China Faces a Grad Glut After Boom at Colleges
online.wsj.com
There is a misalignment between the university system and the needs of the economy," says Robert Ubell, who heads a New York University program in China to train young Chinese employees of foreign companies. "Chinese graduates often have few practical skills."
The problem lies in the middle layer of China's educational system. The country's basic education ensures that most Chinese are literate, which means that even poor farmers heading to the country's coastal factory boomtowns can easily be trained to operate a machine. At the system's peak are 75 elite universities lavishly funded by China's central government. Because these schools' expansion has been controlled by Beijing, they have been largely exempt from financial problems.
Beneath the elite universities are 2,100 others where the vast majority of Chinese undergraduates study. Almost all are saddled with virtually unserviceable debts, say official sources and independent researchers. In impoverished Anhui province, 50 universities owe $1.2 billion to banks, according to Zhao Han, who is vice president of the Hefei University of Technology in Anhui. Mr. Zhao, who is a government adviser with access to the financial figures, says some schools have debt payments that equal half of their tuition revenues. "It is a heavy expenditure affecting the schools' normal operation," he says.
Local governments with financial muscle are already organizing bailouts. Last year, wealthy Guangdong province ordered banks -- almost all of which are state-controlled -- to restructure their loans to universities. The province also spent $30 million this year to prevent a string of universities from defaulting. Officials at China's Ministry of Education refused to be interviewed for this article, but have said in speeches that university debts are a top priority. |
