 per cent of the amount insured).  Even if a year ago there weren’t debates –  as now in the US –  about possible government restrictions on China student visa numbers – the risk of something going wrong wouldn’t have seemed small (after all, even pandemics happen more than once in a hundred years, and wars have also been higher frequency than that).
  • and, on the other, you have to therefore suppose that the contract is very tightly drawn, and it might well be difficult for the university to get a claim paid out.

It would also be interesting to have seen their analysis on the merits of paying a premium to an outside insurer as opposed to self-insuring.  The university concerned  appears to have an endowment of US$3.5 billion and a drop in Chinese student numbers doesn’t look like it could pose an existential threat to the institution as a whole.

And the policy seems unlikely to provide cover in the event that, say, the university president or a group of his/her senior academics were at some point to make a strong stand against the actions and policies of the People’s Republic of China.  That is something in the hands of the university and therefore almost certainly uninsurable.  If anything, one could imagine the insurance policy constraining their perceived freedom of action/speech.

But it also got me thinking about the compromised position of New Zealand universities.  Perhaps none of them is dependent on the China market for quite 15 per cent of their total revenue, although there will be individual departments and perhaps even faculties that will be at least that dependent.   In a new post, on why people on the left have been reluctant to support Anne-Marie Brady, I noticed this line from Paul Buchanan

The first, prevalent amongst academics, is concern about losing funding or research opportunities for publicly siding with her. The concern is obvious and acute in departments and institutes that receive PRC funding directly

Do we really have components of our public universities receiving direct funding from the PRC (Confucius Institutes aside, which are peripheral to the universities themselves)?  If so, surely such funding should be given more prominence, given the nature of the regime (scarcely benevolent and welcoming of scrutiny and criticism).

But even just in respect of student enrolments, the PRC market is clearly of considerable importance to the universities (and slightly far-fetched claims of increased penetration of the international student market are used to support Victoria University Vice-Chancellor – and China Council member – Grant Guilford’s bid to change the name of his institution).   Our universities are keen on lots of foreign undergraduate students for various reasons.  High numbers apparently help them in some of the mechanical international ranking schemes.   But the key driver is almost certainly the money.  Overseas students –  especially from non English-speaking backgrounds –  are quite expensive to support, but they can be charged full fees.  By contrast, the government caps both domestic student fees themselves, and limit the amount of direct support to universities in respect of those students (while, with gay abandon, offering interest-free student loans and fee-free entry to students themselves).  In a hugely distorted “market”, successive governments have set up the incentives that drove the universities further into exposure to the political whims of the PRC authorities.  Universities, in turn, were aided and abetted by the immigration policy provisions, that bundled-up work rights and qualification for post-study visas and residence points with study at a New Zealand institution.   In most fields, in most institutions, our universities simply aren’t so good (highly ranked) they’d attract large numbers on their own merits at full fees (although being a low wage Anglo country, presumably our fees are lower than those in some other countries).

The corruption of the system is double-edged.  There is the political dimension –  we are never likely to see a clarion call from our Vice-Chancellors opposing the repressive nature of the PRC regime, including the repression of academic freedom – such as it was – in China.  It seems unlikely they’d even speak up for, say, Anne-Marie Brady here –  certainly none have.  Once upon a time one might have looked to university vice-chancellors as among the eminent figures guarding and championing our traditions (for all the talk about academics as “critic and conscience”, a huge part of what they do is pass down the accumulated knowledge and wisdom, so that we don’t start anew each generation).  But not these days.  There are deals to be done –  connections with the PRC itself, even degree-granting programmes there –  and enrolment numbers to keep up.  Vice-Chancellors seem more like hawkers, than guardians and champions of our values.

But the other side of the corruption of the system relates to the pressure to pass people.  Those of us outside universities don’t see much of this directly, although occasional reports seep out.    But there was a Twitter thread the other day from an Australian economist, who teaches at the University of Queensland

One hears similar stories from time to time here (not necessarily specific to PRC students), and one can only assume they aren’t uncommon, (and that New Zealand universities are no purer, or their academics more resistant to pressure, than their Australian counterparts).

It is a very sad way to run a university system – at least if society expects anything more of universities than being degree-factories.   Rather than “critic and conscience” it has the feel of something more like corrupted exemplars of how off course our society has gone.

And thus there seems almost no chance that our universities –  or the Australian ones – will heed Peter Varghese’s advice (will his own even do so?).  Governments would have to take the issue seriously first, and that seems unlikely.    Putting aside some of the short-term profits as protection against a “rainy day” –  if the thugs in Beijing took a dislike to you – would probably immediately expose the problems in the financial standing of the universities and of our tertiary education system as a whole.  Better just to go along, get along, get the Vice-Chancellor on one or other of the pro-PRC propaganda bodies, pass the students, keep the contracts (with Beijing or Wellington), and keep supporting succesive governments in doing everything possible to avoid upsetting Beijing, to sacrifice the values of our society on the pyre of deals and donations.

But I was left wondering whether our own Export Credit Office –  a small intervention I’m deeply sceptical of –  would offer our universities the sort of insurance the University of Illinois was taking out.    They tout themselves as offering these services

NZEC can assist exporters to mitigate the effects of a buyer cancelling a contract or defaulting on its payments, as a consequence of commercial or political events beyond an exporter’s control.

And would we be better off if they did, or would the insurer just be even more keen on keeping the insured (the universities) in line?

In her writings, Anne-Marie Brady quite often introduces lines from Lenin, which appear to help shed some light on how the PRC operates.  As one reflects on our universities –  in particular – I’m reminded of the line that the capitalists would sell the communists the rope with which they’d later be hanged.   Perhaps one expects little of our “capitalists” –  businesses can prosper under any political regime (see Google worming its way back into China) – but universities were supposed to be better than that.  Governments share the blame, of course, but leaders of universities are moral agents, and should have their own responsibilities beyond just the income statement.

40 thoughts on “Universities and PRC-risk

  1. Watching the University of Auckland’s newest building with its steel infrastructure going up level after level as I drive through Symonds St, it looks like they will need another 5,000 plus students to fill up this building.

    Liked by 2 people

    • I guess the Labour government’s latest 3 year work permit for bachelor degree completion is a stroke of marketing genius. It is great to have a more highly skilled migrant workforce working in our restaurants and service outlets.

      Liked by 2 people

      • Yes that’s true. Funny because labour campaigned on ending study for residence and to end scams.

        essentially that means dodgy certificate courses and not what’s. But this will greatly increase the numbers big time. Pay $100k get a degree and get residence, Work at Starbucks and bring out your parents and 17 family members. University must be a poorly run business model if it needs the government to bring in foreign students to survive.

        Liked by 1 person

      • Hendo, it probably happened in the past but all the INZ stats for the last few years show very few elderly Asians getting residents visas. The family reunion category was frozen in a typically arbitrary manner about 30 months ago. Personally I have no objection to bringing elderly parents to NZ so long as they are no debt on NZ taxpayers and do not take low paid jobs.

        There are other issues relating to wives and children arriving in NZ. Prime applicants for the so-called skilled category for residency are less than a third of all resident visas.

        There are some very talented young people in 3rd world countries; we should be doing everything we can to get them and keep them because we all benefit when a genius decides to stay in NZ but they have to be really talented. We seem successful in recruiting Pacific Islanders to strengthen the All-Blacks national rugby team. No so successful getting academics of equivalent world beating standard.


      • My wife and I immigrated to NZ more than a decade ago as skilled migrants, and on our application I remember having to list parents and other immediate family members, who were specifically excluded from gaining any sort of preferential entry into NZ. Were we in the minority?


      • Excluding parents is only as recent as a few years. 10 years ago you can still bring parents and siblings across to NZ. It used to be preferential treatment.


  2. “2. Half of them” (economics students) “struggle with basic English”

    Worse, my wife, who has an MA (Hons) in English, once worked for a Korean owner of a PET English language school, who held an MA (Hons) in English from The University of Auckland. Her degree certificate was hanging on the wall in her office. Trouble was, she had such poor written English language skills that she couldn’t string three sentences together to make a paragraph without making one wonder how it came to be that she had earned such a degree. Of course, we know how it came to be — The University of Auckland lowered its standards for students for whom English is a second language. I’m sure that it didn’t just happen in Auckland!

    Liked by 1 person

      • I know a German academic in business studies who gave up his job at Auckland because he was frustrated with the inability of most of his international students to understand (or write) English. He’s now teaching in a French university, even though he’d prefer to live in New Zealand.


    • Because if they don’t graduate and get residency then the foreign students will stop coming.

      We don’t have migrants from Western nations anymore because like us they have subsidised education in their own countries and high living standards.

      I’m at a loss as to why Asian societies are considered desirable for nz to replicate.


      • Something to do with FreeTrade Agreements that our farmers need to get our milk and meat exports into those pesky Asian markets. We can’t even include Singapore into our foreign buyers ban on residential property due to the FTA signed with them.


  3. My (limited) understanding is that the PRC itself in looking forward, is seeking to retain more of its own students onshore (no doubt for similar financial viability motivations). Many of their universities do extremely well in international rankings. However, they (as a Government) also seek to retain/incorporate an English-language “immersion” concept/experience in the education of its tertiary population. This trend in policy thought/direction by non-English speaking institutions is replicated elsewhere in non-English speaking countries (i.e., South and Central America).

    Hence, there are new collaborative, or partnership, arrangements being explored between NZ institutions and many international (non-English speaking) universities. For example, a partnership model being explored relates to 2+2 student and teacher exchanges. I think it a wonderful model/idea – as it serves to diminish some of the competitive/corporate nature of tertiary education worldwide – and gives citizens of all countries an opportunity to pursue a bi-lingual aspect to their tertiary study.

    Not that this type of new thinking/initiative diminishes the very good and valid points you make about the current situation, but at least there is some lateral-thinking going on in the NZ sector.

    Liked by 2 people

    • I imagine it is less convenient to hoover up foreign IP by everyone staying at home, though the internet is probably making it easier.


  4. In April 2015 the Australian ABC 4 corners team did an investigation and expose on these very issues – please tell me there has been a similar investigation here in New Zealand – or – compare the comparative silence

    The original program has new expired

    However some kind person has uploaded it to Youtube
    See it before it disappears
    Remove the — and copy the URL and paste to your browser


  5. This is very disturbing especially about our own universities. They used to be the bastions of free speech, quality research and sound basis of quality learning, but China’s universities are producing quality studies better than ours. We seem to be slipping on the world stage. No student should be able to use our universities as a back door to becoming a NZ citizen in my opinion.

    Liked by 3 people

    • In the main I agree but ‘no student’ is putting it too strongly. As with the entire ‘skilled’ category there are people who are truly skilled.You know you are skilled if you earn say $250,000. For example even reserve level members of the All-Blacks squad. I can conceive of even under-graduates who would be offered that kind of money because their ability; the level of reputation that bestows credit on their university. Not many world wide and I suspect these young high flyers will be found in Princeton, MIT, Oxford not NZ.


      • Watching CCTV on the AI robot advancement in China and the future looks bleak for a lot of professions. They did point out a number of jobs that AI robots can’t replace. Mainly healthcare and homecare. The biggest problem is the human body and the different colours and shapes makes it difficult to hold safely and to clean.


      • Definitely not a bastion of free speech. Can’t understand how Don Brash got bullied and banned at our universities.


    • It is disturbing alright Margaret. The issues of free speech, free inquiry and respect of excellence are anathema to the politically correct, leftist frauds posing as educators in our schools and universities. Witness the idiotic apology for expecting year 13 (7th form, 18 year olds) to understand the basic English word ‘Trivial’.
      The childish obsession with equality seeks to destroy the concept of value itself and shut down genuine dialogue. Our educational institutions, through wilful blindness, political correctness, are no longer aimed at the discovery of truth but with the obscuration of the truth.

      “Farewell, happy fields

      Where joy forever dwells: hail horrors, hail

      Infernal world, and thou profoundest hell

      Receive thy new possessor: one who brings

      A mind not to be changed by place or time.”

      John Milton. Paradise Lost.

      Liked by 2 people

  6. Interesting to see the comments about 50% of students struggling with English. After graduating from the University of Auckland I went to tutor maths in Brisbane. I used to get approached by charming Saudi masters students offering 10,000 AUD for me to complete a paper on their behalf.


  7. Mike, I have been in tertiary education for more than 20 years, and this is the tip of the iceberg:

    A thread on my experience:
    1. 90% of students in my economics masters classes are international.
    2. Half of them struggle with basic English
    3. When I ask in tutorials why they are doing the degree, half tell me that they “need more points for their residency visa” (1/n)

    The “international students” in No Zealand are merely visa runners dead set on getting a toehold for residency (who needs citizenship when residents can vote and buy property here) and bringing in more clan members (the Han Chinese lebensraum project). I would simply suggest that you sit in on any number of (supposedly) masters-level lectures at AUT or the UoA and have your eyes opened (although it looks as though VUW is going the same way)… “Today, class, we’re going to talk about some ideas… do you all understand the word ‘idea’?” That is a verbatim quote, and no exaggeration.

    The so-called Kiwis allowing this neo-colonialism are nothing less than outright traitors, and will (hopefully) pay with their lives during and/or after the coming (and unavoidable) civil war…

    Liked by 1 person

    • Your comment sounds like an exaggeration however how can I tell. The nearest to knowledge of tertiary education that I have is attending a level 2 undergraduate course on C++ at Massey Uni a few years ago. It was a demanding course; 36 students enrolled and the other 35 were young and about half attended lectures and tutorials, mainly male and the roughly half who were Asian in appearance could well have been born here. My point being only very basic English was needed to pass this very demanding course. My brother-in-law took early retirement as a senior lecturer in Accountancy in the UK because he was being pressured to pass students who were simply not good enough and especially foreign students; the issue being income for the University – there was no trading study for residency in the UK at the time he was working.

      Surely it would be easy to collect data about the foreign graduates who attain residency. How many choose to stay? What are they earning say 3 years after graduation? What jobs are they doing? How many family members are attached to their residency and what are they doing. If the idea of getting good people from the 3rd world to become Kiwis has any sense then at the minimum we need data that we can debate. Otherwise it descends into anecdotes that persuade only those who already persuaded.


      • Bob people are not kiwis until they support nz against their country of origin in sports.

        otherwise nz is relegated to an economic hostel. As someone of totally British heritage who does not qualify to work in the UK I have every reason to oppose mass immigration on a personal level as their kids will have dual passports to live and work abroad even if they have moderate skills. I consider this unfair after all my family has done for nz.

        You make good points but I’ll oppose immigration until I get to work in UK. At least only allow descendents to participate in anzac parades considering we shut down queen st for Diwali. No festival for me though.

        Liked by 1 person

      • Hendo: agree with you about reciprocal rights – should apply generally to work visas, residency, buying land, etc. But maybe modified a little for countries which have been efffectively colonies – so NZ does have special ties with some countries – Australia obviously but also many Pacific Islands. So just as more Kiwis go to Australia than the reverse then we can expect more Samoans to come to NZ especially for education and work opportunities ~ however I would like the reciprocal rights in Samoa that they have here.

        The sports supporter argument is broadly right – it show where your sympathies lie – so I’m delighted when our Canoe team and cycle team beat England. At rugby I never supported England preferring Scotland where I lived despite being English. It was easy to transfer loyalties to the All-Blacks but they are so professional that the occasional loss actually does them good. Next world cup I’ll be supporting Scotland, all the PI nations and of course the All-Blacks. Maybe the sporting proof of my Kiwiness is my enthusiast support for Lydia Ko, Valerie Adams and the delightful Lisa Carrington – we will be lucky if we ever have so many world champion sportswomen all active at the same time. My support is based on their NZ pride and on the fact that all three are wonderful role models.

        I do not oppose immigration; I oppose the way it happens in NZ. It is in response to vested interests not the benefit of NZ. Surely any rational person how ever cosmopolitan must stop and think whyalmost all other countries prefer a lower rate of immigration.


      • Diwali is a Hindu religious festival of light. Christmas is a Christian religious festival celebrating the birth of Jesus Christ. What is the difference when they are both religious festivals? Christmas is just more widespread because the Christian Priests did their jobs really well in spreading the religion everywhere around the world.


      • The more I read of the Hindu religion it actually looks to be more accurate historical depiction of a bygone era of a very modern civilisation at its pinnacle with advanced aeronautics and space travel capability very much like our modern civilisation today.

        Even today as we live in modern surrounds but we do still have pockets of people that still living at the caveman level of subsistence. I can actually see how our caveman neighbours will survive the next global cataclysm better us modern people people who would die off quickly if we lose the use of our Iphones.


    • Hoodie Ropata is correct about a war being fought. That war is between the haves and the have nots. It is between Maori and Pakeha as it has always been. This time the canon fodder are the asian migrants used in increasing numbers to try and displace the 70% white pakeha majority.


  8. What’s up with the unrelenting, one sided propaganda coming from our MSM. Stuff’s blatant declaration that would simply refuse to publish any opinion that questioned the global warming orthodoxy a new low.

    Heather du Plessis-Allan has a sickening, sycophantic pro China grovel:
    “China has a lot to be angry at us about. In the last year, our Defence Force has published a White Paper using extremely strong language aimed at China, started throwing money around the Pacific in an obvious bid to curb Chinese influence, and blew $2.4 billion buying American war planes that just happen to be really good at spotting Chinese submarines from the air.”

    It gets worse: “Of course, we’re an independent country. We can choose who we are mates with and who we allow to fiddle with our telecommunications networks.

    But, annoying China is a high-risk move. That country is our biggest trading partner. Two-way trade between the pair of us was worth $26 billion last year. And we need them to like us”


    • We sell milk and meat which are heavily subsidised by the NZ taxpayer and we import chinese made products which is pretty much all to China’s benefit at the expense of the NZ taxpayer. If we buy less China imports then we would likely manufacture our own again and would be selling less taxpayer subsidised milk and meat.

      China’s tourists will come to NZ irrespective because they want to come anyway to see if they can decide to settle in NZ or send their kids here to study so that they have a channel for their money to get out of China. Anyway their kids want to come to NZ to study because of the 3 years work permit incentives which pretty much pays for their initial study program costs. Free overseas study so why would they not come?


      • St Andrews day last week no official acknowledgment in parliament yet they did for Diwali. more ethnic scots in nz than indians. Most kiwis had a guts full but not you Mr pro ethnic ggg


      • I am in 2 minds over the whole immigration issue. My mum gets much better care from Filipinos, Thai and polynesian migrants than from Pakeha or Maori homecare workers. As I know I will need homecare and nurse care in the future I like the care and attention offered by these new migrant workers. Personally I say less Indians though. They behave as if they own the place. All this complaints from nurses about violence from patients I suspect is mainly at Indian nurses. In my own personal experience with my mum they have a tendency to behave rather badly. On some of my visits I even felt like punching some of the indian nurses I have met. Rude and authoritarian outside of their specific responsibilities.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s