Hi all.  Short blogs for the next couple of days because HESA Towers is hopping and I’m really up against it for time. So just a couple of bite-size pieces today.

Tsinghua in Trouble

Once upon a time, if you wanted to point to how universities in China were driving economic growth, you’d point to Tsinghua University and specifically Tsinghua Holdings, which was a conglomerate made up of all the spin-off businesses which came out of “China’s MIT.”  Tsinghua Holdings is simply massive – something on the order of USD $40 Billion in assets, the largest chunk of which by is a semi-conductor fabrication company called Tsinghua Unigroup.  A few years ago, there were literally dozens of articles written about how this was the wave of the future in China, science, economic growth, innovation, yadda yadda.  Tsinghua University owns 100% of the holding company, though it does not 100% of all the subsidiary corporations; for instance, Unigroup is a 51-49 split with an outside investment firm.

Unigroup’s outsized status was long a point of pride for both Tsinghua Holdings and the university itself.  But it’s not clear how much of the company’s success was actually market-driven.  The OECD noted last year that between 2014-2018, almost 30% of Unigroup’s income – $10 billion in total  – came from government grants.  Semiconductors are a capital-intensive business.  And if for some reason your cashflow starts to go south, you have a problem. 

In November, Unigroup defaulted on a yen-denominated bond.  In December, it defaulted on a US-denominated bond.  In total, defaults are on loans equalling over a billion dollars.  Unigroup’s total debt is over $30 billion and slightly more than half of that debt is up for renewal in the next few months. Cash on hand is reportedly about $8 billion.  This is looking like an almighty disaster, and even if there is a state bail-out (which seems entirely possible), it’s hard to imagine how this won’t have serious negative repercussions for the university, reputationally if not financially.  Worth remembering that sometimes high-flying companies are just asset balloons – even if they are run by a prestigious university,

Academic Honesty

The Chinese government has been trying to get the higher education system to take cases of academic dishonesty more seriously.  A few months ago, the government announced that among the consequences for plagiarism would be a reduction in one’s social credit score.  Then, having decided the problem was less about students than more about universities, the authorities changed track.  Now, the government has decided to check a universal 2% sample of all undergraduate theses – still a thing in China – for plagiarism.  This isn’t entirely new: the government has been doing something similar for a while with master’s and PhD theses.  What is new is that institutions with high levels of plagiarism could now face funding cuts as punishment.  (Is this a form of performance-based funding?  I wonder).

I don’t think there is anything special about the Chinese experience with academic honesty and institutional laxness in punishing it.  I am in fact pretty sure you find this everywhere that higher education has grown at a breakneck pace: rapid growth breeds lower standards, partly because rapid growth means institutions tend to hire and be led by people with lower sets of academic qualifications, but also because institutional cultures for internal quality assurance take time to gel, and breakneck expansion gets in the way of that.  Institutions shoot for the form of being a university (i.e. issuing lots of degrees) before they get around to actually ensuring that the degree means very much.  And in these places, what makes or breaks a university system is the quality of the external quality assurance system.  In China, that system is much more dependent on central government diktats than elsewhere, but it does seem to kick in eventually.