Local authorities in China have tightened up on debts owed by universities amid fears that big-spending institutions may default on their loans. The move could affect a number of international university collaborations where local and provincial authorities have agreed to fund major construction projects.
According to China’s state-run media, provincial and municipal governments are urging indebted universities to repay loans after the National Audit Office reported at the end of 2010 that some 1,164 colleges were burdened with around CNY263.5 billion (US$41.5 billion) as a result of profligate spending over the last decade.
Strict new policies have been introduced to curb new university expansion not approved in the pipeline before 2009. Other capital projects such as expensive reequipping of laboratories and new dormitories will also be frozen, as local governments have had to step in to bail out universities that overreached themselves.