By staff reporter LUO YUANJUN

Many university students tout themselves as primary and middle school student one-to-one tutors.

HUANG Yue is a third-year student at Jiangsu's Lianshui County No.1 Senior Middle School. Her teacher is confident of her ability to enter a top university, but Huang has reservations. She thinks it unlikely that her parents' combined few hundred yuan monthly income will be enough to finance a university education.

According to the Financial Department of the Ministry of Education statistics, in recent years about 25 percent of poor university students have needed financial aid. For those from rural areas and low-income urban households, an annual tuition fee of around 5,000 yuan, plus living and other expenses, is a huge burden. "I have no comment on university tuition reform other than to say that if I'd had to pay tuition, I would not have been able to receive higher education," says Fang Fan, a PhD at Xi'an Jiaotong University.

From 1949 to 1994, China's higher education was free for the lucky few who managed to squeeze through the narrow portals of the entrance examination system. In 1993 the average budgeted government allocation per university student was 5,310 yuan, accounting for 82.4 percent of the 6,442 yuan per-student expenditure, the balance being met by universities. By 1994 the government subsidy had risen to just 84 percent. This situation overstretched the already tight university education budget, triggering tuition reforms that marked the end of free university education.

Financial Dilemma

University tuition reform has set a high financial threshold for students from poor families.

Between 2004 and 2006, Guangzhou University plans a recruitment of 100 researchers and professors. It has initiated human resource recruitment measures whereby academicians of the Chinese Academy of Sciences and Chinese Academy of Engineering are each offered a research project start-up and housing fund of 3 million yuan.

But few universities have the financial resources necessary to attract talents. Tight budgets prevent them from providing conditions good enough to retain their professors, so there is a constant outflow from various university faculties. It is reported that from 1996 to 2000, institutes of higher learning in Shanxi Province lost more than 1,500 teachers with a master's degree or above, a problem by no means confined to Shanxi. Fund shortages in universities also mean outdated research equipment and facilities, that further inhibit the advance of higher education.

Yet education funds allocated by the central treasury have actually increased in recent years. In 2003 they rose to 3.41 percent of the country's GDP from the previous year's 2.5 percent, but the low base number and enlarged enrolment of recent years keep the per-student allocation low. Some universities have even seen a slight drop. "Investment is the key to closing the gap between quality educational resources and the increasing demand for education," says Minister Zhou Ji of Education. According to the 1994 World Bank World Development Report, educational expenditure accounted for 5.7 percent of the GDP in developed countries, compared with 4.4 percent in moderately developed countries.

Inefficient fund usage is also a problem. A large number of Chinese universities operate their own hospitals, kindergartens and primary and middle schools that entail hefty non-teaching-related expenditure. In 1998 non-teaching employees of Chinese universities accounted for 60 percent of all faculties, compared with 22 percent in Japan. Facility usage is also inefficient. For instance, colleges and departments of most Chinese universities have their own libraries in addition to the school library, which cause overlaps in facilities and spending.

The Solution

Increased government investment is key to solving universities' funding problems. Higher education may not be free in China, but as a public welfare undertaking it should get full support from the state treasury. Says Liu Kuan, a PhD student at Beijing Normal University, "A country's progress depends on the quality of its people, to which higher education is integral. "

Chinese law actually states that education should get government financial support. Article 55 of the People's Republic of China Education Law stipulates that people's governments at various levels should increase their financial appropriation for education at a rate higher than their current financial revenue and should ensure a step-by-step increase in teachers' salaries and per-student educational and facility expenditures.

Under current circumstances it is unrealistic to expect the central treasury to increase its education appropriation by a large margin, so other financial channels have been directed towards supporting education. The government has implemented a series of preferential policies to encourage corporate and individual investors. One example is exemption from income tax on the educational undertakings of enterprises and individuals.

University students work in their spare time to help cover their tuition and fees.

Universities have exerted great efforts to obtain financial support from enterprises and other commercial entities. Tsinghua University got full mileage out of its 90th anniversary in 2001, having raised 43.8 million yuan in "birthday presents," but less exalted universities must look to other means. Encouraged by the government, many universities make use of their educational resources to run fee-paying adult education and vocational training programs, and try to attract social and enterprise investment. "Compared with universities in Western countries that get large inputs from enterprises, those in China have a long way to go," says Zeng Jianqiu, professor at the Economic Management School of Beijing University of Posts and Telecommunications.

In order to expand financial resources, many universities operate their own enterprises. In 1999, the sales income of university-run enterprises totaled 37.9 billion yuan, and 64 of them generated sales incomes exceeding 100 million yuan. Currently more than 1,000 schools of higher learning in China run more than 5,000 enterprises. Beijing University stands out in this aspect. Its Founder and Jade Bird Groups own seven listed companies on China's mainland and in Hong Kong. Opinions vary on universities running enterprises. President Pan Yunhe of Zhejiang University disapproves. "A university should take science education, knowledge dissemination, and the role of society think tank as its mission."

Professor Yang Ruilong of the School of Economics under the People's University of China categorizes university-run enterprises under four headings: those funded by universities for the application of their scientific research achievements; those based on employing university generated human resources; sideline hotels, restaurants and small businesses; and enterprises whose relationship with a university is based solely on a purchased right to use its name tag. There is controversy concerning the first two types, and a universal call for universities to desist from the last two.

Professor Zeng Jianqiu argues that educational institutions are not for profits but for education. He suggests that China establish an education lottery, a common practice in developed countries.

In addition to expanding funding channels, there is a general call for universities to make more efficient use of their education funds and to demarcate non-education-related operations. Another suggestion is that the state allocates a support fund to initiate this process and issue preferential policies, such as tax exemption and reduction, to help sideline operations become independent from the universities they fund.