The explosive growth of China’s higher education sector wasn’t achieved without incident.  In fact, the expansion has thrown up a number of challenges for institutions and students alike.

Let’s start with the institutions.  The so-called 985 universities – that is, the research-intensive schools directly under the control of the education ministry in Beijing – have done remarkably well out of government policies since the 1990s.  Peking and Tsinghua Universities, in particular, have become genuinely global powerhouses in certain fields of research (Tsinghua, along with Zhejiang and Shanghai Jiao Tong, now have publication outputs surpassing MIT’s, though citations still lag badly – an indication of the still-not-quite-mature state of science in China); other institutions like Fudan and Nanjing have also done well.

Less well-off are the many universities that are under provincial control.  They were all required to expand capacity in the late 90s, and did so under the expectation that they would be given access to the “diversified funding sources” they were promised in the 1998 Higher Education Law.  In practice, the provinces didn’t invest as much as hoped, and didn’t allow tuition to rise as much as hoped.  This left institutions – which had borrowed heavily in the expectation of future revenues – holding an enormous bag.  By 2011, some estimates had it that they collectively had a debt of about $US 41 billion.

Students, of course, were big winners – young people now are something like eight times more likely to end up in higher education than they were twenty years ago.  But when you expand numbers that quickly, you’re bound to run into some capacity issues on the other side.  And this is exactly what we find: unemployment among recent Chinese university graduates now runs at over 15%, compared to rates of just 3% for non-university graduates, and underemployment is also rife .  As I’ve noted before, that’s unlikely to curb demand because the risk-adjusted returns are still pretty good.  But the creation of a large number of unemployed young people is never a good thing for a government that puts political stability first and foremost.

More to the point, perhaps, the unemployment problem has made people even more desperate to get into one of the prestigious 985 universities, whose graduates can rely on institutional prestige to get them a job.  But as Damien Ma and William Adams pointed out in their excellent recent book, In Line behind a Billion People, access to these schools is highly unequal.  Each restricts seats for students who graduate from their own affiliated middle and senior schools (in which the children of local Party officials are overrepresented), and also set aside the majority of their places for pupils from their own city or province.  What that means is that students from Beijing (population: 20 million), who have their pick of eight of the thirty-nine 985 universities, can get into an elite school with much lower gaokao scores than students from Guangdong (104 million, two 985 universities) or Henan (94 million, no 985 universities).

The universities’ debt problem will probably disappear eventually – as it has done before with state-owned enterprises, Beijing is likely just going to wipe the debts at some point.  The graduate problem also probably fades with time as the economy grows.  But the problem of unequal access to top universities is a killer.  As Ma and Adams note, urban elites like their privileges; woe betide the Party who tries to take it from them.