From where I sit - The mother of white elephants

August 19, 2010

When Oriental University City opened in Langfang, Hebei Province, a decade ago, it was the first of its kind in China and was hailed as a model to be emulated: a purpose-built campus that would provide facilities to a host of existing universities. Now, it seems a grand folly with massive debts - more than 2.4 billion yuan (£225 million) - and a golf course that occupies half the town.

Oriental University City, which sits about halfway between Beijing and Tianjin, was created in response to the huge expansion in university enrolments since 1999, which were stretching the physical resources of China's academy.

It was a joint venture between the Langfang municipal government and Beijing Foreign Enterprise Service Company, and established a business model that others have followed.

The attractions were obvious. For local government, it represented a way to attract investment and boost consumer spending, while private-sector partners sniffed the opportunity to make a profit from the expansion and commercialisation of higher education.

From the beginning, however, there were signs of overambition. The overriding mentality of the creators of Oriental University City was "big is beautiful" - how better to declare their aspirations than with a grand avenue à la Champs-Elysées and a triumphal arch that cost 2 million yuan to build?

In 1999, the first phase of building on the 153-hectare site was finished within 10 months with all the speed of a "great leap forward", but an investment of 1.4 billion yuan promised by private companies never materialised.

In 2000, the second phase expanded the campus to 733 hectares, including vacation villages, luxury property developments and the golf course. However, the Hebei branch of the Industrial and Commercial Bank of China re-evaluated the venture and decided to stop a loan of 310 million yuan.

The capital chain quickly broke down, and the campus never delivered on its promise.

Students who live and study in the town complain about rising rents and report that classroom walls and ceilings are crumbling as the estate falls into disrepair.

Construction companies have not been repaid the money they advanced: some are so angry that they have tried to remove computers from classrooms in lieu of payment. The university city has become the home of hundreds of migrant construction workers who have been waiting for years to collect their wages.

According to the Southern Weekly newspaper, when Oriental University City opened in September 2000, it hosted more than 60,000 students from 30 universities in Beijing and Hebei, including Beijing Union University and Beijing Technology and Business University. Today, the number of students on site is probably half that.

Unfortunately, the ill-fated venture was not an isolated case.

Within two years of its inception, the "win-win" model had been copied by more than 50 university towns in 21 cities. Like the original, many of them are now failures. So what does the future hold for these expensive white elephants?

According to Lin Li, an academic at the Fujian Academy of Social Science, there are two ways for university towns to free themselves of heavy debts.

One is for local governments to lend a hand, as has happened in the case of the Guangzhou university city. The other is to turn to the commercial sector once again - as Zhejiang University did in 2006, when it sold part of its lakeside campus to Malaysia Kerry Properties Ltd.

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