A sustained effort to upgrade human capital is needed for countries in Southeast Asia to increase living standards to those of the advanced economies. Higher education and access to it are essential in boosting long-term productivity and supporting economic outcomes that are crucial to a country’s ability to integrate into the increasingly knowledge-based global economy.

Public investment is one element in improving higher education, but fully subsidising higher education has been shown to be inefficient and expensive. Why should the public pay all the cost for individuals to attend universities when much of the gain from higher education is captured by graduates who, over their lifetimes, earn much higher-than-average salaries because of the payoff from educational investment?

Yet it is well known that, left to itself, the commercial banking market will not provide students with loans to help them finance their higher education. The disincentive for a bank lending to students is that there is no saleable collateral in the event of default, such as would be the case for the housing capital market. As well, investment returns from higher education are highly variable and uncertain.

The public spillovers and private benefits from higher education suggest that a combination of a market-based approach and government intervention will best correct the market failure involved.

In Thailand, as in practically all countries, governments have intervened to help ensure that students have access to loans. But the Thai experience with student loans over the last 15 years or so has been very unusual, even unique. The recent change of government in Thailand is likely to encourage further debate about, and reform to, student loans. The issue is a live one in Bangkok.

There are essentially two types of student loan schemes, with Thailand the only country to have experimented with both. The first is for a government to act as a guarantor for student loans provided by banks (or, equivalently, loans provided by the government) to be repaid within fixed time periods (and often with the government paying the interest on the debt for the period before the borrower’s graduation). This type of scheme is used in the United States and Canada, and was the essence of Thailand’s Student Loan Fund (SLF), initiated in 1996.

The second type of government intervention is known as an income contingent loan, in which repayments are collected through the income tax system, with repayments dependent on borrowers’ future economic circumstances. Such a policy was implemented in Australia in 1989 as the Higher Education Contribution Scheme (HECS). Variants of this approach now operate in New Zealand, the UK and Hungary. With the encouragement of then-prime minister Thaksin, Thailand introduced its own version of an income-contingent loan scheme in 2006, based on HECS, and known as the Thai Income Contingent Allowance and Loan (TICAL) system. TICAL was discontinued after one year of operation, after which a new version of the SLF was reintroduced, in 2007.

It is useful to compare the two types of loan schemes that are relevant to the contemporary Thai higher-education funding debate. The SLF, being a mortgage-type loan, means that borrowers are obliged to repay their debts over a given time period. This means that former students who have low incomes will find it relatively difficult to repay their debts. Research suggests that, for a small but significant minority of student debtors in Thailand, the so-called repayment burden — the proportion of a graduate’s income that has to be allocated to debt repayment — can be as high as 70 per cent. In most of these cases the former student will default on their debt and as a consequence face difficulties in securing loans in the future.

Another concern with mortgage-type loans such as the SLF is that, in order to minimise potential problems with repayments, governments typically offer interest rate subsidies, and these can constitute a high cost for the government. With respect to the SLF, it has been calculated that the implicit subsidy inherent in the interest rate arrangements effectively means that at least 65 per cent of the loan is in fact a grant rather than a loan. This might not matter if the goal is to help the poor to gain access to higher education, but it needs to be recognised that the SLF in essence is not a student loan.

TICAL also had its problems. One was that, due to the interest rate and repayment conditions, it was also associated with very large subsidies, perhaps similar in magnitude to those from the SLF. It is also not clear that the income tax authorities were both willing and able to collect an income-contingent loan. Sorting this out in administrative and political terms is a critical issue for contemporary debate.

There are two reasons why TICAL is likely to be back on the policy agenda in the near future. One is that it is becoming increasingly apparent that student loan policy in Thailand is in need of considerable improvement, perhaps even radical reform. The second is that the SLF was brought back in 2007 in part because of the demise of TICAL’s main political support, it being arguable that this support has reappeared in a different form.

Bruce Chapman is the Director (Policy Impact) at the Crawford School of Economics and Government. He was a consultant to the 2008 Review of higher education, which recommended most of the changes adopted by the Australian Government.

This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘Where is Thailand Headed’.

1. Financing the expansion of higher education in East Asia
2. Principles for reforming higher education in Australia: is Bradley brave enough?
3. China’s higher education revolution

Thailand went through its fertility transition more quickly than almost any other country, with the average number of children born to the average woman declining from about six to two in little more than two decades, between about 1970 and 1990.

Fertility rates have since gone still lower, now standing at around 30 per cent below replacement level (the level that would lead to long-run population stability). This does not mean that Thailand’s population has stopped increasing. Population momentum — resulting from a continued relatively high concentration of people in the childbearing ages – may result in slow population increases for up to 10 more years. But after this Thailand’s population will begin to decline unless fertility rates increase substantially from their current level, or there is net immigration.

What are the issues, then, that Thailand faces in relation to population change? One is rapid population ageing, and another is urbanisation. The latter is concentrated on Bangkok and its surrounds, but increasingly also on regional cities such as Chiang Mai, Korat and Hat Yai. Equally, the international migration balance appears to be lowering the labour force’s average education and skill levels, as Thais moving abroad tend to be better-educated than migrants coming to Thailand from neighbouring Myanmar, Laos and Cambodia.

Still, Thailand has profited in recent decades from a demographic dividend, where its earlier decline in fertility has subsequently led to a population age structure in which the proportion of working-age people is very high. Such an age structure is favourable to rapid economic growth, something which Thailand has certainly achieved over recent decades. This demographic dividend is now drawing to a close, and the proportion of working-age people is beginning to decline, albeit slowly.

Thailand is fairly well placed to deal with the additional challenges this transition will pose for economic growth in coming years. Its education system has (rather belatedly) managed to achieve a much higher proportion of students completing their upper-secondary education. But the situation is not yet satisfactory. Thailand’s National Economic and Social Development Board reported that in 2008 the retention rate in primary education, from entry to the highest grade, and in upper secondary from entry to the highest grade, was 88 per cent and 53 per cent, respectively. A further problem will be Thailand’s ageing labour force, with a declining number and proportion of workers under the age of 29.

Considerable publicity has been given to the ageing issue in Thailand. The proportion of those aged 60 and above will increase from about 13 per cent at present to about 24 per cent in 2030. Most of Thailand’s elderly are healthy and able to look after themselves. Though the proportion living with children is declining, the proportion living with children or in close proximity to children remains quite high — 71 per cent in 2007. Therefore, despite a substantial flow of younger adults to the cities, the proportion of the elderly living alone is not high, and close contact can be maintained with absent children through the ubiquitous cell phone. Material support from children has declined only modestly, some workers are insured under the social security system, and the new National Saving Scheme is designed to provide a government contribution if fund members save until they reach retirement age. The greatest challenge is the provision of long-term care for severely disabled people and those suffering from serious chronic illness, especially in view of the increasing share of never-married Thais in the elderly population — a group that will become more apparent over the next two decades — who will have no children to rely on.

Thailand’s population policy focused on reducing fertility from high levels for almost three decades. Now Thailand must consider following the example of its low-fertility East Asian neighbours — Japan, South Korea, Taiwan and Singapore — in introducing policies designed to encourage marriage and childbearing. Though the policies elsewhere in East Asia do not appear to have been particularly successful, some have been in place for too short a time to make much impact. At a minimum, Thailand should be considering more generous maternity-leave provisions than are provided at present, more flexible working hours and improved subsidised childcare.  Merely copying other countries’ policies is unlikely to serve Thailand well, as its circumstances differ considerably from its neighbours.

Population projections for Thailand suggest that fewer than five million people, and very likely only one million (less than 2 per cent), will be added to the population before growth ceases. Bearing in mind continued population movements from rural to urban areas, this means that some regions will witness a drop in population because the growth of towns and cities in these areas will not fully compensate for rural depopulation. Planning for population decline is important to any country’s future, and Thailand can profit from the experience of European and East Asian countries that have had to manage population decline in rural and regional areas.

Gavin Jones is the Head of the Division of Demography and Sociology, Research School of Social Sciences of the ANU and was the Coordinator of the Demography Program of the ANU’s College of Arts and Social Sciences from 1990 to 1996.

This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘Where is Thailand Headed’

1. Population prospects in East and Southeast Asia
2. Australia’s population policy and the resources boom
3. Paying for higher education in Thailand

The death toll from Thailand’s worst floods in more than half a century is more than 600, millions of hectares of farmland have been inundated, 20,000 factories and plants have been damaged, some that are not likely to reopen, leaving at least 1.5 million unemployed.

As the clean-up continues, accusations of incompetence and corruption in the management of the crisis and the allocation of relief, have dominated the media and the Parliament.

The good news is that, for the first time since September 2006, when a military coup deposed the government of Thaksin Shinawatra, the country has a leadership whose legal and electoral legitimacy is acknowledged by a large majority of Thais. It is a government that decisively won a fairly contested election. It is also a government that has an opportunity to reduce, though perhaps not eliminate, the severe polarisation that has taken place in Thai society in the last decade — during Thaksin’s five years of government and in the five years of turmoil following his removal. To do that, the government led by the Pheu Thai Party of Prime Minister Yingluck Shinawatra, Thaksin’s younger sister, will have to implement the program of populist redistribution for which it has an electoral mandate. More importantly, it will also need to tackle Thailand’s long term underlying economic and social problems.

The latest issue of East Asia Forum Quarterly (EAFQ) addresses the challenges that now confront Thailand. They  include economic problems, some of which result from the difficulties of financing the promises on which Pheu Thai was elected, but also the deeper issues of competitiveness arising from the country’s outdated educational system and its ageing population. There are also problems along the borders, especially the Cambodian border, and the very different problems of the Muslim-majority southern provinces bordering Malaysia. As the six-decade reign of the 84-year-old monarch, His Majesty King Bhumibol Adulyadej, approaches its end, there is also uncertainty and disagreement about the royal succession, about which the law stifles public discussion.

In this week’s lead essay, Peter Warr, editor of this issue of EAFQ, observes that, on the economic front, Thailand is caught in a middle income trap — stalled in its ambition to graduate from a middle income to a higher income (OECD level) economy.

Progress from middle-income to higher-income levels requires a different kind of policy reform from that which lifted Thailand from backwardness to modest, if unevenly distributed, wealth over the past thirty years. Trade and other market reforms in that period saw income growth spurred by the accumulation of physical capital and people lifted out of poverty as the share of low-skilled, labour-intensive manufacturing output rose. Escaping the middle income trap, as Warr says, requires ‘addressing a market failure that the private financial system cannot resolve: the undersupply of human capital. Human capital is a crucial input, created primarily by investment in education, broadly defined. But it differs from physical capital in that it does not provide the collateral that can ensure repayment of loans. Unlike physical assets, human beings can walk away. The private financial system is therefore unable to support investment in human capital. Individual families can and do invest heavily in the education of their own children, but because their resources are limited and because the recipient of the educational investment reaps only part of the returns it generates this is insufficient to prevent the overall underinvestment in human capital’.

This is where national policy is critical and a raft of complex institutional reforms have to kick in.

Among the reforms that Warr identifies as important are reforms to Thailand’s antiquated systems of primary and secondary education, the single greatest impediment to long-term economic progress in the country; reforms aimed at lifting the long-term productivity of Thailand’s masses of unskilled and semi-skilled workers; reform of the country’s regressive and inadequate tax system; and reform of governance systems aimed at reducing corruption. Thailand’s version of economic populism will waste public revenue, feed corruption, and divert attention from dealing with the sources of long-term improvements in human productivity.

Unless Thailand deals with these issues, as Warr says, ‘the jaws of the middle-income trap will surely remain closed’.

Peter Drysdale is the Editor of the East Asia Forum

1. Thailand in 2011: a year of surprises
2. Thailand, a nation caught in the middle-income trap
3. Paying for higher education in Thailand

Asia is not without notable examples of women who have made it to the top in the political arena, but this does not mean the gap between male and female participation in politics is anywhere near being closed.

And while many women have played a pivotal role in the modern politics of various Asian countries, it would be wrong to think that the ability to reel off a list of political stars is an indicator of wider participation. China’s political structure has not limited women’s access to politics, business or social affairs since its 1949 revolution. In fact, access for women is widening; a phenomenon supported by the nation’s relatively inexpensive childcare system and broad educational opportunities. But this easy access has evolved in different ways for women in the private and public spheres.

Female business leaders have thrived in recent decades. The 2010 Hurun Report’s List of Self-Made Women Billionaires noted that 11 of the world’s top 20 independently wealthy women are Chinese. Yet the percentage of women among the Chinese government’s top leaders, especially members and alternate members of the Central Committee of the Chinese Communist Party, shrank from 11.4 per cent in 1977 to 7.6 per cent in 2002. While women serve as officials in more than 80 per cent of the country’s provincial-level governments, only about 8 per cent have a woman in the top position. This gender discrepancy between private and public sectors partly illustrates the unbalanced development pattern in China: the nation now has a rapidly maturing market economy alongside a political system that has shown relatively slow progress on reform.

In general, two obstacles stand in the way of real progress for women in China’s political sphere. One is perception, and the other is reality. Many Chinese men tend to think that women lack the capacity to engage in politics. But this field is about people who take the lead in making collective decisions; a process which requires wisdom, vision, management skills and the ability to lay, execute and revise plans. These abilities are not gender-specific. And today, as more women undertake higher education and hone their professional skills, this demographic is more prepared than ever to take on political responsibility.

But sometimes misconceptions about women are a result of how women see themselves. In many places, women accept traditional, secondary roles in the context of family and society, as they believe that being attentive and obedient are virtues. This perception can be altered when female role models become more visible in political, business and social circles, and as more women assume active roles in day-to-day business and social affairs. At Caixin Media, women account for more than 60 per cent of newsroom staff. Their achievements have put them at the top of China’s journalism industry.

The second obstacle is the reality of the system. We can hardly expect that situation to change overnight, despite well-intentioned legislation and regulations. India adopted a constitutional amendment in 1994 that stipulates one-third of seats in village-level government bodies must be reserved for women. This raised the ratio of female village heads — but the official posts won by women in India are not necessarily powerful. And in many cases, seats reserved for women are left unfilled, or are eventually assumed by men.

In reality, it can take a long time to change minds in a traditionally patriarchal society. Even in Kerala, the Indian state that successfully broke the caste system and whose Human Development Index is comparable to that of developed nations, female leaders more often serve as representatives of parties and their policies, not as advocates for women. Besides, only a minority of Asian women are conversant with their legal rights. This lack of awareness about the rights and privileges available to women hinders the impact of legal remedies.

Georg Simmel wrote in Female Culture that the world has no neutral, ungendered culture because, ‘with the exception of a very few areas, our objective culture is thoroughly male’. He also said that outstanding performances by women are celebrated as ‘thoroughly manly’. Modern progress in Asian societies has disproven this. Female characteristics are increasingly recognised and included in common notions of leadership. For instance, micro-finance banks often lend to women, as they tend to be less selfish as family leaders, fairer and more resilient to outside pressure. This same conclusion is reflected in a lower corruption rate for female leaders and a higher probability that a government will adopt people-oriented policies while giving proper attention to social welfare and public benefits.

Women are accepting multiple roles in society and in their families. Sometimes these roles conflict, usually due to friction over social norms and popular expectations. For Asian women to participate more actively and widely in politics, to make having female leaders at the top the norm rather than the exception, and to broaden the horizons of the political scene, we need new thinking within and across borders. That can only happen if we make the voices of women heard, ensure women’s actions are visible to the public, and approach political participation with firm determination.

Hu Shuli is Editor-in-Chief at Caixin Media, publisher of Century Weekly, China Reform and the English-language Caixin Weekly: China Economics & Finance.  An earlier version of this article was published by Global Asia

1. Will China change the region or end up changing itself?
2. China’s changing intergovernmental relations
3. China’s rising sex ratio at birth

Eclipsed by the clamorous debate surrounding a 14 year-old Australian boy allegedly caught purchasing marijuana in Bali recently, some important developments in Australia’s relationship with Indonesia went largely unnoticed.

In Jakarta, 20 Australians and Indonesians met at the inaugural Indonesia-Australia Dialogue (IAD) on 5–6 October. The IAD, aimed at boosting people-to-people links between the two countries, comes on the back of Prime Minister Julia Gillard’s earlier announcement of a Ken Henry-led White Paper, Australia in the Asian Century, examining ways that Australia can best engage with and benefit from the economic growth of Asia — including Indonesia. One issue relevant to the IAD, and which the White Paper will undoubtedly confront in its inquiry, is the appalling state of Indonesian language learning in Australia.

Federal government figures report that between 2005 and 2008 less than 1 per cent of Year 12 students in Australia were enrolled in Indonesian language courses. Additionally, Murdoch University research released this year suggests that there has been a 30 per cent drop in student enrolments for Indonesian language learning among most of the Australian universities that taught the language between 2002 and 2009. Although three Australian universities have reported a slight increase in Indonesian language students this year, the overall trend is alarming. And this is especially true in light of Indonesia’s current and future economic growth potential: the country is currently the third-largest economy in the G20 — behind China and India — and according to a recent Citibank report is expected to become the world’s fourth-largest economy (PPP) by 2040.

The shrinking number of Australian students with Indonesian expertise, then, is a significant problem to which the White Paper and the IAD need to turn their attention if Australians are to truly understand and benefit from Indonesia’s rapid economic and strategic growth. But in the struggle to have more young Australians studying and developing expertise about Indonesia, boosting language learning alone is not enough.

The few students who study Indonesian at Australian universities graduate with specialised language skills as well as an understanding of the culture, politics, economy and legal system of an important neighbour to Australia. Yet Australian employers are not capitalising on these skills.

As an example, many Commonwealth government department graduate programs with a strong presence in Indonesia, such as AusAID and the Department of Foreign Affairs and Trade (which houses its largest embassy in Jakarta), seek talented generalists, not regional specialists. As a consequence, graduates in these programs, who have spent years cultivating specialised country-specific skills, may spend most of their careers working on a country for which they have no relevant background. Similarly, private sector graduate programs in businesses with a strong presence in Indonesia do not promote opportunities for graduates in Australia with specialist Indonesian skills.

This sends a clear message to students that some of the country’s largest employers — including the federal government, that is itself calling for greater Asia literacy — are not interested in employing graduates with specialist Asia-focused skills. Graduates may then ultimately work in jobs where they do not apply and cultivate their expertise, or they might work in-country, but not always for Australian organisations.

If Australia wants to capitalise on the economic growth in Indonesia and elsewhere in Asia then Australian students need to develop Indonesian language and other specialised skills; but career opportunities where these Asia-literate graduates can use their skill-sets to the benefit of Australia’s prosperity must also be created.

One way of doing this is for Australian employers to offer graduate programs that create more Asia-focused opportunities for young graduates. Commonwealth government and private sector graduate programs, for instance, could seek out graduates with specialist Indonesian or other Asian skills, rather than generalists, and offer opportunities to rotate through Asian offices in the early part of their careers. This would allow departments to make use of the expertise that graduates have developed at university, and encourage graduates with an interest in Indonesia and Asia more broadly to work for Australian organisations, rather than seeking opportunities abroad.

If enrolments in Indonesian language courses have any hope of increasing in Australia, students must be able to see that Australian employers value this knowledge. By offering more Indonesia-focused career opportunities, it will hopefully be young Indonesia-literate Australians, rather than tourists caught up in drug scandals in Bali, who come to dominate the relationship.

Arjuna Dibley is a Bachelor of Asian Studies/Laws student at the Australian National University and is currently finishing his degree in Jakarta as a Prime Minister’s Australia Asia Award scholar. 

1. Asia literacy: making a good policy better
2. Australia’s Asia literacy and an Asia Pacific Community
3. Beijing and the reality of international competition

China is a united multicultural country. The development of each national minority (with its unique language, culture, location and shared experience) has different requirements and the educational needs of each nationality within China involve unique challenges.

1. Wanting an education in rural China
2. Private higher education in China and India
3. Indian education system: Crying out for speedy reforms

Choson Exchange recently prepared a program for North Korean students to learn business, finance and economics overseas through university courses and internships.

They consulted a range of North Koreans on how it should structure such a program and ‘the Australia National University’ often came back as the model to follow. Up until 2006, ANU hosted North Korean trainees studying economics under programs supported by international and Australian aid agencies. The Australian exchange program was clearly well-regarded by outward-looking North Koreans.

But what would Australia gain from such programs?

A resolution to the constant series of crises on the Korean peninsula is obviously in Australia’s interest. Conflict on the Korean peninsula can destabilize the region and in a worst-case scenario draw China and the United States into a military conflict involving Australian troops. This would cause incalculable harm to the Asia-Pacific economy because of its impact on all the major Northeast Asian economies, not to mention the human cost of conflict. Australia also has long and particular historical interests in commerce with North Korea.

There are some things that Australia can facilitate for North Korea which is in their mutual interest, but which neither the United States nor South Korea can provide anytime soon. The opportunity for North Korean students to study economics, business or law in Australia in long-term university programs is one such crucial shared interest. Yet such programs are currently impossible because of autonomous sanctions in place since 2006 that deny visas to visiting North Koreans. This policy is counter-productive. It trades off the ability to shape longer-term outcomes on the Korean peninsula for short-term public displays of opprobrium. The only countries whose sanctions can hurt North Korea are the countries that actually trade with it. This policy is also unusually harsh of Australia. The United States takes a more nuanced stance by allowing visits by North Koreans for some purposes while publicly preventing political delegations to express its political support for US allies, chiefly South Korea. Similarly, Australia can publicly express its disapproval of current North Korean activities alongside efforts to develop exchanges that shape a future that goes beyond the present stalemate.

These educational exchanges provide Australia with an effective way to shape longer-term dynamics on the Korean peninsula. One way the Korean crisis will end peacefully is when North Korean elites calculate that benefits of economic integration with the rest of the world are great enough to make the costs of confrontation unsustainable. Overseas education can shift this cost-benefit calculus because it equips a new generation of North Korean leaders with the knowledge and the networks to benefit from international trade and integration.

Choson Exchange recently placed a North Korean student in an internship with an international consulting firm. Without such networks, the opportunity would not have materialized. The student also needed coaching on how to explain why his prospective-employer might find value in taking him on. He assumed that a good score on an international English test was the qualification he needed even though most selective employers see fluency as a minimum threshold, rather than a core selling point. This experience helped us see things from the North Korean perspective: there are hardly any commercial benefits to speak of when one lacks knowledge and networks to realize those benefits.

Now is the time to help build this knowledge and network base. North Korea has been active over the past year setting up institutions to promote economic development. This includes the State General Bureau of Economic Development, the Daepung Group, and the State Development Bank.  Choson Exchange has led finance workshops with the State Development Bank, and Bank managers agree that training is needed and appreciated. By helping to educate the next generation of North Korean businessmen, economists, financiers or lawyers who will eventually fill these institutions, Australia can play a role in shaping these emerging institutions in North Korea, institutions that could have important ramifications for how North Korea interacts with the rest of the world in the future.

Australia has the opportunity to redefine how such exchanges are conducted. To maximize impact in developing institutions in Pyongyang, we need to think in terms of a “talent pipeline.” We need interlinked programs targeted at different age-groups: training workshops targeting senior or middle management at these institutions, overseas scholarships targeted at university students or recent graduates, and a way to bring both groups together to help maximize opportunities for scholarship recipients to move into the emerging institutions.

Australia has the base from which to take initiatives with North Korea. The North Korean institutions that are looking outwards explicitly seek to build on what has been done with Australia, and specifically through the Australian National University program for training in economics. A comprehensive settlement of the Korean problem is much more likely if we begin again to put this infrastructure in place and help with institutional development in North Korea.

Geoffrey K. See is an Executive Director at Choson Exchange, an organisation dedicated to economics, business, finance and legal training in North Korea and a University Fellow at Yale University. Choson Exchange runs discussion-based workshops, global internships and overseas academic programs for young North Koreans with a focus on helping specific North Korean institutions build institutional capacity.

1. Australia flat-footed on North Korea?
2. North Korea: new opportunities in a post-Kim Jong-il landscape
3. Economic performance and legitimacy in North Korea

The recent flare-up over the Diaoyu Islands—a Chinese fishing boat captain was arrested by the Japanese Coast Guard—has followed a well-worn script. An international incident, say, the publication of a Japanese textbook, the bombing of a Chinese Embassy or pro-Tibet protests in France or even a disputed football match, quickly leads to protests in China, which are quickly defined as ‘nationalist’.

The international press duly reports on outraged citizens shouting slogans, bearing flags, threatening boycotts and some form of retaliation against those who have dared to offend China (The New York Times article of September 19, 2010 features a photograph of a bellicose bare-chested man with a tattoo of the national flag). Government spokespersons tell the world that the ‘feelings of the Chinese people’ have been offended. But, generally speaking, within a week or so the protesters are gone and the causes for which their fury ascended like a whirling dervish become mild breezes. To wit: for all the bluster of Chinese ‘nationalists,’ French products and stores were not boycotted after the pro-Tibet protests, Japanese cars and electronic products remain highly prized, and applications to American colleges and universities have not declined because of dissatisfaction with American policies or actions. When observing the contemporary China scene a gambling man would never lose by betting long on economic self-interest over any contemporary ‘ism’.

I raise these issues to make a larger point about how we empirically evaluate any sentiment or ideology in China, whether it is nationalism or Marxism. Now is a particularly opportune time to think about this given the widespread acceptance of the notion that ‘nationalism’ replaced Marxism-Leninism-Mao Zedong Thought as China’s reigning ideology in the reform period.

What is the evidence for this?

Yes, it is true that the government has promoted ‘patriotic education’—but it is not clear that this campaign—which began, not coincidently, after the 1989 legitimacy crisis—has worked, that people who are otherwise quite cynical about corruption, the education system and rampant materialism would suspend their disbelief and become ‘patriots’. What about all of those ‘nationalists’ who stage colorful street protests and shout slogans, vent on the web or hack foreign websites? They are, overall, a tiny sliver of the Chinese population, and unrepresentative at that. The American Tea Party has a flair for the dramatic, but one could hardly conclude that ‘Americans’ share their sentiments about the government.

I would suggest that it is critical to examine long term behaviors and commitments as a more accurate measure of patriotism in China, or anywhere else. Are Chinese economic nationalists? By the measure of calls for boycotts and statements of outrage at ‘x’ (take your pick: the US, Japan, France), yes; by a sustained boycott that requires sacrifice? Not really. There is no evidence that Chinese consumers prefer ‘Made in China’ products because they are manufactured in China and support Chinese workers.

The same can be said about military matters, both historically and in the present. During the Korean War, for example, the Chinese government mounted a propaganda campaign to mobilise support for the war (‘Resist American, Support Korea’). Unsurprisingly, the state media produced evidence of ‘rising nationalism’: protests, citizens happily contributing money to buy bullets for the army and the like. Many Western analysts concluded that Chinese supported the war, and the government enjoyed heightened legitimacy as a result, despite the high costs and stalemate.

But what happens if we shift the spotlight away from easily mobilise-able populations, like students, government workers and the press? Materials in archives, unlike newspapers and film clips, reveal that many ordinary citizens in Shanghai objected to the war, were confused about its objectives and admired the United States for its high standard of living; fear of reprisal should they not contribute to the war effort led many to hand over their money; peasants were often forced into the army and recruiting officers resorted to lies to recruit them; landlords and other ‘class enemies’ were sent to the front to fight the CCP’s war. When soldiers returned from the war, they were not treated well by employers or their fellow citizens, even those who were supposedly most exposed to state propaganda in cities.

The same sorry story repeated itself after China’s brief war with Vietnam in 1979: ballyhoo in the press and expressions of outrage against Vietnam, but archival documents show that veterans had a very difficult time taking advantage of their patriotic status when they sought better employment. Wives of military personnel soldiers could not easily capitalise in their status either. During the Cultural Revolution, when urban youth were parading around the county wearing military uniforms, investigations by the Shanghai Supreme Court revealed dozens of cases involving the rape of real soldiers’ wives, and soldiers who went AWOL seeking to avenge the crime. In fact, there is little conventional wisdom in Chinese politics that can survive the test of archival data unscathed.

Nationalism is a convenient concept for Western analysts to use—it ‘fits’ the way Westerners understand their own history and seems to explain various protests. But there is little documentary evidence that nationalism, Marxism or even hatred of Japan motivated millions of peasants to support the CCP in its rise to power. Nationalism did not prevent the bloodletting of the Cultural Revolution or contribute to better treatment of those who served their country in wartime or peacetime. At the moment, and until more archives are opened, we do not know how many current day ‘nationalists’ or ‘patriotic hackers’ are on the government payroll and directed by the party.

In the meantime, I would rather take the long-term view and ask: do the speeches and online chat result in meaningful, long-term action, and are they even authentic? Does evidence about actual behavior match the evidence from orations and comments to reporters? As with anything that we deem significant, the proof has to be in the data pudding.

Neil J. Diamant is an Associate Professor of Asian Law and Society at Dickinson College, Pennsylvania.

1. Chinese nationalism and where it might lead
2. The anniversary of the 1999 Chinese embassy bombing
3. Territorial disputes in East Asia: Proxies for China-US strategic competition?

As Japan watchers warn that the island nation is becoming more insular, the government’s newest bid to internationalise Japan’s stuffy higher-education system, the misnamed Global 30, is off to a wobbly start.

The goal was to recruit 30 universities and support their internationalisation efforts. Beginning last year on a 3.2 billion yen, or about US $38 million, budget, the project aims to significantly increase the number of foreign students in the country and Japanese students studying abroad.

But the education ministry’s tough selection criteria mean that just 13 elite universities have been chosen so far. Government cuts have already shaved up to 30 per cent from the budget allocated to each institution. And the remaining 17 spots open to universities are unlikely to be filled, according to two administrators at universities in the exclusive club.

‘It’s disappointing,’ says Go Yoshida, a spokesman for the Office of International Strategic Planning at Nagoya University, one of the 13 selectees. ‘Quite honestly, Japan is late in the game of globalisation in higher education. But the government’s left hand doesn’t know what its right hand is doing.’

The stakes for this island nation are high. After more than two decades and billions of yen in scholarships, fewer than 4 per cent of Japan’s university students come from abroad. Only 133,000, well below China, with 223,000, and the United States with 672,000. Just 5 per cent of its 353,000 university teachers are foreign, according to ministry of education statistics. Most of those teach English.

At the opposite end of the education pendulum, students here are increasingly staying home: Japanese undergraduate enrollment in American universities has plummeted by more than half since 2000, estimates the ministry. Japanese student enrollment in European institutions is also down.

‘Frankly, in my view Japan is going backwards,’ says Ian de Stains, executive director of the British Chamber of Commerce in Japan, and one of many observers who believe that despite government rhetoric about internationalisation, Japan is becoming more isolationist. ‘The big danger is that Japan will lose touch and fail to compete globally.’

South Korea, with less than half Japan’s population, sends twice as many students to the United States. At some American universities, such as Cornell, the number of Japanese students is behind not just the number from China, India, and South Korea, but even from Thailand and tiny Singapore. The drop is without precedent,’ says Mark Selden, a senior fellow at Cornell’s East Asia program.

Global 30 is supposed to partly remedy those ills, helping Japan reach a government goal of 300,000 foreign students by 2020, while sending the same number of Japanese students abroad.

Participating universities receive an annual grant of 200-400 million yen (between US $2.4 million and  US $4.8 million) annually for five years to employ foreign faculty members and English-speaking support staff, and to create new all-English undergraduate courses. Each university is also required to set up offices outside Japan, both to recruit locally and help Japanese students study in other countries.

Japan’s education ministry hopes that its modest commitment will help transform the country’s academic landscape by luring more international students and generating more collaboration between foreign and Japanese professors.

‘We think those universities will set an example for other colleges by leading with good practice,’ says Shigeharu Kato, deputy director of the Higher Education Bureau at the ministry. ‘This practice will then diffuse to other colleges around the country.’

With Japan’s population falling and dozens of private colleges facing bankruptcy, the government has little choice but to look beyond the country’s borders. Education specialists agree that tripling the intake of foreign students will expose their Japanese counterparts to the world, and could help create a cadre of foreign academics who studied in Japan.

But while praising the Global 30 program, some are questioning its focus on elite universities. Priority was given to large institutions with proven research capacity, such as the University of Tokyo and the private Waseda University, says Akiyoshi Yonezawa, an associate professor at the Center for the Advancement of Higher Education in Tohoku University, another of the 13 selected institutions.

Tough Demands

‘Smaller and midsized institutions, despite satisfying many of the strong international criteria, were eliminated from the selection process,’ he says. He adds that some of the country’s best universities, such as the Tokyo Institute of Technology, were driven away from the program by its demands, which included raising the percentage of international students to 20 per cent and the share of international professors to 10 per cent by 2020.

Paul Snowden, dean of Waseda’s School of International Liberal Studies, says that institutions that have achieved success attracting international students should have been rewarded for their efforts but instead were disqualified for having already met the ministry’s goals.

Half of the students at Mr. Snowden’s institution are from abroad, he says. But despite this accomplishment, three other Waseda faculties-the departments of political science; economics, science and engineering; and social sciences – were selected for the Global 30.

‘It was flattering, but disappointing, that basically our curriculum had been imitated by the ministry and disseminated to other places, but we weren’t allowed any of the money,’ Mr. Snowden says.

He questions whether the ratio the School of International Liberal Studies has achieved can be replicated by others. ‘I’m pretty sure that extreme case is not going to be achieved by more than a handful of institutions in Japan, though.’

Despite the concerns about the new program, Mr. Kato of the education ministry says Global 30 is now taking off and is ‘almost at cruising altitude.’ And there are some signs to support that.

Nagoya University’s Mr. Yoshida says the roughly US $3.5 million it received has helped the institution raise its intake of foreign undergraduate and graduate students by 170, and open new offices in Germany and Uzbekistan.

Yet the colleges and the ministry have been frustrated by cost cutting ordered by the Democratic Party of Japan government, which took power last year just after Global 30 was approved. Nagoya’s government support, for
example, will shrink by 27 per cent in its next fiscal year, which starts in April. ‘We’re just starting to launch this and the cuts have come. And we fear more are due,’ says Mr. Yoshida.

Some believe that the government may be switching priorities to a separate effort called Campus Asia, which is intended to harmonise China, Japan, and South Korea’s colleges and ultimately keep more students in the region. A working group from each of the countries is set to meet in China this year, with the project officially starting in April.

Little Fiscal Legroom

With the worst public debt in the industrialised world, 900 trillion yen or US $10.6-trillion, Japan has much less fiscal legroom than its competitors. That is likely to mean careful scrutiny of all education spending and a demand that colleges and the education ministry deliver more bang for the government’s buck.

Even if this year’s cuts were reversed and the government met its financial commitments to Global 30, Mr. Yonezawa of Tohoku University and others doubt that the student targets are attainable without major reform outside the education system. ‘It is impossible to achieve this sort of internationalisation only with Global 30,’ he says, adding that Japan needs to focus on its second- and third-tier colleges. He also urges major changes in the labor markets and among Japan’s conservative companies to give foreign graduates an incentive to stay and work in the country.

Despite these looming issues, Waseda’s Mr. Snowden is among many who believe that Japan is still in the race. ‘Japan is indeed late in the game. But with much interest from Korea and China, I think it can find a new role as an international education base’ within the region.

David McNeill writes regularly for the Irish Times and the Independent, teaches at Sophia University in Tokyo, and is a coordinator of Japan Focus.

This post originally appeared at The Chronicle of Higher Education.

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3. Private higher education in China and India

China and India are often perplexing to analysts. One of the best examples of such shared perplexity is over higher education. From the vantage point of western education service providers, China and India are typical cases of being ‘so near, yet so far’.

This need not be the case. Both China and India wish to expand their higher education sector. Both realise that government efforts alone are insufficient to match the growing demand for higher education. And both China and India realise that private initiatives are needed to supplement existing state-led efforts to improve higher education facilities.

In this context, both have been trying hard to create an enabling environment for private education service providers, particularly foreign ones. China, in September 2003, invited foreign universities to set up campuses. India introduced a similar Bill in March 2010.

What are some of the problems facing foreign service providers seeking to invest in education in China and India?

First, both countries are used to seeing the public sector as the sole provider of education services. Their higher education architecture has evolved consistently with such a monopoly. Shaking off this legacy and shifting to a market-based system is not easy. China is, relatively speaking, better placed to manage this transition, since it begun reforming its education sector before India did.

Second, from the perspective of foreign education providers, China and India offer deep and wide markets. But while the size of the domestic market is the key determinant of their interest, there are many additional operational challenges for foreign providers.

Cultural dissimilarities, particularly language barriers and unfamiliarity with local market conditions, cause particular difficulty. These problems are neatly categorized as ‘information asymmetry,’ which is a problem that occurs when entities from entirely different markets interact with each other. This is a major issue.

Information asymmetry first became evident in the 1960s, following growing amounts of patented technology transfer from developed countries to developing countries. But the current asymmetry is more one-sided; education providers argue that recipients know more about their services than they do about the recipient market conditions.

This lack of information initially confined foreign education providers in China and India to distance education programmes and efforts to recruit students for home campuses. These latter efforts have been successful. China and India have become leading exporters of students to higher education institutions in the US, the UK, Canada, Australia and Europe. Lately, Singapore, Hong Kong and New Zealand have also become popular destinations for Chinese and Indian students. But as foreign providers have shifted to more ambitious models of service provision, including setting up campuses in host countries, problems have begun surfacing.

India’s latest initiative for attracting foreign universities may not receive a euphoric response. India’s cupboard for foreign campuses is almost empty, barring rare examples such as the Leeds Met in Bhopal or the forthcoming Georgia Tech in Hyderabad. And even after the latest Bill becomes an Act, information asymmetry will remain a problem.

In China, degree-granting foreign institutions need to collaborate with a local partner. In India, while the Bill allows for institutions to function ‘independently or in collaboration’, most providers will scout for partners for better management of local operations. Lack of adequate knowledge about varieties and systems of local educational institutions will make the search for the right partner a long and arduous one. Further, in India, worries will be significant on account of the limited outreach of the independent regulatory authority. Out of India’s 18,000 colleges affiliated to central and state universities, a little more than 6,000 are recognised by the University Grants Commission.

In addition, foreign providers also find the involvement of central and provincial authorities in managing education difficult to comprehend. This excessive involvement plagues both China and India.

Thus, as much as they understand the virtues of digging into the two countries, foreign higher education service providers are baffled by the complexities.

But there is a way out. Foreign providers must be patient and persuasive. The University of Nottingham in Ningbo, China, and the Xi’an Jiaotong Liverpool University, also in China, are good examples of fruitful investment projects. These investments are a useful guide for the Indian market. They show that, if foreign service providers are prepared to wait, and comply with the relevant regulations, they can achieve a profitable outcome that is good for all parties.

Amitendu Palit is a visiting senior research fellow at the Institute of South Asian Studies in the National University of Singapore.

An earlier version of this article was first posted here at The Financial Express.

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