Changchun baby murder

Help for debt-ridden universities pledged

PUBLISHED : Tuesday, 27 March, 2007, 12:00am
UPDATED : Tuesday, 27 March, 2007, 12:00am

The central government has promised to bail out the mainland's universities as they struggle with mounting debt from overborrowing in the late 1990s to fund rapid expansion.


Director of the Ministry of Education's department of development and planning, Han Jin , said yesterday that the government would proceed with prudent accounting practices at the universities in an attempt to rein in their serious credit risk.


Also, 'the government should share with university authorities some of the burden [of overborrowing]', he said.


The pledge comes as many universities find themselves in dire financial straits as a result of reckless expansion since the late 1990s, most of it funded by bank loans.


Management at Jilin University last week appealed desperately to teachers and students for suggestions on how to handle mounting debts and tight finances.


In a notice posted on the university's intranet, authorities admitted the institution needed between 150 million and 170 million yuan a year to pay bank loan interest alone since 2005. The authorities have refused to confirm media reports it has amassed 3 billion yuan in debt.


A Chinese Academy of Social Sciences report last year estimated that public universities owed between 150 billion and 200 billion yuan to banks by the end of 2005.


Debt-ridden universities were a focal point at the annual National People's Congress and Chinese People's Political Consultative Conference sessions.


Delegates said some universities had already gone broke as a result of the blind pursuit of expansion.


Mr Han said the central government had tried to cool the drive for university expansion since 2000, 'however once it's ... started, it's difficult to stop'.


He has defended the expansion drive, saying universities need to develop to match the country's rapid economic development in the past two decades.


'But the government did not provide sufficient funding in proportion to university expansion, and that's where the problem began to develop.


'Now the government does need to spend some money to ease the situation,' he added.