Arizona’s edge relies on Chinese influence

Chinese influence in Arizona comes in many fruitful forms: thousands of bright students leading technological advances, the largest segment of international tourists, and hefty investment in real estate, hospitality and other businesses.

University, tourism and other state officials are gratified. Their hard work in developing close relationships with China has paid off nicely. Arizona ranks among the top in the nation for number of Chinese students. Chinese tourism grew 286 percent from 2000 to 2017.

But restrictive policies inside and outside of U.S. control are making the choice to come to the United States less appealing. For one, in its effort to protect national security, the White House has cast an unfriendly eye on Chinese business transactions and students, making entrance to the U.S. more difficult.

A number of other issues foreshadow trouble ahead:

Chinese investment in the U.S. almost disappeared last year After years of growth, investment plummeted 83 percent in 2018, according to several independent research firms such as the Rhodium Group. Direct investment fell to $4.8 billion, down from $29 billion in 2017 and $46 billion in 2016, Rhodium reports. In addition, Chinese investors are selling off their American assets at a record pace.

Policies from Washington D.C. and Beijing Restrictive policies have squeezed investment flow. In the U.S. last year, the Foreign Investment Risk Review Modernization Act was changed to expand the scope of “covered transactions” with China to allow the U.S. government more authority to heavily scrutinize even small foreign investments if they involve sensitive technologies. The Chinese government, in turn, has been focusing inward, suppressing outbound investment.

Restricting student Visas White House sentiment tipped away from welcoming Chinese visitors and students last year when the Trump administration started restricting visas for Chinese graduate students in some sensitive high-tech fields to one-year instead of the previous five years.

Unfriendly skies Long delays and wait times for visitors at customs and entry points are causing negative impressions about travel for more than 100 million past and potential visitors, according to data from the U.S. Travel Association. Forty-three percent of overseas travelers  recommend avoiding travel to the U.S. because of the long entry process. By deterring travellers, the U.S. is setting itself up to lose up to $95 billion and 518,000 jobs, U.S. Travel estimates.

While national security is of first concern, there are more instructive ways to keep American technology safe and prevent further deterioration of Chinese interests in the U.S., education, tourism and business advocates said.

Chinese students alone represented $14.9 trillion in economic impact to the U.S. in 2017, according to the non-profit Open Doors Institute. Currently, more than 350,000 Chinese nationals attend American colleges and high schools, representing one-third of all international students in the U.S.

Arizona ranks 12th in the country for international students. Of the 23,000 students, more than 35 percent are from China, according to the 2018 Open Doors annual education report. About 4,000 attend ASU, which has nearly 13,500 international students on its Tempe campus. International students spend an estimated $717 million in the state, the report shows.

“These students are incredibly important for Arizona. They don’t just pay tuition. They spend in our economy and their families come to visit,” said Matt Salmon, vice president for government affairs for Arizona State University and a former Congressman and member of the House Committee on Foreign Affairs.

“If you’re a student coming from overseas, you’re paying full freight,” said Salmon, a fluent Mandarin speaker who is assisting ASU in advancing its global strategy. “Our in-state students pay roughly over $10,000 a year in tuition while Chinese and foreign students are paying over $30,000.”

While international students continue to flock to the U.S., new enrollment is seeing a drop for the first time in years. New international student enrollment fell by 6.6 percent at U.S. universities in fall 2017, according to the most recent data.

“Chinese students make up about 40 percent of our international student population, so we are monitoring the situation carefully and are working to make sure that Chinese students, like other students, know they are welcome at the U.A. and that they have an excellent experience while here,” said University of Arizona Vice Provost of International Education Brent White.

After some years of decline, China numbers have stabilized at the UA, White said, in part due to a broader diversification strategy including adding 400 students at its micro campus in Qingdao.

Chinese tourism also is flush right now but there are signs of deterioration. In Arizona where  Chinese tourism makes up the state’s fastest-growing international market, growth has started to shift downward. After jumping 20 to 22 percent annually for years, growth dropped down to 6 percent in 2018, according Becky Blaine, Deputy Director of the Office of Tourism that works aggressively to attract and connect with new Chinese markets. Chinese tourists spent $326 million in Arizona in 2017.

As visitors to the U.S. are trending down, China’s population is growing. Arizona officials are doing their part. Now, the U.S. needs to move quickly to preserve this important market that today is third largest for overseas visitation. Without action, the U.S. could be left out in the cold, business and tourism advocates said.

While some factors are out of the country’s control, including increasing competition from other countries, there a few important reforms that could address national security without alienating law abiding visitors. The U.S. Travel Association, U.S. Chamber and other national industry groups support a number of reforms including:

Expand the Visa Waiver (VWP) Program Currently 38 countries participate in this program that allows citizens of these countries to travel to the U.S. for tourism, business, or while in transit for up to 90 days without having to obtain a visa. That leaves millions of potential visitors  from countries that are not included in the VWP program – like China, Brazil and India – faced with more entry processing obstacles, thus discouraging travel to the U.S.

Grow the Transportation Security Administration’s Precheck Program Expansion of the program would free up TSA screeners to focus resources on higher-risk passengers and expedite screening of low-risk, pre-vetted travelers.

Rethink recent restrictions on Chinese students and business The White House has made it more difficult and cumbersome for students and student workers to obtain visas and worker permits. Measures to expand, not limit, the H2-B and J-1 visas that are granted to temporary non-agricultural guest workers and to researchers, professors and others for cultural exchanges and medical and business training within the U.S.

Protect funding for Brand USA The federal program is funded without tax dollars and has proven to be successful at recruiting international visitors. The program is funded through a mix of donations from more than 700 partner organizations and fees from international travelers.

Arizona and the nation’s economy depend on preserving its ties with China.  

“Our goal is to continue getting as many visitors here as possible,” Blaine said. “Tourism is the economic gateway to economic development.”

Victoria Harker

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