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Top Official Sounds Alarm on University Debts

The problem of Chinese universities' huge debts should be put on top of governments'agendas, according to a senior official of the State Council.

Chinese universities are burdened with huge loans from banks, creating potential risks to the country's higher education development, State Councilor Chen Zhili said, Beijing News reported yesterday.

The government should address the debts problem and take measures to solve these headaches that shadow stable development of education, Chen, a former education minister, said.

Chinese universities are said to have total debts of 200 billion yuan (US$27.4 billion) and the National Development and Reform Commission, China's top economic planning body, said last year the debts have affected the operations of some of them.

Jilin University, the biggest university in China in terms of area of a school, acknowledged last March that it is almost three billion yuan in debt after having built eight branch campuses across China since 1987.

The university, in northeastern China's Jilin Province, has to pay up to 170 million yuan a year in interest on the money it borrowed to build these branches, which are home to more than 63,000 students, according to previous reports.

But Education Minister Zhou Ji told a news conference in September that the problem was not "that serious" and was only "a special problem in the country's education development path."

However, corruption, mismanagement and extravagance were involved in some of the debts, Zhou admitted at the conference, without further elaboration.

Universities across China have taken out 200 billion yuan in bank loans since the country started college expansions in 1998.

The expansion, aimed at sharply increasing student enrollment to promote higher education, led to numerous infrastructure projects among Chinese universities -- mostly funded by loans from banks.

These infrastructure projects now have an estimated value of more than 500 billion yuan given the country's booming real-estate industry, Zhou said.

Land sales would be a reasonable choice to offset the financial crisis in the universities, Zhou said.

But the Ministry of Land and Resources rejected that proposal, saying universities are not legally allowed to sell their land.

A survey by Peking University in 2005 showed 76 state-owned universities owed banks a total of 33.6 billion yuan, or 440 million yuan on average, a number which is growing 76 percent a year.

The debts accounted for 51.1 percent of the universities' revenues, which totaled 65.67 billion yuan.

Zhou insisted that the university expansions were necessary as they may play an important role in the country's future education development.

China last year recruited 5.4 million college freshmen, five times the number in 1998 and the number of high school students admitted to universities rose to 23 percent.

(Shanghai Daily January 3, 2007)

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