British universities must reduce their reliance on tuition fees from China to protect their independence and long-term sustainability, a think tank has said.

Ministers should consider capping the proportion of income that each university can generate from a single country to avoid risks to academic independence, a report from Onward said.

A new rule that institutions can only increase the number of overseas places if they also boost places for UK school leavers should be introduced, the centre-right think tank says.

The report, by Onward director Will Tanner, says ministers should consider introducing higher levels of taxpayer support for high value-added courses – such as physical sciences, medicine, or engineering – to encourage universities to take more UK students in these subjects.

The number of Chinese students at UK universities has soared in recent years, and they are of increasing importance to the nation’s higher education system.

In 2018/19, China sent more students to study at UK institutions than any other overseas country, according to the latest data from the Higher Education Statistics Agency.

More than a third (35%) of all international students, from countries outside the EU, are now from the Asian nation, the figures published in January show.

This proportion had increased by a third over a five-year period.

The think tank says the dependence on international student income – especially from China – has created “financial fragility” and warns it could undermine academic freedom.

It says: “Smaller universities may become unviable without income from overseas students. It is possible that several universities will go bust, disrupting the education of tens of thousands of young people at a time when the labour market offers few alternatives.”

The report says the Covid-19 crisis could “threaten UK scientific endeavour” as it suggests some research-intensive universities use overseas income to subsidise research funding.

Universities have become worryingly dependent on (overseas students) for their finances, undermining their independence, credibility and long-term sustainability

It concludes: “UK universities have become too reliant on overseas students from one dominant source. This is a consequence of the view – held for a quarter of a century across all parties – that exporting higher education has no downsides and could continue indefinitely.

“The coronavirus has exposed the risks of such an approach, while growing geopolitical risks should also give ministers pause.”

An analysis of Hesa data, carried out by Onward, suggests Chinese students make up more than a fifth of total fee income at 16 UK universities – of which 12 are in the Russell Group.

It also found that more full-time places at universities went to Chinese students than from six regions across the UK – including Wales and Northern Ireland – in 2018/19.

Mr Tanner, author of the report, said: “While overseas students generate valuable income and international focus on UK campuses, universities have become worryingly dependent on them for their finances, undermining their independence, credibility and long-term sustainability.

“Britain has never had a serious debate about the growth of overseas students. Yet the viability of the UK’s most prestigious universities – to say nothing of billions of pounds of science funding – is now decided not in Parliament but in countries thousands of miles away.

“Even more worrying is that a third of overseas funding comes from China, a country whose government has shown itself unafraid of threatening to cut student flows in response to criticism and whose commercial partnerships with UK universities are increasingly under scrutiny.”

An analysis of official data, published by the Times Higher Education earlier this year, found that in 2017/18, Chinese student fees were worth around £1.7 billion to UK higher education.

A number of UK institutions have close links with China and its universities – and the analysis calculated that at five institutions, more than 10% of all income came from these students.

A Universities UK spokeswoman said: “We value the presence of students from China and all over the world on our campuses – including from countries where there may be political or cultural tensions – precisely because it means that we can challenge preconceptions and spread better mutual understanding among our students.

“We simply don’t know how many international students will come here this autumn. If there is a big downturn, it would have a very serious impact on university finances. However, we have been working across the sector to understand and address any concerns students have, wherever they come from.”

A Department for Education spokesman said: “International students play a vital role in our economy, our society and our culture and we are proud that so many choose to study here.

“One of the aims of Government’s International Education Strategy is to avoid an overreliance on a single funding source, helping universities to recruit sustainably and widening the appeal of our universities through the Graduate Route, due in Summer 2021.

“Covid-19 has also highlighted the need for the higher education sector to diversify and we encourage providers to continue to innovate and broaden their offerings, including degree apprenticeships and more part time learning.”