International education remains the only Australian export worth more than $10 billion annually which is heavily reliant on the Chinese market and could therefore be easily targeted by Beijing without risking self-harm, co-authors Dr Dirk van der Kley and Dr Benjamin Herscovitch say in a new policy options paper.

Dr Herscovitch said there were signs in February this year that education agents in smaller Chinese cities were directing students away from Australian universities.

"With the political relationship between Canberra and Beijing continuing to spiral downwards, it seems increasingly likely that there will be moves to restrict the number of Chinese students going through Australia and to make the Australian economy feel pain in that critical export arena," he said.

The Chinese ambassador to Australia warned in April 2020 that Chinese consumers might not choose to drink Australian wine, eat Australian beef or travel to Australia for tourism or study.

Dr Herscovitch said there could be moves to limit student flows from China to Australia by ramping up negative press coverage of Australia and encouraging people to go to other English-speaking study destinations such as the United States, Canada or the United Kingdom.

The authors argue Australia needs to ramp up education diplomacy by appointing an ambassador for Australian education and creating a new office for education trade diversification within the Department of Foreign Affairs and Trade.

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The office would market a new "Education Australia" brand to prospective students in countries other than China, such India, Indonesia, Nigeria, Pakistan, the Philippines, Vietnam and Bangladesh.

While the expansion into new markets would not be able to replace the vast numbers of Chinese international students, it could help Australian institutions cope with a sudden drop in student numbers.

"It's about building up the economic connectivity with new and emerging markets in south Asia, for example, so that if China seeks to politically coerce Australia by restricting Australian exports into the Chinese market, there's more ballast in our trading relationship so that we can recover from that trade blip and that political blip quicker and more effectively," Dr Herscovitch said.

The authors also argue that universities should be exempt from the Foreign Relations Act. The legislation gives the Foreign Minister powers to veto international agreements signed by government agencies.

Instead, a transparency scheme would keep a public register of active international research agreements, audited by the Australian Security Intelligence Organisation.

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