Search

This paper empirically investigates the economies of scale and economies of scope for the Chinese research universities by employing the flexible fixed cost quadratic (FFCQ) function. The empirical results show that both economies of scale and economies of scope exist in the Chinese higher education system and support the commonly belief that universities as multi-product organizations.

Amid today's acute competition on the international scene, universities are a major factor affecting a country's key competitive ability. Thus creating and running world-class universities should be one of the strategic foci of building up a country. Other than such mandatory requirements as having world-class teaching abilities and research results and powerful material and technical foundations, world-class universities must also lay particular emphasis on providing a relaxed and lively academic environment and on encouraging a scientific spirit of exploring and searching for the truth. Universities in developing nations must bring about "leaping" advances in terms of educational ideas, operating strategies, personnel systems, and administrative regimes and must be good at referencing the experience of other countries in advancing higher education, form a wide field of vision, and vigorously participate in international academic competition if they are to reach first-class world standards.

China’s transition—from an ossified, centrally planned system to a dynamic market economy—coincided with the revolution of information technology and the rise of the knowledge-based economy. These dramatic changes provoked a series of reforms at Peking University

Under market economic conditions, the most important consultative factors for governments or the educated in making private investment decisions are the policy makers (whether government or individuals) in determining educational costs and the expected returns. Under circumstances where a greater share of responsibility for the cost of higher education in China is increasingly becoming the responsibility of individuals, educational policy makers and researchers, in their investigation of higher education policy, are paying increasing attention to the expected returns to higher education. Taking educated individuals or families as the investigative target, it is the anticipated returns that are one of the main determinants of their higher education needs. Another concerns whether the anticipated size of returns is affected by the willingness to pay fees in formulating the appropriate self-funded costs of higher education or whether a top-up policy should be considered.

The problems facing Chinese higher education are analysed and it is argued that these are caused by underfunding, high inflation and low internal efficiency. Possible strategies for addressing these problems are discussed: these include: (i) improving internal efficiency; (ii) developing systems of cost-sharing and cost-recovery; (iii) income generation by individual universities; and (iv) increasing national expenditure on higher education as soon as the state of the economy allows.