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Financial crisis endangers indebted Chinese universities
Latest Updated by 2007-03-12 09:28:59

Chinese universities boasting the largest number of students in the world are endangered by severe financial crisis, a result of the rapid enrollment expansion since 1999, warned deputies to the National People's Congress (NPC), the top legislature.

To cater for students who flock to campus for higher education in expectation of finding a good job on graduation, universities have to borrow huge sums of money to keep things going.

"As a far as I know, there is one university that owes banks 5 billion yuan (641 million U.S. dollars). This means it should pay 300 million yuan for the interests every year," said Hu Sishe, an NPC deputy.

"I don't know how many students they have to enroll if they want to repay the money only with the tuition fees," said Hu, also president of the Xi'an Foreign Studies University based in the northwestern province of Shaanxi.

Hu did not give the name of the debt-ridden university nor did he disclose where the campus is located.

According to other NPC deputies, the debt of universities has exceeded 10 billion yuan in both Shandong and Jiangsu provinces in China's fast developing eastern coast.

As for the total amount of debts owed by Chinese universities put together, no one can tell for now.

China's higher educational institutions have been expanding rapidly following a government's decision to enroll more university students in 1999. Now 5 million students are admitted to campus annually, compared with less than 1 million a decade ago, according to the Ministry of Education.

The number of colleges and universities also rose from about 1,000 to nearly 2,000.

To cope with the rapid expansion, many universities resorted to banks for huge loans to support construction of dormitories, dining halls and classrooms, said Wang Bintai, an NPC deputy and director of Jiangsu Provincial Education Department.

Universities had to cover 90 percent of the construction costs on their own as the investment from the government budget failed to be in place, said NPC deputy Wang Wu, who also serves as vice-president of the Southern Yangtze University.

The university, based in Jiangsu Province, an economic powerhouse in east China, sees a drastic increase in the number of students, from around 4,000 to 40,000 in just a few years.

It is reported that short-term loans account for more than 60 percent of the debt of the universities.

Under the mounting pressure of financial burden, many universities are unable to focus on teaching and research, which poses a threat to their future development and even to the quality of the country's higher education as a whole, said deputies at the ongoing NPC annual session.

Hu Sishe was worried some colleges and universities, especially the understaffed ones in remote areas, might go bankrupt as what had happened to some debt-ridden state-owned enterprises.

"The government must take the issue seriously and work out measures to solve the problem as early as possible," said the university president.

NPC deputy Zhou Hongxing, also a professor in Shandong University, even called on the government to pay most of the bills of indebted universities.

"Colleges and universities in China have made great contribution to the overall improvement of education in the country, and they deserve the financial support from government," said the professor.

Some local governments have taken actions to deal with the crisis.

In Jiangsu, the provincial government recently made a decision to allocate 3-4 billion yuan to fund the indebted universities in the province.

To most NPC deputies, it is really a pressing job to help universities overcome the financial crisis no matter who is going to pay the bill for them.

Editor: Wing

By:Cai Yugao, Hai Mingwei and Cheng Zhiliang Source:China View website
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