(Xinhua)
Updated: 2007-09-12 23:55

China's Education Minister has moved to play down concerns over the country's universities with more than 200 billion yuan (US$26.3 billion) in debt, saying the problem was not "serious".

Zhou Ji argued that the debt, racked up by universities when they expanded to meet the demand of an increased number of students from 1998 by using bank loans, was worthwhile and implored people to "look at the issue in the long-term".

He explained that since 1998 university education had become more open to students from lower-income families. In 2006, a total of 5.4 million Chinese people entered universities, five times that of 1998.

In order to accommodate the rise in the number of students, universities have to borrow huge sums of money to keep things going.

"To cope with the rapid expansion, many universities resorted to banks for huge loans to support construction of dormitories, dining halls and classrooms," Zhou said. "That's how our universities fell into debt."

Zhou said the banks have agreed to extend the grace period of the debts but did not give any details.

Both the central and local governments are increasing investment to help universities overcome the financial crisis, according to Zhou, but he refused to say how much money the government will spare.

Zhou also admitted that some universities borrowed money or even wasted money for inappropriate construction projects. "Such behavior will be strictly supervised and controlled," he said.

Examples of education funds being lavished on unnecessary facilities came under the spotlight in recent years as some colleges built golf courses or luxury hotels in scenic spots, sparking national debate. A university in east China's Shandong Province spent three million yuan on a 140-meter-long gateway.