2010-03-27 07:54

Beijing - A number of Chinese universities with some of the world's largest student enrollments are facing bankruptcy in the next decade due to dwindling applications, the head of a major institution has said.

"With the end of the baby boom, we will see less students aged between 18 and 22 years old entering college," said Wuhan University president Gu Hailiang.

"Some schools, particularly private universities and independent colleges, are facing financial challenges," Gu was quoted by the China Youth Daily as saying on Wednesday.

There were 10.2 million students registered to sit for the college entrance exam last year, 400,000 less than in 2008, according to the Ministry of Education.

The number of students who registered for the university exams decreased 20 percent in Shanghai last year, resulting in Shanghai missing its enrollment target for two years in a row, according to the Shanghai-based Oriental Morning Post.

"Many private universities and independent colleges compete by lowering their selection criteria to attract more students, because they will run at a loss when the number of student applications drops to fewer than 6,000," Gu said.

Private universities and independent colleges also do not have enough avenues for raising revenue, he said, adding that private universities in particular lack practical financial experience compared to their western counterparts.

One of the best options for Chinese schools is to explore courses that attract more students who care about employment, Gu said.

Universities facing financial crises might have to shut within five years, said Guo Shenglian, deputy governor of Hubei province.

A number of Chinese public universities are also reported to be burdened by insurmountable debts.

The debts hit a record of 500 billion yuan in 2006, according to a March 10 report in the Guangzhou Daily. The debts for the universities exceeded 10 billion yuan in both Shandong and Jiangsu provinces, according to the official website of the educational department in Ningbo, Zhejiang province.

Following a government decision to enroll more university students in 1999, universities have seen an annual influx of 5 million students, as opposed to less than a million a decade ago, according to the Ministry of Education.

To cope with this rapid expansion, many universities withdrew huge loans to finance the improvement of their infrastructures, Wang Bintai, director of the Jiangsu provincial education department, was quoted by Xinhua News Agency as saying in 2007.

Zhou Ji, the former minister of education, suggested in September 2007 that universities in debt should resolve their crises through "land replacement" - selling the land use right of the old campuses to pay the debts accumulated in building the new ones.

However, universities do not have the legal right to carry out "land replacement" to repay their debts, the Ministry of Land and Resources said, explaining that the lands are State-owned and for "educational use".

(China Daily 03/27/2010 page3)