Funding cuts: A test for Hong Kong’s academic community

Hong Kong’s higher education system has long been a cornerstone of its global reputation, with several universities consistently ranking among the world’s best.

This prestige, built on a foundation of generous government funding, has enabled institutions to excel in research, attract international talent, and position the city as a burgeoning education hub.

However, the budget cuts announced by the Hong Kong government on 26 February 2025 have sparked uncertainty about universities’ ability to sustain this hard-earned status.

Hong Kong’s higher education sector, which began with the establishment of the University of Hong Kong (HKU) in 1911, now comprises eight University Grants Committee (UGC) publicly funded universities alongside several self-financing institutions.

Notably, five of these public universities are ranked among the world’s top 100 in the QS World University Rankings: HKU at 17, the Chinese University of Hong Kong (CUHK) at 36, the Hong Kong University of Science and Technology (HKUST) at 47, the Hong Kong Polytechnic University (PolyU) at 57, and the City University of Hong Kong (CityU) at 62.

In addition, the Education University of Hong Kong (EdUHK), though smaller, has distinguished itself as a global leader in education, ranking sixth in US News & World Report, 13 in the Shanghai Ranking, and 20 in the QS Subject Rankings for Education.

This remarkable success is driven by sustained government investment, which has provided state-of-the-art facilities, competitive scholarships, and resources to attract top scholars from around the world – factors that have been instrumental in elevating Hong Kong’s higher education to its prestigious standing.

Fiscal deficit

In a significant move to address the fiscal deficit, the Hong Kong government has mandated that all eight UGC-funded universities return a total of HK$4 billion (US$514 million) from their reserves during the 2025 to 2026 academic year.

This amount represents about one-third of the HK$11.1 billion held in “general and development reserve funds”, which is part of nearly HK$14 billion in total reserves.

The CUHK will face the largest deduction at HK$964 million, followed by HKUST at HK$766 million, with the remaining institutions contributing between HK$85 million and HK$762 million.

Additionally, the government has introduced a progressive 2% annual cut to universities’ recurrent funding over the next three years. Combined, these measures are expected to reduce university education expenditure by approximately HK$8 billion over the three-year period.

The government attributes these cuts to the need to address a fiscal deficit exacerbated by economic challenges, including the lingering effects of the COVID-19 pandemic and geopolitical tensions.

This financial strategy also includes a tuition fee increase, reflecting a broader effort to curb public spending and stabilise the city’s finances.

While on 18 February the Executive Council of Hong Kong approved HK$68.1 billion in higher education funding for the next three academic years – a 7.75% rise from the previous triennium – the immediate reserve return and recurrent funding reduction have caused alarm among educators.

Risks to prestige and international collaborations

The funding cuts create considerable uncertainty about sustaining the prestigious standing of Hong Kong’s higher education institutions. Public funds are vital for supporting high-quality teaching, innovative research and state-of-the-art infrastructure.

With reduced resources, universities may be forced to streamline research initiatives, adjust staffing levels, and modify educational offerings. Although these adaptive strategies can help manage financial constraints, they may also affect institutional excellence and global rankings.

Hong Kong’s ambition to establish itself as an international education hub is also at risk. The city has worked hard to attract students and scholars globally, leveraging its academic reputation and strategic location.

However, reduced funding could limit scholarships, hinder facility upgrades, and erode the appeal of its learning environment, potentially deterring international talent.

This is particularly concerning as Hong Kong competes with other regional hubs like Singapore and mainland China, where investment in higher education remains strong.

International collaborations, a vital component of academic prestige, may also suffer. Partnerships with overseas institutions often require seed funding and sustained investment, both of which could be constrained.

A decline in collaborative research opportunities might reduce the connectivity of Hong Kong’s academic community, thereby limiting its global influence and access to innovative networks.

As the city strives to maintain its status as a bridge between East and West, these financial constraints pose a formidable challenge.

A pragmatic yet cautious stance

In response to government budget cuts, Hong Kong’s university leaders have adopted a pragmatic yet cautious stance.

Recognising the economic challenges, HKUST President Professor Nancy Ip outlined plans to boost revenue by expanding cross-regional and cross-institutional research collaborations, thereby enhancing funding opportunities and facilitating knowledge transfer.

Similarly, HKU President Professor Zhang Xiang emphasised the necessity of prudent financial management and strategic planning to safeguard the institution’s international standing.

He expressed optimism that, as the economic climate improves, there might be room for a policy reassessment regarding university funding.

Meanwhile, CUHK President Professor Dennis Lo committed to rigorously studying the impact of these cuts and ensuring that teaching and research remain as little affected as possible.

Hong Kong Baptist University President Professor Alexander Wai stressed a strong commitment to efficient resource use, aligning academic goals with broader societal benefits.

Other institutions – including CityU, Lingnan University (LU), EdUHK and PolyU – have echoed these sentiments, proposing flexible measures to maintain quality despite tighter budgets.

For instance, EdUHK has voiced its support for measures addressing the fiscal deficit while maintaining high standards, and PolyU has announced plans for strategic resource allocation and cost-saving initiatives.

Collectively, these responses imply an inherent tension between the imperatives of fiscal austerity and the pursuit of academic excellence, signalling a challenging road ahead for Hong Kong’s higher education sector.

A pivotal moment

Hong Kong’s higher education institutions face a pivotal moment as funding cuts threaten the prestige they have meticulously built. Both historically and currently a leader in global academia, the sector now grapples with uncertainties that could undermine its rankings, international appeal, and collaborative potential.

While university leaders demonstrate resilience and innovation – pursuing alternative revenue and optimising resources – the long-term implications remain unclear.

For Hong Kong to sustain its vision as an international education hub, the government must balance fiscal responsibility with the need to preserve a world-class higher education system. The coming years will test the adaptability of its academic community and its ability to shine amidst adversity.

Yuzhuo Cai is co-director of the Global Research Institute for Finnish Education (GRIFE), the Education University of Hong Kong, Hong Kong SAR, China. E-mail: cyuzhuo@eduhk.hk

This article is a commentary. Commentary articles are the opinion of the author and do not necessarily reflect the views of University World News.