The National Bureau of Economic Research (NBER) recently released a new working paper showing that China’s massive university enrollment expansion, launched in 1999, has not only reshaped its domestic higher education system but also profoundly influenced the educational and economic landscape of U.S. universities and their surrounding communities. The study argues that China’s higher education reform unintentionally became one of the key driving forces behind the expansion of U.S. higher education.
The paper, titled “The Ripple Effects of China’s College Expansion on American Universities,” was co-authored by Ruixue Jia and Gaurav Khanna from the University of California, San Diego, and Hongbin Li and Yuli Xu from Stanford University. Using detailed data from China’s university enrollment quotas and the U.S. SEVIS visa database, the researchers systematically analyze how China’s college expansion between 1999 and 2015 indirectly affected U.S. graduate education and local economies.
According to the study, China’s 1999 policy marked an unprecedented surge in higher education enrollment, with the number of college students growing from roughly 1 million to 9.6 million over two decades. The researchers found that this expansion directly fueled a wave of Chinese students pursuing advanced degrees in the U.S.: for every additional 100 Chinese college graduates, approximately 3.6 went on to enroll in U.S. graduate programs. Overall, the expansion can explain roughly 27% of the growth in Chinese graduate student enrollment in the U.S. between 2003 and 2015.
The influx of Chinese students, the authors note, had far-reaching consequences for U.S. higher education structures, academic programs, and local economies. As the number of Chinese master’s students increased, American universities responded by launching new programs—especially in STEM fields. The data suggest that for each additional Chinese master’s student, U.S. universities enrolled, on average, 0.26 more domestic master’s students and 0.50 more international master’s students, with public research universities benefiting the most.
The researchers describe this as a “crowd-in effect,” driven by the substantial tuition revenue and stable funding streams provided by Chinese students, who largely pay out of pocket for their degrees. These funds, in turn, help universities expand programs, subsidize domestic students, and support research activities.
The paper also identifies notable spillover effects on local economies. Defining “college towns” as areas where students comprise more than 20% of the population, the study finds that an increase in Chinese master’s students correlates with a 0.7 percentage point rise in local net employment growth. This effect stems mainly from increased demand for housing, retail, dining, and services—indicating that international education mobility not only shapes academic landscapes but also serves as a powerful driver of local economic activity.
Co-author Ruixue Jia emphasizes that these findings reveal a “cross-national transmission mechanism” of education policy: “The expansion of higher education in one country can reshape the academic and economic ecosystems of another through student mobility. This is not just talent migration—it’s a spillover of knowledge and economic energy.”
However, the study cautions that this virtuous cycle faces growing uncertainty. Rising geopolitical tensions, stricter visa policies, and heightened security scrutiny of STEM students could disrupt this flow. The paper warns that if the U.S. continues tightening visa and work permit rules, it could reduce the number of Chinese students and weaken the fiscal resilience of U.S. universities as well as their contribution to local employment growth.
While the study focuses primarily on graduate-level data, broader trends reinforce its implications. According to Open Doors statistics, the total number of Chinese students in the U.S. rose from about 65,000 in 2003 to 304,000 in 2015, peaking at around 380,000 in the 2019–20 academic year, before dipping to roughly 290,000 in 2022. Since 2015, more than half of all Chinese students in the U.S. have been undergraduates. This continuing influx has sustained tuition revenue, provided a pipeline for graduate education, and become a key pillar of the internationalization and economic sustainability of American higher education.