Far fewer students from China will go abroad to study next year as a result of the global crisis which is already having an impact on Chinese industries - especially those relying on the export market. UWN China correspondent Michael Delaney reports that the Chinese economy is slowing and companies across the nation have begun laying off workers with the result that many families do not have the money even for living expenses, much less foreign study. Universities heavily reliant on the fees from these students will be in serious trouble.

Students from mainland China who enrol in offshore universities far outnumber those from all other countries and they have been contributing an estimated US$6 billion a year in fees to higher education institutions. Many universities have come to rely on the fees as a growing source of income; but what had seemed an unending and growing source is drying up now the Chinese economy has stopped its massive expansion and has begun to decline.

Although the number of Chinese enrolling for the first time at universities in other countries was estimated earlier this year to hit a record 200,000, compared with 144,500 in 2007, observers in China say there will be a marked drop-off in enrolments as the Chinese economy slows.

A report in the China Daily in January said the number of students leaving secondary school and college was expected to reach the highest levels experienced of nearly 15 million and 5.5 million respectively in 2008. According to the Ministry of Education, a fifth of those who graduated last year were unable to find work and the situation is now worse for those seeking jobs.

While the economy was booming and families were earning more money than they ever had, parents could afford to send their offspring to overseas universities. That is no longer the case as the economic situation begins to look increasingly grim.

"There are no signs of a definite recovery from the financial crisis," warned China's State Council Information Office last week. The office said the rate of expansion in the economy was the slowest since the second quarter of 2003, when the outbreak of SARS cooled growth to less than 7%.

The fall in overseas sales because of the global crisis is a key reason for the Chinese slowdown given the economy is based largely on exports. Economists predict that with people around the world buying less, and buying fewer Chinese-made goods, the trend is likely to continue.

"We expect a further deceleration in industrial production growth as export-oriented industries such as garments and toys grapple with external weakness, and heavy industries from steel to autos adapt to declining domestic demand," said Jing Ulrich, chair of China equities for JP Morgan Chase, in a report to clients that Associated Press reported last week.

The slowdown affecting economic fortunes in China was demonstrated last week when a huge Chinese factory that made toys for Mattel, Hasbro and other American companies shut down. The Smart Union Group factory in the southern city of Dongguan employed 7,000 people in mainland China and Hong Kong.

Chan Cheung-yau, chair of the toy and games subcommittee under the Chinese Manufacturers' Association of Hong Kong, said the outlook was gloomy for toy makers. Chan predicted that thousands more factories would close in China next year.

Chinese universities are not likely to face any drop in applications from students given they are quite unable to meet the heavy local demand. But as, Delaney says, most of the institutions are already impoverished so boosting enrolments to meet the rising numbers expected to seek entry next year will not be possible.