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Chinese Universities Threatened with Bankruptcy
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Chinese universities, which hold the largest number of students in the world, are facing severe financial difficulties, following the enrollment boom which started in 1999, according to deputies to the National People's Congress (NPC).


As they compete to offer services for high school graduates depending on universities to secure a good job later in life, the seats of knowledge borrow ever-more money to stay afloat.


"I believe there to be one university that owes banks 5 billion yuan (US$641 million), representing an annual repayment of 300 million yuan to cover interest alone," said Hu Sishe, an NPC deputy.


"I don't know how many students will have to enroled if tuition fees are their only method of repayment," said Hu, also president of the Xi'an Foreign Studies University in Shaanxi Province, who declined to name the indebted university.


According to other NPC deputies, universities in Shandong and Jiangsu, both part of China's rapidly developing eastern coast, are suffering from over 10 billion yuan in debts. No estimate can be given as to the total amount owed by Chinese higher education institutions.


Following a government's decision to enroll more university students in 1999, universities sees an annual influx of 5 million students, as opposed to less than a million a decade ago, according to the Ministry of Education. Furthermore, the number of colleges and universities has leapfrogged from close to 1, 000 to nearly 2,000.


To cope with this rapid expansion, many universities have withdrawn huge loans to support infrastructure improvement such as more dormitories, dining halls and classrooms, said Wang Bintai, an NPC deputy and director of Jiangsu Provincial Education Department.


NPC deputy Wang Wu, serving as vice president of the Southern Yangtze University, blamed a lack of appropriate government allocations forcing universities to cough up for 90 percent of the construction costs.


The university, based in Jiangsu Province, has seen its student body from 4,000 to 40,000 in only a few years.  


A further issue is that reports have emerged alleging that short-term loans make up 60 percent of the debts owed by universities.


Bearing the weight of this burden has forced many universities away from teaching and research, threatening their own development and that of China's higher education, stated deputies at the ongoing NPC annual session.


Hu Sishe was worried about some colleges and universities becoming insolvent, especially remote areas, following the path of some debt-ridden state-owned enterprises. He called on the government to "take the issue seriously and…to solve the problem as early as possible."


NPC deputy Zhou Hongxing, a professor from Shandong University, has requested that the government foot the bills, relieving indebted universities.


"Colleges and universities in China have made great contributions to improving education in the country, and they deserve financial support from government," said the professor.


In response, some local governments have taken actions to deal with the crisis.


In Jiangsu, the provincial government recently earmarked 3-4 billion yuan to alleviate the worst-hit universities in the province.


(Xinhua News Agency March 12, 2007)

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