China’s economy is slowing, and the stock market has taken a beating as well. At the end of July, the S&P 500 dropped 4% in a day. The U.S. dollar index rose about 1% on the same day. As with the rest of the markets, the stock market is feeling the pressure as Chinese officials to crackdown on corruption.
“The recent drop in China’s economy will have an impact on worldwide education stocks,” said Steve Landsburg, CEO of Global Education Capital. “While no one can predict the long-term effects of the devaluation of the RMB (Roman currency), the current weakness in China’s stock market will most likely affect higher-priced stocks of private education in the U.S. as well.” In fact, analysts predict that over the next three years, the Chinese government will continue to intervene in the market to prevent local companies from dominating the sector. These moves could result in more volatility and losses for global investors.
China’s economy is growing at a rate of about 7% per year. However, many economic experts believe this pace will slow down or reverse sometime in the near future. In addition, China’s economy is heavily dependent on the services and products that it manufactures. The slowdown will affect the quality and supply of these products, upsetting U.S. manufacturers’ ability to compete in the Chinese market.
China’s economy is heavily based on exports. High-tech firms in the U.S. rely on Chinese manufacturers to make their products available on the open market. China’s growth also means it will take a bigger slice of the global surplus, meaning that trade flows between the two countries will experience a significant downturn. This will have a negative effect on the stock market. Many education stocks that are negatively affected by these changes will either dry up or suffer a quick loss in value.
Many education stocks have also been hit by government-sponsored news reports that highlight the numerous benefits that Chinese students receive from studying abroad. These stories often inflate the number of times students spend studying abroad and inflate the quality of education they receive. The truth is that it takes a substantial amount of time and effort to attract top-notch students to a university. In addition, most of these students are sponsored by their schools, and any perks they receive are usually above and beyond what any other student could receive.
On a related note, many of the Chinese government-sponsored news reports are rife with stories about the quality of Chinese students in foreign universities. However, the quality of education they receive does not always match up to the claims made. Many foreign universities have begun removing Chinese students from their programs due to concerns about the quality of their education. If Chinese officials were able to increase the number of students studying in foreign countries, then the stock market would be affected. However, the Chinese government has been unsuccessful in this endeavor. Whether or not this has any impact on the stock market is hard to say at this point.
There is also no guarantee that the Chinese government will continue to support higher education. The government was one of the original investors when the Chinese economy was first opened up to the world, but how many of its goals for globalization appear to be fading. At the same time, the Chinese government has been busy implementing an extensive plan to increase the number of foreign universities that offer degrees in Chinese. These efforts are designed to help foreign students earn a better living by providing them with the necessary skills to do well in high-paying jobs in the United States and other Western countries.
As Chinese officials crackdown on foreign education, some foreign students feel they have no choice but to leave the country. As China continues to develop its economy and improve its relations with the U.S., it is not a secret that the Chinese government wants the benefits of globalization to spill over to the West. Unfortunately, there is little the U.S. can do to stop Chinese officials from closing the door on higher education for those who want to study abroad. However, the positive news for American college students is that Chinese students may be learning from previous generations, and the U.S. can do something to help facilitate that development. No matter what the Chinese government does to limit foreign influence on the Chinese education system, the U.S. can work with its neighbors to encourage higher education and create educational opportunities for Chinese students who wish to pursue higher education in the U.S.