On a dusty sidewalk outside the U.S. embassy in Beijing, just before the fall academic semester of 2002, two dozen Chinese students assembled under the nervous watch of public security officers. They hastily pulled on white t-shirts as a symbol of hope.

It was not to be the protest that some feared. The students wanted to deliver a letter to the American ambassador on behalf of hundreds of Chinese students who, like them, had been denied U.S. study visas. Several top American universities lent their support, sending a flurry of angry letters to the embassy.

Less than a year had passed since the 9/11 terrorist attacks, and the State Department had tightened its global immigration policies. After submitting to mandatory visa interviews, many of the Chinese students felt that the embassy had gone too far. They claimed that consular officials rejected their applications because they believed they would be unwilling to leave the United States after graduating. At the time, the consular officials were probably right.

Today, however, the tide has turned. Many Chinese graduates in the U.S. are eager to go home to weather the lingering effects of the financial crisis. Since 2008, there have been fewer appealing job opportunities overseas. China’s more liberal economy, while also suffering from the crisis, is still growing at a faster clip. And even though the average salary for a returning Chinese graduate in 2012 was little more than $16,000 a year, the chances of gaining invaluable work experience are now greater at home than abroad.

According to China’s Ministry of Education, some 800,000 Chinese have returned over the past five years, or roughly 70 percent. It is an unprecedented number, and China expects it will only increase in the coming years.

Historically, Chinese students have gone abroad mainly to study STEM subjects: science, technology, engineering or mathematics. In recent years, however, many have underestimated the cultural and language barriers to employment in a Western job market that has grown intensely competitive. Their inability to adapt has made life in North America and Europe more daunting than ever.

Chinese have been going overseas to study for nearly two centuries. After China was defeated by technically superior European powers during the Opium Wars in the nineteenth century, which forced open the nation’s seaports to European traders and saw control of Hong Kong ceded to Britain, it realized that its longstanding attitude of self-sufficiency as the “Middle Kingdom” was no longer tenable in the modern world. The Qing government quickly dispatched scholars to the West to bring back critical skills in a desperate bid to help prevent the empire from lapsing further into decline.

In 1872, 120 young Chinese went to Yale University to study mechanical engineering. They were China’s first overseas scholars, apart from a handful of Chinese Christian converts brought to Europe by the Jesuits in the eighteenth century to study theology and languages. Many more followed in their footsteps, travelling to the United States and Europe to learn engineering, physics, chemistry, mathematics, geology and social philosophy. They returned to lay the foundations of China’s modern sciences, and several would establish some of China’s best universities. A few would rise to high office, such as Tang Shaoyi, who became the first prime minister of the Republic of China.

Between 1937 and 1977, China experienced a long stretch of internal turmoil. Throughout its invasion by Japan, its civil war, several tumultuous decades under Mao Zedong and the onset of the Cold War, less than 20,000 Chinese students went abroad.

During the Cultural Revolution, when the communist party disparaged book-learning and sent academics “down to the countryside” to learn the wisdom of the proletariat, few Chinese were allowed to study overseas. Those that did were in no hurry to go home. As China began opening up to the world again in the late 1970s, after decades of self-imposed isolation, more Chinese went out to learn advanced skills. They helped to modernize and strengthen China’s economy as scientists, engineers, economists, and other technocrats. In the early 1990s, Deng Xiaoping, the architect of China’s market reforms—he had studied in France—acknowledged the importance of overseas Chinese to the nation’s future and urged more to return to their homeland in his famous “Southern Tour” speech.

By the mid 1990s returning Chinese students and professionals had come to be known as hai gui, or sea turtles, people who return home after crossing the sea to grow up. Once back in China, those with degrees from prestigious foreign universities commanded a premium over local salaries and quickly climbed to prominent positions in industry and government. A boon for China’s economic growth, bringing new ideas and experience to a nation struggling to reform and develop, they became China’s new gold-collar workers.

Since 1978, an estimated 2.6 million Chinese have gone overseas to study. In 1995 only around 6,000 returned, but today between 400,000 and 600,000 return each year.

The problem now is that many of those returning are not what China needs, as a nation, to define a new phase of economic transformation. In the past only a select few went abroad—the highest achievers—and their success after returning from carefully chosen programs was almost preordained.

Today, a foreign education is within reach of China’s burgeoning middle class. More and more Chinese parents send their children to easily accessible schools in the United States, believing that they can replicate the success of former hai gui. A growing number return with business degrees, however, hoping to cash in on a dwindling export market for low-value-added goods or to ride the tide of real-estate speculation. Struggling to find jobs, they are called hai dai, or seaweed.

China is no longer looking to the West for basic business models. It has, for the most part, already made the transition to a market economy and established global marketing and distribution networks. National development goals place a new emphasis on advanced science and technology as China’s industry recognizes that it must, of necessity, lift itself up the value chain to remain globally competitive.

In 2008 the Chinese government launched an incentive scheme to lure back Chinese scientific and technology-related entrepreneurial talent from foreign countries. Dubbed “One Thousand Talents,” the program offers large cash incentives, housing assistance, and tax-free education for children. It was supposed to run for 10 years, until 2018, and repatriate 2,000 of the best Chinese minds to spur innovation in a country which has, for the past three decades, based its economic growth on a massive pool of low-cost labour.

Under the scheme, universities and local governments were encouraged to draw up wish-lists of candidates, and they were offered rewards of up to $2 million for recruiting them. After only five years, the program has met with equivocal success. While it has already exceeded its quota, it appears to have attracted more business graduates than the core STEM talent it sought.

Heavy pollution, a poor healthcare system, and rampant government corruption have dampened any appeal to patriotism the program might have otherwise evoked. Many of the STEM graduates who were its prime targets now hold tenure-track positions at prestigious American universities, where salaries and living conditions are better.

There is no clear view of what the future might hold for China’s competitive prospects over the short term, but many believe that the nation will, over time, regain its former prestige as an innovator. After all, China has not always been a borrower of science and technology. Only two hundred years ago it was extolled in the West as an exemplar of innovation for inventions such as the compass, gunpowder, papermaking, and printing.

This article was originally published in the Diplomatic Courier's January/February 2014 print edition.

Paul Nash
Toronto-based Correspondent Paul Nash is a frequent China commentator and serves as a Senior Contributing Editor at Diplomatic Courier.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.