Higher Education in Mainland China in Debt: 200 Billion Yuan

September 29, 2007 Updated: September 29, 2007

On September 12, Chinese Minister of Education Zhou Ji admitted for the first time that higher education institutions in the country are facing a debt of over 200 billion Yuan. He also recognized that corruption among officials has played a key role in this issue.

Chen Zhili, the former Minister of Education, has long been blamed for the huge debt facing China's current education system. Nine years ago, former president, Jiang Zemin appointed Chen Zhili, who had no prior experience in education, as the Minister of Education. The fact that the corruption was revealed right before the 17th National Party Congress signifies the inner political power struggle in China and the target of the “anticorruption” drives, Jiang Zemin.

Universities Bankrupt

On September 12, at a press conference for the State Council Information Office in Beijing, Zhou Ji answered a reporter's question about the debt in higher education and explained that the accumulated debt is a natural consequence of education reform. He pointed out that mismanagement, wastage of resources, and corruption all exist in education reform, though they also existed outside of education.

Since 1999, in order to accommodate increased enrollment, many universities borrowed money to construct or build new campuses. Construction costs account for more than 80 percent of the debts. However, corruption is rampant at many universities, and loopholes in construction, costs procurement and admission fees are used. In 2005, six out of every seven cadres investigated in Shanxi Province were found guilty of bribery involving construction costs and were dismissed. Many believe that a number of universities have already gone bankrupt.

Impeachment of the Former Minister of Education

Chen Zhili fostered and supported the corruption of funds at universities.

In 1998, Jiang Zemin appointed Chen as the Minister of Education. Chen was impeached several times; there was a point at which more than 1,200 professors from more than 80 universities called for urgent education reform and cosigned a petition. Chen was nicknamed “Europe and America Tour Ambassador” by the presidents of several universities including Tsinghua University and Beijing University. On numerous occasions, these university presidents requested that Chen be removed from office.

They indicated that these higher education institutes are the foundational resources and national pillars of society. However, Chen Zhili's so-called “long-term economic vision” turned these resources into a filthy business exchange with escalating tuition, forged diplomas, “diplomas for sale,” and much more. According to a press release from the National Development and Reform Commission which reviewed China's fee scale and supervision, unlawful education charges exceeded 2.1 billion yuan (approximately US$ 269 million) in 2003. The official documents indicated that in 10 years, unlawful tuition has accumulated to as much as 200 billion yuan (approximately US$25.6 billion). For the past three consecutive years, unlawful tuition fees have become the primary complaint submitted to China's price inspection and supervision committee. Xinhua News Agency also reported that in Guangxi Province alone, unlawful tuition has exceeded 108 million yuan (approximately US$13.8 million) since 2002.

Zero Operating Funds

China's education as a whole has long been a concern in all aspects. Teenagers suffer from insufficient financial aid, with12 percent of students being out of school in average urban areas. 75 percent of the rural students cannot afford to go to school. Both the learning capacity and the quality of education have been significantly decreasing.

And yet, Chen Zhili made very little investment in education. According to a State Education Supervision Committee Report in 2005, there was zero per capita funding from the State budget to elementary schools in 163 counties and junior high schools in 142 counties. The operation of the schools relied solely on the tuition fees. Under such extreme and embarrassing conditions, unlawful tuitions seemed to be the only way for the schools to survive.