Years of booming expansion have left Chinese universities struggling to cope with mounting debts, hampering the operations of some institutions, says a report by China’s National Development and Reform Commission.

After years of neglect, and recovering from a lost generation during the Cultural Revolution, the government encouraged mergers and rapid expansion to create 'super-universities' that would catch China up with Western nations.

Instigated under the Premiership of Zhu Rongji in the 1990s, the ambitious programmes to build new campus facilities and subsidise student loans, have left higher education institutions owing nearly 33 billion yuan (US$4.5 billion).

A key factor is the sheer volume of undergraduates now enrolling. Between
2000 and 2005 alone, the number of undergraduates in China almost tripled -from 5.6 million to 15.6 million. Despite this, there are still not enough undergraduate places for the vast majority of China's college-age population.

Today, students have to pay for accommodation and tuition at amounts 10 times higher than a decade ago. Average incomes have increased by only four times in the same period and rural incomes lag far behind those in the coastal cities.

Tuition loans are available to most students but, with graduate unemployment rampant – more than a million of this year's graduates have yet to find work – around one in five do not repay their loans.

"Many universities are owed several million yuan in defaulted tuition fees," said a spokesman for the Ministry of Education. He added that despite this, the institutions were not permitted to withhold degrees until loans were repaid.

A survey by Peking University of 76 public universities found that by the end of 2005 they had borrowed 33.6 billion yuan, with an average annual growth of 76%. The debts were equal to more than half the institutions' revenue while the heaviest borrower, the north-eastern Jilin University, had a debt-to-asset ratio of 55%.

But the situation is not as bleak for China's big-name institutions, such as Beijing's Tsinghua University, Peking University, or Fudan in Shanghai, which are better able to attract investment and to generate additional streams of income.

The survey identified foreign language publishing as particularly lucrative, noting that such prestigious universities were aided in the field by their brand-name recognition.

Meanwhile, the central government recently enacted legislation to cap enrolment at the provincial level, though it is unclear how likely this is to be enforced.


Printable version
Email to a friend
Comment on this article

Disclaimer: All reader responses posted on this site are those of the reader ONLY and NOT those of University World News or Higher Education Web Publishing, their associated trademarks, websites and services. University World News or Higher Education Web Publishing does not necessarily endorse, support, sanction, encourage, verify or agree with any comments, opinions or statements or other content provided by readers.