The number of Chinese students studying in Australia will decline over the next decade as a key competitor in the lucrative international education market - China - invests in itself, the vice-chancellor of a leading university has warned.

The University of NSW's Professor Ian Jacobs, said the number of Chinese undergraduates travelling to Australia is dropping as China invests heavily in building universities and attracting research talent.

Professor Ian Jacobs, vice-chancellor of the University of NSW. Credit:Ryan Stuart

"They are getting more universities, and those are getting much better quality, very rapidly," said Professor Jacobs. "The Chinese government understands education is everything if they are going to be the high tech country they aspire to be."

Numbers of Chinese students travelling to Australia, the United Kingdom and the United States will "gradually wane," he said, but the numbers could be made up by students from other countries amid a global "thirst for education".