Generation 40s – 四十世代

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Through endowments, private capital can revitalise Chinese universities

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South China Morning Post
Comment›Insight & Opinion2014-09-25

Hu Shuli

Hu Shuli says, first, they must be given the autonomy to pursue the academic excellence that attracts willing donors, as Harvard does

Donations by Chinese entrepreneurs to top universities overseas have become a talking point. In July, Soho China’s husband-and-wife team of Pan Shiyi and Zhang Xin launched a US$100 million fund to help send poor Chinese students to the world’s top universities, beginning with a US$15 million donation to Harvard.

More recently, a foundation set up by Hong Kong property tycoon Ronnie Chan Chichung and his brother Gerald Chan Lok-chung made a donation of US$350 million to Harvard’s School of Public Health.

These gifts are made voluntarily in support of a commendable cause. They deserve our praise. But many Chinese people can’t help but wonder: why has the money not gone to the Chinese universities that desperately need it?

Let’s turn the question around. What can the largely government-funded Chinese universities do to attract support? In other words, what kinds of reforms are needed to ensure they have access to the “deep pockets” vital for the long-term development of China’s higher education? After all, the country’s future depends on its bright young minds.

The issue at hand is not why China’s tycoons do not see fit to support Chinese universities, but why Chinese universities do not appear to be suitable candidates for their largesse.

In his interview with Caixin, Ronnie Chan noted that Chinese academia is plagued by fraud and corruption. “Without the rigours of academic discipline, universities cannot produce top-class research,” he said. Besides, on the mainland, charitable works too often invite trouble and aggravation, he noted.

His experience reflects the need for higher education management to improve. It can do this by opening its doors to private-sector resources.

Universities need capital to excel. Currently, the majority of Chinese tertiary institutions are public, with the government meeting 70 per cent of their running costs. To supplement their income, they’ve been encouraged to commercialise their research. Thus, many have set up their own businesses in the past 20 years.

The result has been disappointing so far. About 80 per cent of such enterprises have already closed down. In 2009, profits from the remaining businesses only paid for a measly 0.2 per cent of the universities’ expenses.

The cons, on the other hand, far outweigh the benefits. With no clear lines separating the commercial from the non-commercial, these enterprises tend to be a management nightmare. In recent years, the State Council has stepped in to try to clarify roles and duties, but the root problem remains unsolved. In too many places, the university’s administrators are also its business managers.

Such muddled organisation only encourages corruption. Unsurprisingly, not a few university leaders have been caught in the current crackdown on corruption. It is time for a clean break to let universities return to their core duties of teaching and research.

How, then, should universities raise money? In recent years, many institutions have set up endowment funds that welcome donations from their alumni and the community at large. This trend is to be encouraged.

Such funds originated with American universities, and have played a vital role in raising academic standards and protecting academic freedom.

Domestic universities do attract generous donors. From its setting up in 1994 to the end of 2012, the Tsinghua University Education Foundation raised nearly 2.3 billion yuan (HK$2.9 billion). The Peking University Education Foundation, set up a year later, had raised 1.67 billion yuan by the end of 2012. Other universities have not done as well. They are less prestigious, to be sure.

But the larger problem is the lack of a robust system to ensure endowments are well run – that is, assurances on how money is raised, managed and used. Further, favourable government policies, such as on taxation, and a thriving private capital market are also needed.

Today, most Chinese funds are spent on infrastructure – the hardware – where donors can easily see the result of their goodwill. If donors are to be persuaded to give money to enhancing the software, universities will need to improve their accountability, by drawing up measurable targets and performance indicators.

To do this, university administrators must have the autonomy to act to ensure academic quality. This requires fundamental change, given that most aspects of Chinese universities today – from staff recruitment to curriculum planning and research directions – are run as they were years ago when decisions were taken by a central authority.

For a start, universities should be encouraged to rely on a board of directors to help run the schools. While it’s true that many universities have already set one up, many of these boards act only on matters of external relations and have little influence on other critical aspects of university operations. This has to change.

This article is provided by Caixin Media, and the Chinese version of it was first published in Century Weekly magazine.

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