China-U.S. trade war insurance fact of the day

An increasing number of US universities are looking to buy insurance policies against a drop in revenue from international students, fearing they are overexposed to China at a time of mounting trade tensions between Washington and Beijing.

A 10 per cent decline in new international student enrolments at US universities — which rely heavily on revenue from Chinese and Indian students — over the past two academic years has already cost the US economy $5.5bn, according to a report from Nafsa, previously known as the National Association of Foreign Student Advisers.

Two colleges at the University of Illinois at Urbana-Champaign — the Gies College of Business and the College of Engineering — bought insurance in 2018 worth $60m from USI Insurance Services in Champaign, Illinois. The policy pays off if both the colleges suffer an 18.5 per cent decline in revenue from Chinese students year over year due to a government action such as visa restrictions or a “health event”.

The correct inference, I think, is that some of these colleges already have spent that supposedly forthcoming tuition money.

Here is more from Priyanka Vora at the FT.

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And here is more from MR - https://marginalrevolution.com/marginalrevolution/2018/11/insurance-markets-everything.html

Sounds almost as if the FT is cribbing from MR cribbing from Inside Higher Ed.

Good catch. Surprised Tyler didn't link to his own post of less than a year ago. Back when Thiago used his name instead of these fake generic American ones.

Isn't it funny that some Americans apparently can not believe other Americans have noce things to say about Brazil?

It's hilarious.

Brazil is a shithole. It stinks. Is that "noce" enough for you?

Sounds like a real dilemma, better hire more administrators!

Exactly. That's what the bastards will do, along with raising tuition.

We need to tax those endowments. They put out a sh*tty product and sucker naive young people into burdensome debt.

Or we could sell it to the Chinese and the world's elite to enrich our country. Higher education in America is one of our best exports.

Yeah, sure. Let's sell them access to the social sciences and the inanities. I mean the humanities. Then we should cancel their visas after graduation and send the little sjws back to China.

No STEM for them! The last good part of American universities is STEM, and STEM is strategic for the US.

Let's not train the people that would undermine us.

FO slaver and leave us out of your yellow peril delusions.

Have you taken a STEM class recently? It's like 70-80% immigrants. Enough to give Trump goons a heart attack.

Yes, I took graduate classes in math, and about 50% of the class were immigrants, but no Chinese. I never said anything about immigrants. I was talking about PRC students. The Chinese elites send their kids to elite American universities, probably by cheating at all levels. The Chinese cheat on trade deals, steal IP, violate patent laws, and spy on our military. They take the gains from this misbehaviour and use it to bump other students, including immigrants, out of our universities. Of course, the fat and useless rulers of the universities are more than happy to take the money. They are overpaid and retire to gated communities. That we allow that to happen looks like civilizational suicide to me. If you want to commit suicide in the name of some rediculous and unprovable or unfalsifiable economic theory or a dogma like libertarianism, please do it to yourself and leave the rest of us out of it.

Personally, I am not going to stand by and watch it happen. The best I can do is vote, and I always vote. Trump is really getting in the faces of the Chinese, who I believe are flummoxed by his unpredictable nature. Good!

We have devasted vast regions of the US by outsourcing our manufacturing to China. The human cost to us has been immense. The opioid epidemic is just one, but a horrible one. The economic damage has led to mental illness, financial collapse for many families, divorce, and all the consequences down the line.

In addition to the human cost there are environmental costs. Manufacturing in the US is rightfully constrained by environmental regulations. These are virtually non-existent in China. We share the oceans and atmosphere with a gross polluter. China is the largest consumer of coal on the planet. Coal is filthy beyond just CO2. Here in the US most if electricity is generated via natural gas - far cleaner than coal. Furthermore, China is a brutal non-democratic regime and a gross violated of human rights. The nation is dominated by the Han people and Confucianism. Anyone outside that circle is at risk, like the Uighurs, but there are others.

Why do we put up with this?

This whole mess was chosen as a matter of policy by the political class - the POTUS and Congress - and the management elite. These people insulate themselves from the consequences. They enrich themselves and live in apartheid neighborhoods where they don't have to see it, waited on and pampered by a workforce of illegal aliens that directly compete with the same people tossed aside as a result of a deliberate trade policy. Those new and many old service sector jobs are now taken by illegal aliens.

Full disclosure: my younger brother died one of those "deaths of despair" described by Anne Case and Angus Deaton. He was an intelligent and sensitive man and a highly skilled mechanical technician. He had a broad and deep skill set and was a brilliant diagnostician. He worked at Lawrence Livermore Labs, Stanford Linear Accelerator, and numerous manufacturing facilities in Silicon Valley. His last real job that utilized at least some of his skills was at Solyndra where he worked the graveyard shift for a year up until they closed. That was his last decent job. The manufacturing sector employment had too few jobs available for too many displaced workers.

He didn't just suffer financial collapse, but there were other social capital and paychological impacts. His subsequent jobs were not mentally challenging for him, to say the least. He worked at a plastics factory doing menial production work. All of his co-workers were illegal aliens from Mexico. He was the only non-Mexican in the plant. His co-workers listened to Mexican radio all day long, especially a talk show ranting about the USA's cruel laws regarding immigration. When he mentioned that to his manager they sent him home immediately them fires him. His next job was even worse. Then the jobs dries up.

He was unmarried and did not have any kids. His social life revolves around his work. He went to BBQs in the park with his coworker pals, riding dirt bikes and skiing until he was disabled. Then the depression came on, then the drinking.

He died alone in his bedroom, half in bed and half on the floor.

I cleaned up his bodily fluids myself.

That is the impact of our trade policies.

My post is full of typos, but you get the idea.

Sorry but your tearjerker of a story is no excuse for shutting down the free market system that made America great and my retirement accounts fatter.

My condolences for your personal tragedy. I've seen similar though not as bad cases in my own extended family. Rising international trade and large scale numbers of illegal immigrants have put pressure on wages.

Yes, total wages haven't dropped for a lot of natives (just stagnated), but they've kept them up by working more jobs in worse conditions. The current opioid epidemic is a symptom of this effect.

I am very sorry to hear about what happened to your brother. I am sorry you couldn't save him. I thank you very much for describing in detail his work history which shows that he never should have had trouble getting a great job in America -- and yet he did.

One of this country's biggest problems in my opinion is that our people have no sense of how far and fast they can fall. Technology and other factors are projected to take away tens of millions of jobs in the next few decades and yet people somehow feel they will be able to keep their current salary and way of life. Not necessarily true, not at all, for tens of millions in an array of job categories.

We should be vigilant in looking out for our own national interests and making sure that our own people come first. Yet our elites do just the opposite of that and most people aren't paying attention. The necessary level of fear that it takes to be self-protective just isn't in enough of us. Now me, well, I am very afraid for the future.

"our people have no sense of how far and fast they can fall."

Our country knows but they don't care. This fits in line with the world view that people get what they deserve, a corrupted take on Calvinism. Trump doesn't care. 90% of the Dems don't care. Get on social media. Support candidates that do.

I do not know who you have in mind. None of the Democratic candidates are calling for less immigration in the future, which is one of the obvious steps we should be taking now. In fact, some of them are calling for much higher levels of legal immigration. That seems like madness to me when we know we are going to lose jobs by the tens of millions in the not-too-distant future.

Andrew Yang's support of the universal basic income is interesting.

Do you really think this is a problem that we can vote our way out of?

Do you really have faith that Donald Trump will do much that is really effective over the long term to get manufacturing back into the US and to prevent other countries from taking advantage of us in trade policies?

This is extremely serious business that requires perseverance and a refusal to be schnuckered. I do not see these qualities in Trump or anybody else who's in charge who agrees with you and me. I do not know what the answer is, I can only hope people wake up before it's too late.

People tend not to accept claims by right-wing national/racial chauvinists concerned about "civilizational suicide" in good faith. I'm not saying that there's anything wrong with being right wing or a national/racial chauvinist, just that in the contemporary environment, those aren't accepted by the mainstream and much of the right as being "legitimate" viewpoints.

When one is coming from such viewpoints, claims about China, Chinese stealing and cheating, the environment, etc., are regarded as polemical and deployed for political purposes rather than in good faith. After all, if one is a right-wing national/racial chauvinist concerned about civilization suicide, one implicitly holds a zero-sum view and whether or not China or the Chinese steal, cheat, like, etc. are ultimately irrelevant. What's relevant is that they are, that they exist, take jobs, spots at universities, etc. If they were angels, it wouldn't change a thing from the right wing nationalist/racialist viewpoint.

Are you calling him a liar?

Most people, right and left, aren't completely intellectually honest about their political views and motives. Lots of left-wingers bleat about, say, environmentalism for the purpose of more centralized social and economic policies.

If the Chinese were angels who had democracy and a green economy, do you think that would change anything for the like of EdR? In the contemporary environment, you have to throw up bank shots and go on about human rights, the environment, etc., because direct racialist appeals are considered illegitimate and "bad".

+1. The problem is always other people. It was the Mexicans, then the Muslims, now the Chinese. The problem is looking elsewhere instead of the mirror.

Your brother should have learned to code.

"The correct inference, I think, is that some of these colleges already have spent that supposedly forthcoming tuition money."

You can quibble with why are in the hole they are in and that's fair but what they are doing is the fiscally prudent next best step. That's why we have insurance.

More proof that Trump is bankrupting our country. We have the world's best schools. People want to come here to learn but King Covfefe had to deny some of our best paying customers who want to pay $100s of $1000s for the opportunity and get a taste of how freedom and democracy works. A calamity of foolishness all around.

Hi mouse!

Surely the Chinese elites can send their spoiled little commie brats to excellent universities in Russia, like the one you went to.

The Russians are great at STEM, especially mathematics.

Then that's $200k per student that goes into Putin's pockets instead of ours. You aren't thinking clearly.

Do worry, the Clintons will find a way to bring it back to the US.

Or the Trumps. Ivanka has a line to China, Jared has a line to Saudi Arabia, and Trump has a line to Putin. #followthemoney

What is this "we?" We never were paid any of that $200,000 per China tuition money.

We don't think "bankrupting" means what you think.

"If the question is when markets will recover, a first-pass answer is never." Paul Krugman, November 2016. Yesterday, the DJIA closed over 27,000. It was on or about 18,000 in November 2016. People's 401k/IRA's are up. Employment is up. Wages are up. Housing prices largely recovered to near-2006 peaks.

The higher education apocalypse was flagrant long before President Trump reversed decades of appeasement, treason, and weakness with China.

Putin! Putin! Putin!

We should use our leverage over the party elite on China by sending all their brats back. When they stop cheating on trade and stealing our IP then we can take the little party brats back.

I doubt they are sending their smartest munchkins here - they keep their smart ones close by. They send the progeny of the party elites to the sweet US universities.

That nation is hopelessly corrupt.

Can you give an example of IP stealing committed by China? This seems to be one of those talking points that got repeated so many times that it is now assumed to be true without strong backing or considered thought. I know for a fact that they copy some things like fake Apple stores or fake Nike's but those are small stakes and they eventually run their course and gets shutdown. A stack of fake DVD's from China isn't going to sink the American economy.

I care more about the big things. Huawei supposedly is an IP thief but when they are the technological leader for 5G there's nobody to steal from, they must innovate. DJI the world leader in consumer drones is in a similar predicament. America's tech companies are smart enough to guard as much of their secrets as possible so China does not have an equivalent to a Google, Intel, or Microsoft nor will they in the foreseeable future. The Chinese equivalents to Facebook, Uber, and Amazon came about not through theft but because the ideas are simple enough with lower amounts of technological wizardry needed and the execution is straightforward.

I just don't see a strong case for IP theft being a good angle on China. Doesn't mean it doesn't happen but the things we do hear about are weak and infrequent enough that this should not be our rallying cry against China. A focus on democracy and human rights, like retired Gen. Mattis's support of Hong Kong, fairer rules for business, and clearer, more transparent due process are more fruitful avenues to take than this fake IP business.

Huawei just got caught stealing IP again this week.

It really only takes a few minutes to come up with a rather large set of examples:

"American Superconductor Corporation (AMSC) - AMSC partnered with a Chinese maker of the wind turbine hardware, Sinovel, to sell into the Chinese market. In 2011, AMSC discovered that Sinovel had an illegal copy of the entire AMSC software code on one of their windmills. AMSC launched an investigation and found that a Serbian engineer working at their Austrian development facility, Dejan Karabasevic, had stolen the full software code and turned it over to Sinovel. In 2011, AMSC filed the largest-ever IP theft case in a Chinese court, seeking $1.2 billion compensation for their losses. Sinovel cancelled all its business with AMSC and refused to pay the $800 million it owed AMSC. Today, Sinovel still uses stolen AMSC software to power its wind turbines. It is the world’s number two, and China’s number one, provider of wind turbines. AMSC estimates that 20% of the wind turbines deployed in China today use illegal AMSC software."

https://www.prosperousamerica.org/top_ten_cases_of_chinese_ip_theft

At the end of the day, even with a court settlement against Sinovel, AMSC only managed to recover $58 million in damages. Which was a trivial amount for the sums involved.

Then there's the 1997 theft of "information, sketches, and blueprints of Dupont’s titanium dioxide facilities and processes. "

The Motorola espionage
"On February 28, 2007, a Motorola engineer named Hanjuan Jin was stopped by customs agents at O’Hare Airport. They searched her and found she had $30,000 in cash, a carry-on bag full of Motorola documents marked “confidential and proprietary,” and a one-way ticket for Beijing. ..n 2007, she returned to Chicago and resumed work briefly for Motorola, during which time she was seen leaving the office with shopping bags full of documents in the evenings.

"In 2014, six Chinese nationals were arrested for attempting to steal genetically modified corn seeds from Dupont and Monsanto experimental farms in Iowa.""

"Two engineers from Chinese supplier Huawei used a 2014 visit to T-Mobile’s labs in Seattle to steal information and even a piece of confidential T-Mobile equipment,"

"In 2015, the federal government charged six Chinese citizens with stealing wireless communications technology from two Silicon Valley microchip makers, Avago and Skyworks, and launching their own company to sell that technology in China. (Avago is now known as Broadcom.)"

"In August 2017, Taiwanese-American engineer Allen Ho was sentenced to two years in prison for providing nuclear energy technology information to China’s state-owned China General Nuclear Power Company (CGNPC). "

*chirp chirp*

So roughly a couple dozen out of 1.4 billion people or 0.000001%. That's a lot rarer than getting struck by lightning.

Spying happens all the time. It is a fact of life. You snooze you lose. Captain Bolsonaro never snoozes and never loses.

For Gary on the IP theft - the sources for direct information are numerous. Try reading some of ChinaLawBlog, or the Department of Justice arrest files on individual Chinese researchers, or just type "China IP theft" to get many individual stories. Or the technology for the high speed trains. Or, as you point out, Huawei over the last decade. I do have a real question on schools buying insurance against revenue loss - who would sell that sort of policy? I understand business interruption, but in this case - small universe of buyers with some fair amount of control over the potential losses, revenue decline at the whim of politics, and looming immediate losses - how would an insurer expect to profit on such a policy?

Globalization has been a bonanza for America's colleges, and not just from tuition paid by foreign students. America's colleges have become dependent on gifting from wealthy benefactors, as endowments (and tuition) pay an increasing share of college expenses. Large gifts have been made possible in large part because of the wealth that has been accumulated from trade, as business, bankers, and investors have thrived on globalization.

It also looks like one can under that these colleges are offering a product that is insufficiently attractive to the domestic market.

"under" should be "infer." Stupid Google keyboard.

"It also looks like one can under that these colleges are offering a product that is insufficiently attractive to the domestic market."

It seems more likely that US Colleges have just expanded their enrollment after satisfying the domestic market. At this point their catering to the large export market.

The domestic market doesn't appreciate what a science or math degree could do for them, but the overseas market sure does.

Wait... having fewer Asian students on campus is now a problem, rather than a desirable outcome engineered by admissions committees?

Liberals hate Asians for being too successful and taking minority slots that should go to historically oppressed peoples while Conservatives hate Asians for being too successful so they must be cheating and stealing like the other minorities.

Re: “already spent”: both colleges are required to be self-financing and Gies was a recent $150M gift so not sure why that inference follows. Re: insufficiently attractive to domestic market: the #2 ranked accounting department in the world? Top 10 engineering school? Maybe we can infer uninformed inferences are just uninformed inferences....

This is another way public education undermines US policy. Ready to sell their souls for their revenue source.

Better that well educated foreigners pick up the tag than raising your taxes. They pay full price too.

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