A Policy Analysis of the Financing of Higher Education in China: Two decades reviewed

Abstract

This policy review examines major government policies and reforms regarding higher education development in three distinct periods, and analyzes their impact on financing higher education in China. The analysis reveals that with the expansion of enrollments, declining funding from central government, increasing demand for greater quality and efficiency, and ascendance of market orientations and solutions, a new mechanism of administration and financing has emerged to adapt Chinese colleges and universities to change. The study describes four trends in higher education financing in China: (1) decentralization - shifting financing higher education from state government to provincial governments; (2) diversification of financing - supporting higher education with income from university enterprises, contract training for enterprises, contract research and consultancy, and donations and endowments; (3) cost sharing - sharing cost of higher education with students, parents, and other social sectors; and (4) optimization - increasing efficiency through consolidations and mergers among institutions. These reform attempts are parallel to the worldwide trends in the financing of higher education described by Johnstone. Results show that the financing mechanism of higher education has evolved to meet demands imposed by the changing political and social environment.