Marketization of higher education
Abstract:
Marketization is one of the most prominent features of the reform in Chinese higher education shown by the expansion of autonomy of HEIs, the increase in funding channels, the establishment of the ‘two-way selection’ or ‘graduates-meeting-employers’ graduate employment system, the reform of personnel and distribution systems and socialization of logistics at HEIs. The dual natures and dual functions of higher education determine the feasibility of marketization. With the reform and opening up and development of a market economy, the marketization of higher education expanded gradually. Massification of higher education and the universities’ financial crisis also sped up the establishment of the higher education market. Expansion of university autonomy is a gradual process and the basis for marketization, during which the role of government changed from direct into indirect management. Funding of HEIs changed from solely depending on government fiscal to raising money through a variety of financing channels, giving full play to the role of the market. Reform of the graduate employment system forced the graduates to enter the market, while reform of the teaching staff employment and distribution system promoted the mobility of teaching staff, which resulted in the teachers’ participation in marketing competition and improved their teaching motivation and efficiency. Socialization of logistics of HEIs forced the logistics to become a competitor at the market and provide high quality services for HEIs at low cost. Marketization of higher education has both positive and negative impacts, and the latter should be reduced mainly by the effort of the government including coordination.
One of the most prominent features of the development of Chinese higher education in the past 30 years is its marketization, which means introducing market mechanism into the running of higher education so as to lend it some of the significant features of market economy such as competition, decentralized decision-making and so on. The higher education governance model should change through devolution of power from the government to the HEIs; thus HEIs were given autonomy and the role of the government in the management of higher education has changed from micro-control into macro-management. Marketization of higher education was launched gradually, featuring the expansion of autonomy of HEIs, the increased funding channels, the establishment of the ‘graduates-meeting-employers’ graduate employment system, the reform of the teaching staff employment and management distribution the socialization of logistics at HEIs. Marketization of higher education emerged and strengthened with China’s reform and opening up and the development of a market economy, and in turn promoted the pace and the speed of the market economy.
Background of marketization of higher education
At the foundation of the PRC in 1949, China adopted a highly centralized planned economy system following the model of the former Soviet Union. Under those circumstances, this system played a major role in laying a sound industrial foundation and promoting national development by rapidly mobilizing and deploying the limited human, material and financial resources of the whole society on key national constructing projects. But with the development of the economy, the drawbacks of the highly centralized economic pattern were gradually exposed, such as neglecting commodity production, law of value and role of the market, serious egalitarian distribution, absence of separation and barriers of government functions from those of enterprises, and overly centralized and strict management of the nation, which hampered the further development of the social economy. Reform of the economic system became an inevitable trend in social development.
The Third Plenary Session of the 11th Central Committee of the CPC in 1978 decided to focus on the central task of economic construction and to implement reform and a opening up policy, which was the prelude to China’s market economy reform. In the following decades, China gradually changed the originally planned economic system and established and perfected the market economic system. Instead of the government, the market began to play a fundamental role in allocating resources. Through the economic system reform, the layout of the state-owned economy was optimized, the quality and efficiency were improved and a common development of various forms of ownership was established. The egalitarian distribution was changed into a system giving priority according to work requirements with a variety of forms of distribution as supplements. The pace of administrative reform geared to the economic reform was accelerated and this economic and social reform promoted China’s rapid development. In the new political, economic and social context, a number of factors led to the marketization of higher education.
Reform and opening up and the economic and technological development
Before the reform and opening up, China’s higher education system had been adapted to the highly centralized planned economy, with all HEIs owned by the state and directly administered by the MOE and other central commissions and ministries, with funds allocated by the state. This system had also played an important role in the restoration and establishment of the normal teaching order, improving teaching quality and ensuring a planned and proportionate development of higher education. However, with China’s economic and social development, the shortcomings of the original system gradually became exposed.
The local government and HEIs lacked autonomy and creativity, resulting in the following problems: inefficiency in higher education, mainly including lack of capability in personnel training, which was on a small scale and a low level; HEIs’ lack of awareness of scientific research, leading to limited contribution to the development of culture, science and technology; and a void in the concept of social services, with the main functions of HEIs being confined to teaching and education. The low efficiency of higher education was incompatible with the market economy. Moreover, the productive relations of higher education were incompatible with the requirement of reform and development, with higher education system, mechanisms, various rules and regulations and the associated attitudes and atmosphere severely constraining the productivity and adaptability of higher education.
Social and economic development demands a lot of human resources, thus higher education should undergo not only a big expansion in scale, but more importantly, a fundamental change in the characteristics of the personnel it cultivates. Massification of higher education is a social trend and higher education should help the students to be well prepared for future work and life with emphasis on knowledge, skills and adaptability to society. Especially after China’s access to the World Trade Organization (WTO), the society, economy and other aspects will integrate into the international system at a greater speed and on a higher level. With China’s accelerated integration into the world economy, its industrial structure and layout will be re-adjusted, which will inevitably require the adjustment of structure, disciplines and direction of higher education.
Economists who paid attention to the marketization of education believed that the long-established public education system was a government monopoly. Due to its lack of the necessary market competition, the schools and institutions held little liability for students, and the students held little liability for their own study, which led to inefficiency and a waste of resources. So from the economic, social and educational perspectives, such a system was a failure. The only way out was marketization of education. The introduction of a market mechanism into higher education is an effective way to improve the efficiency, quality and social adaptation, and to increase the resources of higher education.
Reform and opening up necessary and economic and technological development for the marketization of higher education, made this possible. With the development of private economy, foreign-owned enterprises and other economic factors, an ownership structure of coexistence of diverse forms was formed. The enterprises and sectors of different ownerships cooperated and competed with each other, which greatly promoted the development of productive forces. The competition in human resources became severe too, but the public HEI products could not meet the requirements because of the shortcomings in the system, scale and discipline structure. The development of the economy and society made it imperative for HEIs taking the responsibility of cultivating talents to develop accordingly. Meanwhile, along with the economic development, people’s income and living standards improved, thus individuals gradually became capable of paying for their higher education.
Massification and funding crisis of higher education
China is a country with more than two thousand years of high regard for education. Expecting their children to succeed is a long-time tradition and sending their children to college is the hope and expectation of every family. The destruction caused by years of war before, and poverty at the beginning of the foundation of the PRC deprived most people of their higher education, with only a few fortunate exceptions. During the ‘Cultural Revolution,’ higher education in China, which had just been re-established, was severely damaged. Therefore, after the reform and opening up, the people’s demand for higher education was high. Especially with the sustained and rapid economic and social development, the diversification of social, economic and cultural development, further intensification of international competition and on the basis of the rapid spread of primary and secondary education, the people’s desire to pursue higher education became increasingly stronger.
Prior to 1999, enrollment for higher education was relatively small, while the demand of the market on college graduates was very high, so the expected return to higher education was great, which led to a lot of people desiring to receive higher education. Taking part in the college entrance examination was like a mighty force coming through a singleplank bridge. Since 1999, the enrollment has been expanding to a great extent every year, for the purpose of accumulating human capital and improving the quality of citizens and of easing the employment pressure. However, a few years later the new problem of unemployment of college graduates emerged. An even more prominent problem was that the quality of higher education was not guaranteed, because the investment in higher education did not increase in accordance with the growth of enrollment. The lack of quality teaching staff and facilities and out-of-date teaching materials and curriculum, which was out of touch with market and social development, failed to equip students for their careers. Such circumstances put the government into a passive situation. At the same time, although the expansion of higher education was great during those years, a considerable gap still existed between the demand for the rapid economic development of talent and the strong desire of citizens to receive higher education.
Development of higher education requires huge investments. Under the existing education system, a shortage of funds co-existed with repetitive construction and idle and wasted resources. Since the foundation of the PRC, HEIs have repeatedly been split and recombined, resulting in a great waste of resources. The allocation of resources was arbitrary, which made the shortage of funding more prominent. As technology advanced, changes in the economic growth and the corresponding structural demand for the labor market led to an increased social demand for higher education and a change of structure, causing the continuous expansion of higher education and change in disciplines, content and cultivation methods. At the same time, the existing higher education system and HEIs lacked efficiency. Therefore, expenditure per student rose continually, accumulating to such an extent that it could not be covered solely by government investment. In other words, with the limited growth of government finances, it was impossible for higher education to expand according to its needs. Thus the existing funding system of higher education with fiscal expenditure as the main source faced great challenges. With the increase in national strength and the rapid development of demand for higher education, the perspective of massification of higher education had been gradually accepted by many Chinese, yet the realization of it could not solely depend on government fiscal. In this context, the government must take effective measures to ease the financial tension of higher education, such as increasing tuition fees and accommodation, raising money, donations, and other methods of cost-sharing by the community as compensation for the talent from enterprises. More importantly, the administration system should be reformed to attract more funds from society to develop private higher education and to introduce competition to improve the effectiveness of public higher education.
The nature and function of higher education
In reality, the motivation of people pursuing higher education varies. There are generally three reasons. The first is to improve one’s knowledge and ability so as to obtain a higher salary and improve one’s living standards. The second is to improve the individual and the family’s social status so as to earn respect and appreciation of others (higher education is an intangible social wealth, especially in a society with elite higher education). And the third is to enrich one’s spiritual life through access to higher education with a view to enrich one’s personality and enjoy advanced spiritual pleasure. At present, the first is the main reason and motivation.
Education is a quasi-public good. On the one hand, by improving the quality of the educatees, it can help to create more wealth for the society, to improve the level of civilization, and to promote harmonious development of society. So it is public. On the other hand, education can increase the students’ knowledge, enhance their capacity and increase their human capital, so as to benefit their future income. So it is personal as well. The latter aspect is especially prominent in higher education. Table 4.1 shows rates of return to higher education in different countries in the world. It can be seen that personal rates of return to higher education are higher than the social ones, which demonstrates the nature of education as a private good. As such, higher education can become a part of the market and HEIs can set disciplines and courses, employ teaching staff, and allocate resources based on the demand of the market. According to the principle of ‘whoever benefits pays’ of the market economy, college students should pay for their tuition. By setting disciplines flexibly according to the demand for labor, HEIs can attract more students and obtain more education funds, which will ensure the quality of higher education while reducing the government’s financial burden.
Table 4.1
International comparison of rates of return to higher education (unit: percent)
Source: Psacharopoulos, George. ‘Return to Investment in Education, A Global Update’, World Development, 1994, vol. 20(9): 1328.
Meanwhile, education has two functions. On the one hand, it should meet the general needs of social and economic life, and on the other it should also pay attention to the research on the pure human spirit, i.e. cultivating well-rounded human beings and training workers needed by the society. How to balance the two functions is always a concern of educational study.1 Neither of these two roles of Chinese traditional higher education is strong, especially not the latter. This traditional education aims at improving the students’ level of knowledge to cultivate ‘knowledgeable’ people, which can be completed in the ivory tower type of campus. With the development of the society and reform of the economic system, the second function of higher education became the major driving force and objective to urge HEIs to meld with society, serve society and draw resources from society. In September 1988, Deng Xiaoping declared that ‘Science and technology are primary productive forces,’ on the basis of which the strategy of revitalizing China through science and education was established. Since then, China’s economy and education have developed rapidly. And the practice proved that a mutually reinforcing relationship was formed between the two. Both theory and practice have proved that education had become a fundamental element2 which could and has promoted the development of the economy. Education can raise the human capital of the residents and thereby promote the economic development and increase personal income, which is an important function of education, especially higher education today. To perform this function successfully, it is necessary to improve the quality of higher education, and integrate the disciplines, curriculums, and content of teaching with the social and economic demand for talented workers.
In short, the problems in higher education could not be fundamentally resolved under the existing higher education system. In spite of the expansion of education, the improvement of the quality of education and the improvement of efficiency and effectiveness of higher education need a new system and mechanism.3 It can be seen that both the objective situation facing higher education in China and the attributes and functions of higher education itself require a new market-oriented mechanism or system to innovate the original one. Only by relating closely to the demand of the market can a country’s higher education develop healthily and at the same time make the maximum contribution to the country and society, which is demonstrated by the reality and practice of developed countries. Marketization is the only approach to enable the state-owned higher education to compete in the market, improve quality and efficiency and optimize the structure in order to reap more economic and social benefits. Only by forcing higher education to compete in the market can a fundamental change of the Chinese current education system take place. By marketization, the current monopoly of public university on education could be broken and competition could be brought about to public higher education so that public universities are forced to carry out reform on the present administration system and exert themselves to meet the needs of the social and economic demand and the development of the market economy.
Approaches to marketization of higher education
Marketization of higher education aims at getting rid of the traditional administration model of government monopoly to increase the autonomy of HEIs and to introduce market mechanisms to improve the efficiency and to give full play to the role of higher education in the development of society. Market mechanism mainly refers to the price system and competition; autonomy of HEIs is mainly concerned with the internal and external affairs such as teaching, research, personnel, finance, infrastructure, recruitment, foreign exchange and so on. According to education theorist Jog Koelman, marketization of higher education should have the following three characteristics: first, autonomy of HEIs: the government should entitle the HEIs full authority so that the HEIs will respond rapidly to market signals according to their own characteristics and advantages; second, to replace the funding system which relies solely on the government by a new one with funding shared between the government and social forces; third, the quasi-market essence of the higher education market.4
In western countries, the main content of marketization of higher education includes reduction of the state funding and increase of the share of organizations and individuals; strengthening the links between higher education and private economy and enterprises to strengthen HEIs business links; and strengthening the role of private higher education institutions. Key indicators to evaluate the degree of marketization mainly include the self-financing principle, the rise of the education market, the reduction of the role of the government, the adoption of the principles of the market, market-driven courses, income-generating institutions, internal competition, and efficiency.5
There are similarities as well as differences between the marketization of China’s higher education and that of other countries. Marketization of higher education mainly includes the expansion of HEIs autonomy, the increase of financing channels of higher education and active participation in market competition in teacher recruitment and graduates employment, accompanied by the unique socialization of HEIs logistics. Higher education in China has experienced marketization, with the entry of the market and the change of roles of the government.
The reform in the graduate employment system has been discussed in Chapter 2, and in practice, for graduates of each year, the modes of job-hunting were basically decided by the policy at that time. Although the employment rate decreased in recent years as a result of expansion of higher education, imbalance of regional and disciplinary structure and other reasons, the change of policy improved the efficiency of employment. So marketization of graduate employment will not be covered here, and this chapter will mainly demonstrate the marketization process of higher education from the other four aspects.
Expanding autonomy of HEIs-systematic premise of marketization of higher education
Autonomy of HEIs means that HEIs, as independent entities, independently exercise the right to make policies and organize education activities in accordance with law. The conception of running the HEIs is free from external control or intervention, and HEIs can deal with various relationships and related issues adhering to the law of education and their own characteristics. In short, it means that HEIs can independently administer their internal affairs, trying to exclude the external intervention of administrative power. The fundamental purpose of autonomy is to ensure the HEIs’ own academic rights and academic freedom.
From 1952, private HEIs in China began to be nationalized and readjusted with reference to the Soviet model. Then a higher education system matching with the highly centralized planned economy was formed, whose basic feature was high concentration and state ownership, namely, the state was the investor, administrator and school organizer all at the same time, with unified planning by the central government, investment and administration by the central and local government, and unified entrance examination and recruitment, with planned graduate employment. In this highly centralized and unified education system, government at all levels played a decisive role, and HEIs had almost no autonomy.
Since the reform and opening up, it has been an urgent requirement of HEIs to expand their autonomy. Since the 1985 Decision was clearly advancing the policy of ‘expanding the autonomy of HEIs,’ a series of documents on reform and development of higher education of the central government have made clear requirements on increasing the autonomy of higher education. The 1993 Outline proposed to establish an education system with the macro-management of the government and autonomous administration of the HEIs, making HEIs legal entities with autonomy and accountable to society. ‘China Higher Education Law’ issued in 1999 established the basic principles of autonomy of HEIs in running schools from eight aspects, namely civil rights, admission rights, discipline-setting rights, teaching rights, scientific research development and social service rights, international exchange and cooperation rights, institutional arrangements and personnel management rights, and property management and application rights. Although the promulgation of this law increased the autonomy of HEIs in personnel employment, enrollment, financing and use of funds to a great extent, it still stayed at the operational level and the substance of autonomy was not touched upon. Moreover, because of the traditional ideas and some objective reasons, the pace of expansion of the autonomy of HEIs was still very slow. Therefore, it will be the main task of reform on higher education management for some time to expand the autonomy of HEIs.
With the acceleration of the development and popularization of higher education, the traditional model of HEIs became increasingly unable to meet the needs of the times. Traditionally, the state spent huge funds, but the public HEIs were inefficient, with wasted and idle resources and slow reaction to the demand of society, which led to discontent in government and society. So in every nation the popularization of higher education is also a process of reforming the traditional HEIs through such measures as cutting budgets, reducing redundancies, improving efficiency, and streamlining the administrative structure. On the one hand, market concepts and practices are applied to the administration of higher education. Through the introduction of market mechanisms, competitiveness of higher education is enhanced, making its services more responsive to market needs. On the other hand, in order to make the HEIs develop flexibly in the market environment, control over the HEIs must be reduced and HEIs must become the main body in the market. Thus, the autonomy of HEIs must be strengthened in the process of popularization so that they will neither be driven by the administration nor degenerate into mere slaves to the market.
Autonomy concerns institution-based management and is a very important indicator of marketization of higher education. Among the issues concerning the reform of higher education in China, the ‘expansion of HEIs’ autonomy’ is actually the first concern, but the has seen slowest progress yet. Even so, from the perspective of historical development, through the persistent academic appeals and struggles and the constant intrusion and impact of market forces, the government has come to realize the existence and seriousness of the problem and has begun to fade out from some public service sectors including education.
Diversification of funding channels, especially the development of private HEIs
The diversification of funding channels is one of the most significant features of the marketization of higher education. As is stated in Chapter 2, a multi-channel higher education funding pattern has been formed, so far including government financial appropriations, tuition fees, funds from social organizations and citizens, donations, and fund-raising for the running of schools.
Before the 1980s, the cost of running HEIs in China depended completely on government finance. The 1985 Decision put forward that HEIs ‘can enroll a small number of self-financing students on the basis of completing the national enrollment plan.’ Since then, some HEIs have tried enrolling some self-financing students by reducing the minimum passing marks. A number of state-owned enterprises and governments began to increase the number of enrollments in the name of ‘entrust foster’ for the purpose of their own future employment. This pattern gradually became a social trend, and a phenomenon of coexistence of government-financing and self-financing came into existence. In this case, the HEIs were ready to accept self-financing students in order to obtain more funds, and enrollment of higher education gradually evolved into a ‘dual track’ – plan and market – system, which existed from the mid-1980s to 1992. In 1989, a document jointly issued by the SEDC and other ministries recognized this cost sharing and cost-compensation system. And from the same year on, all new entrants of HEIs would pay tuition and accommodation fees.
Driven by this ‘dual track’ system, unfair and irregular phenomena appeared when enrolling new college students. Some candidates with no social background were forced to change from being government-financing students to self-financing students, and ‘pulling the string’ became an imperative problem to be solved. ‘Merging the track’ began in 1994 and was completed in 1997. Since then, one score line and same tuition have been adopted for different types of students at all HEIs. After a few years of practice, tuition accounted for an increasingly large proportion of higher education revenue and became the second most important source of revenue next to the state fiscal.6 Of course, it should be admitted that the comparatively high fees of higher education were beyond the payment capacity of ordinary people at that time.7 Determining the appropriate level of fees is one of the problems of the higher education funding system to be solved as soon as possible.
In addition to tuition fees charged to students, the HEIs also created other sources, such as funds from school-run enterprises, fund raising, work-study programs, and awards from service providers in the communities (the most Chinese characteristic of which is direct investment of HEIs into business, setting up high-tech companies and special industries based on their professional advantages). For the time being, raising money has been institutionalized and, in parallel with education, has become one of the two major functions of HEIs.8 Moreover, the HEIs also established partnerships with factories and enterprises, marketizing their services and commercializing their knowledge directly, and were growing into ‘market-oriented enterprises.’9
With the impact of economic globalization and the increase in domestic demand for higher education, continuous expansion of Chinese higher education in the late 1990s catalyzed new modes of higher education such as education groups functioning like industries, university towns established through a variety of financing, independent colleges and transformation of public HEIs. Specifically, a new pattern of diversification of HEIs in China emerged, which included public HEIs, privately owned and privately administered HEIs, privately owned and publicly supported HEIs, completely transformed public HEIs, partially-transformed HEIs, jointly owned private HEIs, Chinese–foreign cooperative HEIs, shareholding cooperative HEIs and foreign-owned HEIs.10
The following data clearly reveal the implementation of cost-sharing and the gradual reduction of the government’s fiscal expenditures. Since the 1990s, funds raised by HEIs have accounted for a rising percentage of total revenue, which was 30 percent in 1995, 36 percent in 1998, and 44 percent in 2000, and the proportion of government funding dropped correspondingly from 70 percent to 56 percent over the same period.11 In 2007, the total educational funds of HEIs were 37.62 million yuan, of which government appropriation for education occupied 43.81 percent.12
Development of private HEIs clearly demonstrates the process of marketization of higher education. As indicated in Chapter 2, China’s private higher education began in 1980, and in 1982 the state began to encourage social forces to invest in education. In 1997, the State Council promulgated ‘Regulations on the Running of Educational Institutions with Social Resources,’ which defined the relevant principles and policies of the state and the party comprehensively and systematically in the form of law. In the document released afterwards on the implementation of this ordinance, the scope of application was defined. The 1997 Regulations emphasized that the resources of funding were the fundamental criterion on whether an HEI was private or not. Only those HEIs whose establishment and running were predominantly based on self-raised funds were private HEIs. ‘There is no stable fiscal fund in “income from teaching research and other auxiliary,” and infrastructure costs can include some fiscal funds which should not occupy a holding position.’13 Chen (2008) also believed that private running actually had three meanings: private ownership, private administration and private funding.14
Table 4.2
Note: *’Tuition and miscellaneous fee’ of 2007 refers to ‘Income from teaching research and other auxiliary’.
Source: NBSC
So far, there are mainly two forms of private HEIs, namely, those with nationally recognized diploma qualifications and those without. The former should enroll students through the NCEE, and the latter hold various forms of post-secondary non-academic education and there are no restrictions on the enrollment. According to statistics, the total enrollment of private HEIs was 341,000 in 2002, and in 2009, it increased to 4,461,400 (see Table 4.3). In 2009, there were 658 private HEIs in total (including 322 independent institutes); roughly, among the 4,461,400 students, 2,524,800 were taking regular courses and 1,936,600 were taking short-cycle courses; there were also 193,900 preparatory students, students preparing for self-study examination and other types and 812 non-academic private HEIs, with a total enrollment of 852,200.15
One type of private HEI in China is the independent institute. Independent institutes have been important achievers of reform and innovation in China’s higher education system in the past decade and have contributed much to the development of private higher education and promoting massification of higher education. With the promulgation and implementation of ‘Regulations on the Establishment and Administration of Independent Institutes,’ especially the MOE’s approval of the transformation of some independent institutes into regular private HEIs, the development of independent HEIs has entered a new era.
In April 2003, the MOE issued the ‘Document on Standardizing and Strengthening the Administration on the Experiment of Regular HEIs Running Independent Institutes with New Mechanism and Mode,’ in which independent institutes were defined as independent or comprehensive second-rank regular undergraduate institutions which were established according to the new mechanisms and modes. The public second-rank institutions or schools and branch campuses were not included. The mechanism of the independent institute is to combine the advantages of public HEIs including brand and teaching experience with the advantages of private funds and operating systems. Such a mechanism can avoid the disadvantage of public HEIs with heavy historical burdens and inflexible personnel mechanism, and that of private HEIs that lack reputation and experience. Good functioning of independent institutes will promote the reform on public HEIs.
Basically, the development of the independent institute has passed through the following stages.
Attachment period – depending on the parent HEIs (1999–2002)
It is generally believed that independent colleges came into existence in 1999, marked by the foundation of City College of Zhejiang University co-founded by Zhejiang University and Hangzhou Municipal Government. The dependence on the parent HEIs is the inherent basic feature of independent institutes.
In this period, independent institutes served the need of expansion of higher education and increase in revenue and did not obtain the essential qualification of independent education, and the parent HEIs were actually the applicant, administrator and real owner. Independent institutes were not qualified to issue diplomas independently, and most did not have qualifications. The conditions of independent institutes alone were insufficient to support its operation, for example two thirds of the teachers were part-time, lacking cohesion; most disciplines were ‘cloned’ from the parent HEIs and without direction and major legal requirements such as legal entity and property rights were not clear.
Independence period – increasing institute autonomy (2003–2008)
Marked by the issue of the 2003 Document, the independent institutes began to be transformed to independent operations with the support of national policy. Independent institutes had the following three characteristics. First, the funding was mainly provided by the co-founders or raised by the private co-financing mechanism, and the standard of fee collection was set according to the state policy. Second, ‘five independences’ in the running and administration were first proposed, that is, school cadres, the campus, legal entity, awarding of certificates and financial accounting were basically independent. Thus, the exact implication of independent institutes was clear. Third, the administrative system and methods of independent institutes were co-determined by the applicants and partners, and the responsibilities, rights and interests of both parties were regulated and reflected by the signing of legally binding agreements. In addition, the dean responsibility system under the leadership of the board was performed at independent institutes. These features had initially been born with the basic elements of private institutions and as long as it was effectively implemented, the transformation from independent institutes into private HEIs was just a matter of time.
Independent institutes were widely recognized as excellent, but there was profound contradiction between the public ownership and private administration. With such a prominent feature of being a ‘dual-track’ system, the independent institutes’s short comings were fully exposed during enrollment. With the dramatic expansion in scale and increase in number, the competition among candidates became fierce. Therefore, many independent institutes took advantage of the lack of regulations and committed such infractions as lowering the minimum scores, recruiting through agents and spreading false propagandas. In 2005, the MOE issued a document to standardize the enrollment of independent institutes. Through strengthening of administration and policy guidance, the abilities of independent institutes in independent running, self-administration, and self-discipline were gradually enhanced.
Independent institutes began to be transformed toward application-oriented undergraduate education. China’s independent institutes are generally developed on the basis of bidding for dominant disciplines and characteristic majors, leading to the serious problem of conformity between independent institutes and the parent HEIs in training goals and discipline structures. However, with the gradual fading out of the ‘halo effect’ (high reputation) of the parent HEIs, the disciplines and majors no longer appealed to candidates. On the contrary, they became the origin of the severe competition for candidates and posts of graduates. Forced by the pressure to survive, many independent institutes began to reform and build the characteristic of application-oriented undergraduate talent cultivation for the regional economic development. Many independent institutes have established their own education model, significantly different from the parent HEIs, especially those research universities making the most important step towards independence. Of course, the formation of education characteristics is a long process. To survive, many independent institutes established modern and low-cost disciplines, resulting in overlapping. According to statistics, English was covered by more than 75 percent of independent institutes; computer science and technology by 71 percent; international economy and trade, 62 percent; and art and design, marketing, electronic information engineering, law, business administration, information management and information systems, accounting and other popular disciplines, by more than 40 percent.16 Therefore, how to build characteristics is an important challenge facing independent institutes in the future.
The transformation to regular private HEIs (2008–)
According to the plan of the MOE, some of the independent institutes will be transformed to regular private HEIs within five years, which will change the pattern of higher education. The documents of the MOE identified the main responsibilities and obligations of the independent institutes as entities, clearly entitled independent institutes to the legal rights in obtaining support, and stated the policy that the parent HEIs and funders have the right to obtain a reasonable return in accordance with the law. These provisions are in favor of attracting more social resources to private higher education, thereby providing the independent institutes with a new basis for development. In general, transforming to private HEIs is the fundamental way out.
On the other hand, the MOE would spare five years to inspect before the transformation, after which independent institutes will face five fates: keeping the same form, becoming regular HEIs, changing into or merged by private regular HEIs, or being terminated. Those independent institutes with private capital as the major funding source will be promoted to become private regular HEIs. In the meantime, independent institutes must improve school conditions, strengthen the construction of infrastructure and teaching staff, adjust positively to specialties in accordance with the target of development and the requirements on personnel training, improve teaching plans, teaching standards and the administration system, and strive to meet the basic requirements for private regular HEIs. In October 2008 and June 2010 respectively, four and one independent institutes were successfully transformed into private regular HEIs.
Patterns of independent institute operations can be summarized in the following four ways.
1. HEI-government (-and-enterprise) cooperation. The local government, industries (enterprises) and individuals jointly invest in the institute, and the principal accountability system under the leadership of the board is implemented. Such an institute has a relatively independent legal status. For instance, Ningbo Institute of Technology of Zhejiang University was co-founded by Zhejiang University and Ningbo government, and City College of Zhejiang University was co-established by Hangzhou government, Zhejiang University and the Zhejiang Telecom Business Group.
2. Restructuring. This pattern can be divided into overall restructuring, partial restructuring, and merging-and-restructuring. For example, Zhejiang Wanli College was established through the overall restructuring of Zhejiang Countryside Technical Normal College. Partial restructuring means that some campuses or schools of public HEIs are transformed and operated according to mechanisms of private institutions, collected tuition fees and underwent a self-rolling kind of development. For instance, Zhijiang College of Zhejiang University was restructured based on the coordination between Zhejiang Communication College and Zhejiang University. This is a shortcut for regular HEIs to enlarge scales, and promote their strength and quality of teaching.
3. HEI-enterprise cooperation. HEIs and enterprises jointly invest in the independent institute. Generally, enterprise groups, large enterprises or medium-sized enterprises with abundant financial resources are responsible for the money needed for the hardware, including school facilities, equipment, logistics facilities and logistics services. The HEIs provide software, that is, they are in charge of education administration, including faculty employment, teaching planning and administration of students from enrollment to graduation. For example, Wenzheng College of Suzhou University was co-founded by Suzhou University and Suzhou Kaida Real Estate Development Co., Ltd.; Wuchang Branch of Huazhong University of Science and Technology was co-founded by Huazhong University of Science and Technology and the Wuhan Junwei Group.
4. Cooperation between HEIs. These independent institutes are founded by Chinese and foreign HEIs. Teaching and administration are shared between the co-founders, of which the foreign party mainly provides distinctive disciplines abroad, curriculum materials, teachers, teaching methods, even teaching plans and academic qualifications, and some also provide funding, teaching facilities and cooperation in teaching and scientific research. Such institutes include the Sydney College of Business Administration of Shanghai University, China-Europe International Business School of Shanghai Jiaotong University, Raffles Design Institute of Donghua University, and Ningbo Branch of Nottingham University.
Teaching staff
Reform of the personnel system
In the planned economy period, the rigid personnel system matched the centralized administration system of HEIs. China’s teachers were state cadres – once assigned to a HEI job, a teacher would have an ‘iron rice bowl,’ i.e., he would normally be a lifelong employee of the HEI, resulting in the high dependence of the teachers on the HEI and the formation of ‘affiliation ownership.’ Such an ownership resulted in the low mobility of personnel, rigid employment and unemployment, and unfair promotion and demotion of cadres, which in turn led to the prevalence of excessive staff, low efficiency of human resources allocation and waste of talents. Such a personnel system was designed neither according to the need, nor on the marketization of higher education. The distribution system was also unreasonable, by which the salary and bonus were decided by title and position, and with no consideration of whether the task was being fulfilled or not. Therefore, the teachers worked hard for promotion instead of for the main purpose of their task.
After the reform and opening up, China began to recover the personnel system ruined during the ‘Cultural Revolution.’ The documents issued by the MOE in 1979 set the duties of teachers at all levels and also the content and methods of assessment. Another document promulgated in 1981 specified the workload of teachers and the method of calculation and pointed out that the workload was one of the mandatory requirements for determining professional titles. The relevant document promulgated in 1982 clarified the political and professional requirements and procedures and put forward some institutional principles on the titles of teachers at HEIs. However, the phenomenon of determining titles on the basis of seniority and educational background was prevalent, lacking rigorous scientific evaluation procedures and management systems and ignoring performance.
Reform of the employment system was launched in 1986. On the basis of the recovery of the evaluation of professional titles, a new personnel system which combined the evaluation of titles and appointment was established and stated in the Teachers Law promulgated in 1995. The implementation of the employment system of teachers at HEIs laid down the policy foundation and pointed out the direction for the reform of the personnel system of HEIs. However, because of the lack of supporting measures and the deviation from concepts, the problems of emphasizing evaluation of titles and overlooking appointment and administration came into existence, and the rational mobility of talents, competition and incentive mechanism had not been formed. To change this situation, the Cheung Kong Scholars Program was launched in August 1998, in which distinguished professor and chair professor positions were set, with the annual incentive grant of 10,000 yuan, and outstanding Cheung Kong Scholars had the opportunity to be awarded up to 1 million yuan. The implementation of this system was not only a major attempt on the reform on the appointment system of teachers, but more importantly, it had a profound stimulating effect on promoting the program.
The ‘Document on the Deepening of Personnel and Distribution System at HEIs’ issued in September 1999 abolished the life-long tenure system of professional titles and cadre posts of teachers and put forward the professional post appointment system. The reform of the distribution system quickened with the principle of ‘demand-based post-setting, open recruitment, fair competition, performance-based recruitment, rigorous evaluation, and contract management.’ Salaries of the staff became directly linked to post duties, performance and contributions, and distribution according to work and high payment for outstanding performance were set up. Reform of the personnel system profoundly manifested the introduction of the principle of competition into HEIs and the marketization of higher education. Many HEIs began to adopt the teacher appointment system, and in 2000 the MOE launched the staff appointment system in five universities, beginning the reform of the management team at HEIs with competition replacing the ‘iron rice bowl.’ The appointment system was comprehensively carried out in 2002. Through economic and management levers, the mobility of talents was promoted, rational allocation of human resources was achieved, and academic productivity of HEIs was enhanced.
In addition to systematic reform, another cause for the marketization of recruitment of teachers was the competition between universities. In order to obtain more research funds and outstanding applicants and teachers, severe competition in educational resources, educational quality, student enrollment, and teacher employment emerged between HEIs. In order to improve the efficiency of resources and the quality of higher education, the government encouraged competition between universities through a variety of policies. In recent years, reform of the personnel system was launched at HEIs, competition mechanism with open recruitment and job appointment was introduced into the recruitment of teachers and the mechanism of free flow of university teachers was gradually established.
In 2003, reform of the personnel system of HEIs in China took an important step with the reform of Peking University making it representative and influential, bringing about great response both at practical and operational level and in academia. Before the reform, the main characteristics of the system at Peking University were that teachers could be recruited but not fired and could be promoted but not demoted; there was insufficient pressure on teachers; the high level talents could not be recruited since the posts had already been occupied by others, even if some of them were no longer effective; internal promotion was the main channel and a large number of the new teachers were doctors who had graduated from the same university. The main characteristics of the new system are as follows: the appointment system and grade-based mobility system for teachers; introduction of external competition in recruitment and promotion; exclusion of new graduates from this university from recruitment; introduction of ‘professor appraisal system’ and the external review system for recruitment and promotion; category-based management of teachers; and the ‘last-and-out’ principle for disciplines. 17 The reform of Peking University was an attempt to introduce competition to promote mobility of teachers an thoroughly change the traditional personnel system so as to promote the common development of HEIs and academy.18 In May 2004, the university launched open recruitment at home and abroad for the first time according to the final reform program, the reform entering into the substantive operational phase. This reform of Peking University initiated the mobility of teachers at HEIs and changed the affiliation ownership, which was a positive exploration in the possible ways and directions of reform on the personnel system of HEIs.
As for the administrative personnel, the personnel agency system19 and staff rank system were adopted. Since 1999, the personnel agency system gradually became a new and important personnel management model and an important form of marketization of the personnel system of HEIs. Its role was to change the internal personnel management into a social one, changing ‘affiliation-owned’ personnel into social ones and forming a vigorous personnel mechanism. It was a positive experiment in the personnel system and employment pattern of HEIs and in the integration between the HEIs and society. In 2000, reform of the administrative personnel system started at some HEIs. On the basis of classification of the work, the administrative personnel were categorized into two series, and professional management was carried out. Administrative staff could only be promoted at the administrative level but could not obtain professional titles. Relevant document promulgated by the Ministry of Personnel and the MOE during 2005 to 2006 promoted the deepening of the reform, and some provinces launched the corresponding reform of local HEIs.
Distribution system
Before the reform and opening up, the social status of university teachers was relatively low, especially during the Cultural Revolution, and salaries of teachers were very low. After the reform in 1978, China highlighted respect for teachers and attached great importance to education, leading to significant increases in social status and income levels. The average salary of teachers in 1978 was 545 yuan, ranking 13 th in all 15 industries at that time;20 in the first few years of the opening up, the average wage of teachers had been one of the lowest three among the 12 industries. In 1990, the average salary of HEIs teachers was 2,325 yuan, 1.09 times the national average; and in 2005, the average annual salary of HEIs teachers increased to 29,689 yuan, 1.62 times that of the national average (see Table 4.4).
Table 4.4
Average salary of HEI teachers
Note: Datum of 1978 refers to the average salary of teachers of the whole country, ranking 13th among the 15 industries.
Sources: Ding, Lechen and Wanchun Jiang. ‘Comparative Study on the Salary Levels of Chinese and American Teachers’. Statistical Education, 2007 (11), 56. China Statistics Yearbook, 2009.
All along, the low input and low-pay conditions of HEIs had an increasingly negative impact on the development of higher education and HEIs. Reforming the distribution system of HEIs, matching this system with the development of market economy and society, and arousing the work enthusiasm of the teaching staff are a significant issue facing the reform and development of HEIs. The original egalitarian distribution system did no good for mobilizing the enthusiasm of the staff. So in 1982, Shanghai Jiaotong University decided to carry out reform. The salary of each rank was divided into several grades, and 70 percent of the salary would be distributed every month, and the rest would be distributed at the end of each year depending on one’s performance. In such a way, salaries of teaching staff were related to the capacity, contribution and quantity and quality of work. The practice of deciding salary according to seniority was discarded and the egalitarian distribution was abolished in theory. Enthusiasm of the teaching staff was mobilized. As far as the whole country was concerned, the reform at this period failed to achieve the target, since the salary of teachers was generally low and egalitarianism still existed.
In 1993, a new wage system was established, known as the position-based hierarchical salary system. Corresponding reform was carried out with the salary system of teaching staff at HEIs in the following major fields: respective position-based hierarchical salaries were applied to professional and technical personnel and management staff; an allowance system was established, accounting for 30 percent of the total salary, and the distribution of allowances was directly related to the quantity and quality of the work; a normal evaluation and promotion system was introduced, and the salary of those who passed the evaluation for two consecutive years would be raised.21 The original intention of the reform was to relate the earnings of the teaching staff with their performance, to establish a distribution system for regular adjustment of salaries and to promote a substantial increase in staff salaries. However, China was at the early stage of the market economy then, with under-appreciation of the market economy. At the same time, the assessment measures did not keep pace with the reform, so such a system bearing the characteristics of transition from planned economy to market economy was not very successful in practice: allowances were low; a rise in salary became routine, and a pay-rise based on seniority was still a problem.
In 2006, a performance-based payment system was implemented at different institutions and the one-time bonuses at the end of the year, a ‘13th month payment’ and regional supplementary allowance, were eliminated. The performance-based payment was mainly composed of the basic part and the incentive part. The former was based on the appointment, including position allowance and subsidies for daily life, and the latter, including awards for extra work, performance bonus and awards for special contribution, was based on performance. Institutions can also set team performance-based payment according to their own situation and need. Currently, many HEIs have decided to adopt this system and are carrying out this reform. But the principles and methods vary: some distribution schemes are simple but sketchy or obviously unreasonable so that they are hardly convincing and sustainable; while some are scientific, fair and reasonable but unworkable. Because of the imperfection in theory and practice, the system is difficult to be implemented. For instance, performance-based payment must be on the foundation of the scientific performance evaluation system, which has not been established at Chinese HEIs, leading to the risk of unfairness, unreasonableness and corruption.
To sum up, as a group, the teaching staff in HEIs have relatively low mobility as a result of the effect of the planned economy and ‘affiliation ownership,’ while the personnel recruitment system and distribution system of HEIs have not met the requirement of the market economy. At the same time, during this reform, the interests of a wide range of people are involved and the supporting system is imperfect, thus the marketization of teaching staff at HEIs is still facing various difficulties.
Socialization of logistics of HEIs
As important auxiliary activities, logistics has been an indispensable component in the running of HEIs together with such functional activities as teaching and research and support activities such as administration. Without the guarantee of logistics, it would be hard to effectively carry out the functional and support activities. As a result of the political and economic systems and the mechanisms after the foundation of the PRC, the logistics of HEIs in China has significant characteristics. During the 30 years after the reform and opening up, ongoing reform of logistics has been carried out and a socialized logistics system is being attempted. Socialization of logistics is one of the important aspects of the marketization of higher education. Although this work is not completed yet, important progress has been made and the reform has had a profound impact on not only the logistics but also on the overall running of HEIs.
In general, socialization of logistics means separating logistics from the administration system of HEIs and outsourcing HEI services to independent service providers. Through restructuring, the logistics of HEIs would be taken into the market economy system and a new government-led, community-run and socialized community-service industry from which the HEIs have opportunity to choose whichever can meet their needs. To be specific, as for the management system, by reforming the model of direct and all-inclusive management by the HEIs, logistics will be separated from administration of the HEIs and will be integrated into tertiary industry in accordance with the principles of large-scale socialized production, forming a number of independent economic entities, and establishing contractual economic relations between the HEIs and the logistics entities. As for the balance system, socialized employment and the social security system will be established and the cadre appointment system and employee contract system will be implemented. HEIs can set posts according to their own needs, gradually abolish the internal employment system and absorb some employees from the labor market, establish enterprise model management and provide paid services. Consequently, transformation of administrative systems and operation mechanisms could be achieved.
Reestablishment of the logistics system of HEIs (1977–1985)
In contrast to modern western universities, the Office of General Affairs (seneschal) is in charge of logistics and serving the life, education, research and production of HEIs since the establishment of modern Chinese universities. From the end of the ‘Cultural Revolution’ until 1985, with the return to the normal order of higher education, the seneschal and its function were restored. Of course some of the functions were changed – for example, the activities originally related to research equipment, finance, books, teaching or research were removed from logistics, and a service-focused logistics was established, including accommodation, medical care, commerce, utilities, and transportation.
The first step of logistics reform: the establishment of the contract management system (1985–1998)
During the mid-1980s, logistics of HEIs was constantly undergoing reform with the recovery of the economic system. The 1985 Decision clearly pointed out the direction of the socialization of logistics reform. Then, quota contract of all funding for logistics, signed by the seneschal and the HEIs, was carried out at Tongji University. Since then, more than 200 colleges and universities across the country have implemented comprehensive contracts on logistics, partial ‘separation of institutional functions from enterprise management,’ or multi-university joint logistics. The overall feature of these reforms was the implementation of contract management, taking an important and difficult step in the socialization of logistics.
The socialization reform of the logistics was generally tough and prudent. From the 1980s to the 1990s, it went up and down due to the impact of the fluctuations of the prices of grain, oil, water and electricity. The logistics based on food service for students was confined by the internal operation mechanism and impacted and interfered with by the society outside the campus. Those factors caused problems for the reform process. With the transition from a fiscal-based to a multi-channel funding system, the orientation of the logistics reform was transformed into raising funding, and developing school-run industry and tertiary industry. Especially after 1992, with the mushrooming of school-run industries, the function to raise money complicated the relationship between logistics and HEIs.
The two documents – ‘Decision to Accelerate the Development of Tertiary Industry’ promulgated in 1992, and the 1993 Outline – pointed out the direction of gradual socialization for logistics reform. There were two highlights in the socialization of logistics of HEIs, one of which was the deepening of the reform on food service, restoring the pattern in which HEIs provided infrastructure and other equipments, while the individuals who signed the contracts bore sole responsibility for their own profits or losses. The other was the flourishing of school-run industry that led to specialization of production, commercialization of services and marketization of operation.
Socialization reform of logistics (1998–)
After several years of exploration, adjustment and advancement, logistics of HEIs has basically changed from enclosed self-run logistics to the combination of optimizing the logistics service system and socialization. Although the level of socialization was not high, yet it could basically suit the development of HEIs.
In 1999, with the beginning of the popularization of higher education, logistics reform of HEIs once again became a hot spot. The ‘Action Plan for Invigorating Education in 21st Century’ promulgated in early 1999 was clearly requested to accelerate the socialization reform of logistics of schools and to cut down on excessive personnel. Related documents issued in June made further requests to enhance the logistics reform of schools, to promote the socialization of logistical work, to encourage social forces to provide logistical services for schools, and to develop education industry.
Since 1999, the state has chosen students’ dormitories as the breakthrough and has vigorously promoted the reform of logistics, concerning students’ dining halls, transportation, communications, water and electricity, construction of new campuses and so on. Government at all levels actively participated in the new round of reform, which led to significant results and formed a variety of reform models and development channels. The socialization reform of logistics is one important part of marketization of higher education, and the successful performance of this reform will definitely promote the overall marketization of higher education.
Influence of marketization of higher education
The history of marketization of higher education is very short, even world wide, but it is more challenging for such a transitional country such as China where exploration and refinement are needed in practice. On the one hand, marketization of Chinese higher education has achieved much, bringing about a positive impact, while on the other hand there are still some defects, resulting in a number of negative effects.
Positive influence
Marketization of higher education has unique functions in dealing with the problems of inadequate investment in education caused by financial pressure and various drawbacks as a result of the long constraint of planned economy. It helps to relate higher education closely to the market and society and this accelerates the reform of higher education, promotes the innovation of the education system, and helps to change the traditional enclosed mode of school running into an open society-oriented model. In a modern society with a market economy, the basic spirit of the pursuit of knowledge and truth of higher education has not changed, yet the development of higher education has been closely linked with social development, and HEIs must survive and develop in a competitive market economy. The main advantage of the market model is that it can continuously stimulate the HEIs to adapt to the changing economic and social situation. Marketization of higher education makes market factors an important basis for decision making by HEIs and helps the reaction of HEIs to the social demand to be faster and more sensitive.
Marketization makes college students big consumers or spenders and the relationship between HEIs and students increasingly becomes that of service provider and consumer. Marketization not only requires students to pay for tuition, but also gradually increases tuition fees. Tuition is becoming an important source of education funding and financial assistance for students is also being replaced by a variety of student loans, so the resources of HEIs are increasingly relying on the students and their performance. As Watson Starr said, since students can decide which HEI they will enter physically, they have indirect financial distribution right. Marketization changes the policy of HEIs from focusing on the requirements of the government to creating conditions that will meet the various needs of students.
HEIs will respond timely to the change of needs of consumers and employers, adjusting the content of the curriculum and other activities in order to survive and develop in the competition. The changes of the market affect the need of the people to receive higher education and the direction of Chinese higher education, promoting higher education to be concerned with both the interest of the nation and the change of the market demand. Through reforms on curriculum and the system, HEIs will increase their educational efficiency and produce excellent talent for society. Marketization also provides students with chances to practice and increase their experience and employment opportunities after graduation, so higher education will meet the different needs of numerous students with different abilities and obtain the recognition and trust of society, parents and students.
The value of marketization for higher education is recognized by society. Since HEIs have the ability to create new knowledge and new values and the function to exchange useful values with other goods, so the respect for knowledge and talent and the appreciation of higher education are formed in modern society and individuals and the society are more willing to invest in higher education. Marketization of higher education will undoubtedly enhance the links between HEIs and the community, bring the educational services and research results offered by the HEIs’ more in line with the needs of society and enhance HEIs’ positive role in promoting social development.
Marketization of higher education also promotes expansion, enhances the quality and changes the structure of higher education. On the one hand, marketization enables HEIs to raise funds along various channels to solve the problem of insufficient funds during the process of massification of higher education. Making use of the market mechanism, HEIs can cooperate with enterprises and obtain their donations, provide techniques or services, or invest in production depending on their strong scientific and technological advantages, to make up for the lack of funding. On the other hand, marketization of higher education means that individuals, non-government organizations, enterprises and other organizations can invest in higher education. It breaks the monopoly of government and brings about the diversification of investment and ownership.
Marketization is conducive to the improvement of education quality and efficiency. Social entities and individual investors have the ability to be adapted to the market and corresponding management systems, and their participation in the management of HEIs will improve the quality and efficiency of education. Marketization increases competition between teachers and promotes the diversification and flexibility of teaching, while the introduction of competition mechanisms into logistics management improves the quality of logistics services.
Marketization of higher education speeds up the further stratification, diversification and differentiation of HEIs, and thus meets the needs for the variety of talents in society. As the basic rules of market economy, fair competition and survival of the fittest also regulate the behavior of the higher education market. The survival of the HEIs depends either on meeting the needs of the customers or on the quality of higher education. Only by the formation of its own features can an HEI attract the customers and survive in the fierce competition.
Marketization is conducive to the diversification and flexibility of university courses as the market not only puts forward requests for the reform of the diversification and flexibility of the curriculum, but it also helps the HEIs to identify new research topics and provides useful material for the setting of development, disciplines and majors.
Negative effects
First, one of the results of the marketization of higher education is the dilution of the education function of HEIs. Since the principles of the market are the law of value and exchange of equal values, during the marketization of higher education it is bound to undermine the education function of HEIs if too much importance is attached to the relationship of exchange between students and the HEIs.
Second, marketization of higher education will lead to the utilitarian tendency in the running of HEIs. On the one hand, in college teaching activities, this tendency is reflected in the practicality in discipline setting and such courses as history, literature and other liberal arts will lose popularity. On the other hand, as far as research is concerned, this tendency implies that the composition of various types of research will be changed, applied research will be favored and investment in basic research will be reduced in order to pursue the economic benefit and realize the economic value as soon as possible.
Third, marketization of higher education has an impact on education equity. During the marketization of higher education around the world, such measures as collecting tuition fees are taken, which means that higher education is no longer a free or low cost welfare commodity and a corresponding ability to pay is necessary for receiving higher education in China. This will result in the phenomenon that a student from a wealthy family will have more chances to receive higher education, while a student from a poor family will have a smaller chance to receive higher education. In addition, marketization of higher education will bring about the accumulation of good education resources in economically developed areas, hindering its development in poor areas and resulting in a regional imbalance in the development of higher education.
Responsibility of the government
Marketization of higher education does not mean that the government’s responsibility is alleviated. In fact, with the constant expansion and increasing functions of higher education, especially in the important role it plays in the development of the economy, the government’s responsibility becomes increasingly important. In the process of development of higher education, the government must carry out the functions of macro-regulation and indirect management, and its responsibility must be strengthened while making full use of the positive role of the market mechanism. As the absolute owner of the public rights, the government can impose intervention onto the social trends or phenomena hindering the harmonious development of the society with various strategies and measures. The government takes effective measures (including legislative, administrative, economic, and planning) to perfect the market mechanism of higher education, to plan the development strategy, to improve the structure and to maintain the balance, health and sustainable development of higher education. In view of this, in the context of marketization of higher education, the functions of the government should be strengthened by the following aspects.
Plan the strategy of development for higher education
As is the case in the economic field, the market force alone is not enough for the healthy development of higher education, so it is necessary for the government to carry out the necessary macro-control. One of the important means for the government to regulate the supply and demand of higher education is to develop a long-term plan for it, determining its development direction and goals and the corresponding policy and measures. The development plan is the guide to the development of higher education, according to which HEIs plan the personnel training programs, reform the courses, and try to avoid the negative impact of the market mechanism on higher education.
Strengthen the legal system
Marketization of higher education will lead to new problems and the solving of these problems needs the power of law. In order to solve the problems such as the arbitrariness, irregularity, ambiguity in interests division, and indistinctiveness between functions of different apartments, the government’s administration of the HEIs must become law-based. Laws and regulations clearly state the responsibilities, rights, obligations and behaviors of the government and HEIs, and ultimately form a contractual relationship between the two parties. Through the establishment of relevant laws and regulations, the government can define the rights and obligations of market players of higher education, regulate the relationship and behavior between the participators, and protect the legitimate interests of all parties, so as to provide legal protection and create a good environment for the development of higher education.
Cultivate and standardize the development of the education market
Although the need for higher education in China is enormous and the market potential is immeasurable, this need has not turned into market demand. Without a unified market, this transformation is hard to achieve, which is disproportionate with the globalization of society and the economy. It is necessary for the government to view from the perspectives of the world and the future, break the barrier and create a positive and efficient market competition mechanism. Diversification of the entities in running HEIs makes the market more competitive, which in turn promotes the rapid development and the improvement in quality of higher education. Therefore, reform of the higher education system is urgent. On the basis of strengthening supervision, government should have a positive attitude to ensure an orderly market competition and realize the optimal allocation of resources.
Establish an efficient system of active financial support
Government should be a major source of funding for higher education, and a competitive mechanism should be introduced into the financial allocation, reflecting the principle of giving priority to efficiency while promoting fairness, and to improve the overall efficiency of education funding. The government should give special support to the HEIs and disciplines mainly engaged in research on basic theories, and the distribution of funding should give priority to those HEIs with a higher level of education in science and technology. In addition, the government should also give priority to those HEIs or disciplines that can meet the need of the national economic development, yet with low adaptability to the market or lack of public attention. The government must ensure the continual growth of education funding, since higher education is a leading, basic, and comprehensive industry, playing an important role in the prosperity of the nation. The government can regulate the direction and aims of the development of higher education through funding.
Help the HEIs to establish a modern university system
To compete in the market, HEIs must establish a modern university system, which is a difficult process. In addition to reforming the administrative system, the government should help to establish a modern university system which includes corporate governance, competition, innovation mechanisms, interest mechanisms, a supervision system, a personnel system, and a distribution system. The roles of the government include creating a favorable environment for the reform, changing the documents and regulations that hinder the establishment of the modern university system, actively providing information for the innovation of the higher education system, and reducing the possibility of deviation during the establishment of a modern university system.
Strengthen supervision and management to ensure quality of higher education
The expansion of higher education, the increase of university autonomy, and the deepening of marketization of higher education have made the quality of higher education a major concern. How to ensure the quality of higher education has become another aspect of the government’s macro-management. Based on the quality concept of modern higher education, the government should make different quality standards for different HEIs and disciplines, establish quality control and monitoring systems, and monitor the whole procedure of education. Through the establishment of a performance evaluation system of higher education, the government can strengthen the macro-control ability of administrative departments, control and adjust the structure of higher education and the layout of HEIs and the setting of disciplines, and implement appropriate control on HEIs while strengthening their autonomy.
Improve the relief system of higher education and strive to ensure equality of education opportunity
Under the market system, the system of tuition fees is implemented, and the increase in tuition fees is bound to reduce the opportunities for higher education for poor students, particularly in poverty-stricken areas of China. Therefore it is one of the top priorities of the Chinese government to establish and improve the relief system of higher education and increase the coverage of assistance. To minimize the risk of national student loans, harmonious relations between the government, HEIs, students and banks should be established. The national student loan system should be improved and loan approval and issuance measures should be reformed. The management responsibilities of HEIs and banks should be strengthened, and loan restraint, risk prevention and compensation mechanisms should be improved. Transferring part of the government funding for education directly to students will reap more economic and social benefits than to the HEIs, and the government plays an irreplaceable role during this process.
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