Market Size and Student Enrollment in China’s Higher Education Industry
The China higher education industry has experienced strong growth over the past few years, primarily driven by the rising expenditure of both public expenditure and private investment. Total revenue generated by China’s higher education industry has increased from CNY688.0 billion in 2011 to CNY940.8 billion in 2015 and is expected to increase to CNY1,384.0 billion in 2020, while the total revenue generated by China’s private higher education sector increased from CNY64.6 billion in 2011 to CNY92.6 billion in 2015, and is expected to further increase to CNY156.3 billion in 2020. The difference between the total revenue generated by the higher education industry and the total revenue generated by the private higher education sector refers to the total revenue generated by the public higher education sector in China. Despite the growing trend, China still lags behind developed countries in terms of public expenditure on education as a percentage of GDP. For example, public expenditure on education was approximately 4.3% of GDP in China in 2015, lower than 6.0% in the US, and per capita public expenditure on education in China in 2015 is US$336.7, much lower than that in the US which is US$3,348.3.
The total number of students enrolled in higher education institutions increased steadily from 24.7 million in 2011 to 28.2 million in 2015, and is expected to further increase to 32.1 million in 2020. In the meantime, the higher education enrollment rate has experienced rapid growth over the years, increasing from 24.3% in 2011 to 37.1% in 2015. However, the enrollment rate is still low compared to an average of approximately 64.0% and 87.0% enrollment rates in Europe and North America, respectively, in 2015. The enrollment rate in China’s higher education industry is estimated to increase to approximately 52.5% by 2020. The enrollment rate varies in each province in China due to the difference in economic development and education resources allocation.
While the student enrollment in higher education continues to increase, the total student population who is eligible to apply for higher education only represents a small portion of the entry-college-age population. The college-entry-age population was approximately 15.7 million but only 9.42 million students participated in National Higher Education Entrance Exam in 2015. Among the participants, only 7.0 million were admitted into higher education, including 3.66 million into undergraduate schools and 3.34 million into junior college. Hence it is generally expected that the population eligible to apply for higher education could be further increased with the continued improvement of the economy and urbanization. It is noted that China government has been allocating a larger proportion of resources towards compulsory primary and secondary education. Government spending on higher education as a percentage of total government spending on education at all levels declined from approximately 21.6% for 2011 to 20.3% for 2015.
Sources of Revenue of China’s Higher Education Industry
Government appropriation and tuition fees are the two major sources of revenue generated by the higher education industry in China. However, the percentage of their respective contribution to the revenue varies significantly between the public higher education industry and the private higher education industry. In 2015, government appropriation accounted for approximately 68.7% of the total revenue of the public higher education sector, whereas, approximately 80.1% of the total revenue of the private sector was contributed by tuition fees while only 17.4% of the total revenue of the public sector was contributed by tuition fees in 2015. Public higher education institutions and private higher education institutions have some different roles and social responsibilities in China. Private higher education institutions, especially those focused on applied sciences primarily focus on teaching students practical and readily applicable skills and fostering technical-skilled talents, while public higher education institutions, besides teaching activities, have to undertake more scientific research tasks and national R&D missions. Therefore, the revenue achieved from government appropriation for public higher education is mostly allocated to research field such as building laboratories and funds for scientific research. Even though the average annual tuition fees per student pay for private schools are higher than those for public schools, per student revenue achieved from government appropriation for public schools is significantly higher than that for private schools. As a result, the public sector generates significantly more revenue per student compared to the private sector.
Graduate Employment in China’s Higher Education Industry
The graduate employment rate is one of the key parameters to measure the quality of education offered by a higher education institution. China’s overall higher education graduate employment rate was approximately 86.8%, 87.4% and 92.3%, in 2013, 2014 and 2015, respectively. Graduate employment rates of graduate education, undergraduate education and junior college education were approximately 95.3%, 92.2% and 91.2% in 2015, respectively, with average monthly salaries of CNY4,777.9, CNY3,676.8 and CNY2,939.0 in the same period, respectively. In terms of the overall employment market, China’s employment market has been experiencing a slight imbalance between talent and market demand since 2011. In 2015 Q4, talent demand was 4.4 million while supply was only 4.0 million.
Market Size and Student Enrollment in China’s Private Higher Education
Industry
The total revenue generated by China’s private higher education industry increased from CNY64.6 billion in 2011 to CNY92.6 billion in 2015, and is expected to increase to CNY156.3 billion in 2020. The following diagrams illustrate the total revenue generated by China’s private higher education industry and the total student enrollment from 2011 to 2015, and a forecast of revenue from 2016 to 2020. In line with the increase in student enrollment in higher education, the total number of students enrolled in private higher education also experienced steady growth. The total number of students enrolled in private higher education increased from 5.1 million in 2011 to 6.1 million in 2015, and is expected to further increase to 8.7 million in 2020. The penetration rate of private higher education in the overall higher education also has increased steadily over the past five years, from 20.4% in 2011 to 21.7% in 2015, and is expected to further increase to 27.2% in 2020. This indicates that the importance and the recognition of private education continues to increase as more students choose to go to private universities or colleges in China. The following diagram sets forth the penetration rate of private higher education from 2011 to 2015, and a forecast of penetration rate from 2016 to 2020.
Tuition Fees of China’s Private Higher Education Industry
China’s average tuition fees of higher education per student per school year increased from CNY7,327 in 2011 to CNY7,862 in 2015, which correlated to the increase in GDP per capita. As China’s economy continues to develop and GDP per capita continues to increase, China’s average tuition fee for higher education is expected to grow. In 2015, the average tuition fee of private higher education institutions was approximately CNY12,153, much higher than that of public higher education institutions, which was CNY6,674. In addition, China’s average tuition fee of higher education as a percentage of GDP per capita was 16.3% in 2015, compared to 32.3% and 31.9% in the U.S. and U.K., respectively, indicating that it has room to grow further.