High debt at Chinese universities exposed

Updated on: Wednesday, July 06, 2011

Contrary to their opulent look with sprawling campuses, most of the universities in China are running in huge losses raking up a total debt of USD 40.69 billion until last year, an official has said.

Over 1,100 universities in China had racked up a total debt of 263 billion yuan (USD 40.69 billion) by the end of 2010, a senior official with the country's auditing authority said.

High indebtedness has over the years become a common dilemma at universities across the country, Liu Liyun, deputy director of the research institute of the National Audit Office of China told China National Radio.

A similar report by national auditors few weeks ago revealed that the local governments in China raked up to USD 1.66 trillion which most of them were not in a position to pay back.

The main reason for the huge debts by the varsities was the over-expansion of university enrolment and campus construction over the past 10 years, Xiong Bingqi, vice president of the 21st Century Education Research Institute said.

Many universities are forced to borrow money every year to pay back their old debts, which encumbers the development of the universities, Liu said.

The 40 provincial level universities in north western China's Shaanxi Province alone had accumulated debt of more than 10 billion yuan (USD 1.5 billion) in 2009.

The provincial government has allocated 1.65 billion yuan to help pay back the universities' debt, the CNR report quoted by the Shanghai Daily said.

The situation is not any better in Shanghai either.

The Shanghai International Studies University borrowed 600 million yuan (USD 93 million) to build its new campus in the suburban Songjiang University Town in 2000, which has left the university with an interest bill of 35 million yuan annually, according to Wu Youfu, SISU's ruling Communist Party secretary.

Wu said with an annual tuition of 5,000 yuan per student, the university's annual tuition income totals only 30 million yuan.

"Many universities, especially those with new suburban campuses, borrowed at least one billion yuan for campus construction, but had no ability to pay back the loan at all," said Chen Dakang, the former dean of the Chinese language and literature department of East China Normal University.

Meanwhile, universities have few ways to collect money from society apart from asking tuitions and receiving government funds, Xiong said.

Tsinghua University named one of its buildings after Jeans west, a domestic brand of casual clothing, to collect funds for operating the building in May, but this soon sparked heated debate and wide criticism.

Chinese universities should stop expanding enrolments and shift their attentions to education, said Lao Kaisheng, an educational expert from the Beijing Normal University.

Lao said the college enrolment expansion that began in 1999 in China has plunged universities in deep debt and caused a fall in the quality of their education.

High debt at Chinese universities exposed

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