The country's top advisory body has called for the issuing of national treasury bonds to help ease skyrocketing debts resulting from the runaway expansion of the nation's universities and colleges.

The Standing Committee of Chinese People's Political Consultative Conference released a report earlier this week saying that the total debts of China's public universities and colleges had reached 250 billion yuan ($32.5 billion).

Universities' income mainly depends on tuition fees and government funding, which often fails to cover daily expenses and interest on bank loans, let alone manage to pay off these debts, the report said.

It suggested that central and local governments should share the loan interest burden with universities and national treasury bonds worth 100 billion yuan should be issued soon.

"The universities want to enroll more students to collect more tuition fees, which may lead to future expansion and get them into a vicious circle," the report said.

Enrollments have risen rapidly since the government launched a student-recruitment campaign in 1999.

In the first year of the campaign, enrollments swelled by 520,000 nationwide.

As more students poured in, universities turned to loans to finance the building of much-needed classrooms and dormitories.

Universities have borrowed large sums of money in recent years to finance new buildings or even totally new campuses. But few projects have been finished, and now it's payback time, according to sources with the National Audit Office.

The Ministry of Education and the Ministry of Finance jointly released a document in July 2004 that called on colleges and universities to be more financially responsible. It also ordered universities to limit their enrollment growth rate to less than 5 percent.

The huge loan burden also resulted from the tide of university mergers, said Chen Jia'er, former president of Peking University.

"By merging, the universities wanted to become famous in a bid to attract more attention and secure more government funds. However, the results of this have been far from satisfactory," Chen was quoted as saying by Beijing News.

For example, following mergers with several universities and colleges in recent years, Jilin University in Northeast China's Jilin Province is now a mammoth institution with more than 60,000 students.

Jilin University issued a notice in March asking for suggestions on how to solve its financial problems.

"Since 2005, Jilin University has paid interest of as much as 150 million yuan to 170 million yuan each year on its loans. The debt has mainly been incurred in two areas - infrastructure and salaries," the notice said.

(China Daily 07/07/2007 page3)