China’s higher education sector, once seen as a major beneficiary of the country’s growing economic and technological ambitions, is facing mounting financial pressure as universities struggle with tighter budgets, reduced government support and increasing competition for research grants. Despite substantial investments in science and technology, academics across several institutions are experiencing salary reductions, fewer scholarships and growing uncertainty over long-term employment.
The situation reflects a shift in Beijing’s approach towards higher education, with the government increasingly prioritising research and academic programmes that support its strategic ambitions, particularly in artificial intelligence (AI), robotics and advanced technologies. Universities offering courses considered less aligned with these priorities are facing restructuring, with several traditional programmes being discontinued.
According to figures released by China’s education ministry in April, around 12,200 degree programmes have been withdrawn in recent years. Many of these belonged to disciplines such as business management, while new programmes in AI and other technology-oriented fields have been introduced to reflect the priorities of President Xi Jinping’s government.
Government spending on science and technology has also slowed considerably. During the current decade, expenditure by central and local governments in these areas has increased by an average of just 3.5% annually, compared with approximately 10% towards the end of the previous decade. The slowdown has affected even departments dealing with core scientific disciplines such as physics and chemistry.
The financial squeeze has reached some of China’s most prestigious educational institutions. Peking University, one of the country’s leading universities, issued instructions in September asking departments to adopt cost-cutting measures and exercise financial restraint. Several other institutions have introduced similar restrictions, with reports of reductions in staff benefits, salaries and postgraduate scholarships.
Although China has 75 elite universities receiving central government funding, these institutions have not remained entirely insulated from the financial pressures. Their median budgets recorded a growth of 6.8% this year, but nearly one-fifth of them faced budget reductions. Some universities have also significantly reduced the number and value of scholarships available to postgraduate students.
The country’s broader economic slowdown has added to the difficulties. Many universities outside the top tier depend heavily on local government funding. However, local administrations are facing financial constraints amid a prolonged downturn in the property sector. Local governments are responsible for financing nearly 95% of China’s approximately 2,900 universities. Even technology hubs such as Shenzhen and Hangzhou have reportedly experienced cuts of more than 5% in university budgets this year.
Employment challenges are further complicating the situation. While China’s economy continues to expand, its ability to generate sufficient jobs for the growing number of graduates remains limited. Youth unemployment has reached 19%, prompting more young people to remain in universities and pursue higher academic qualifications. The annual intake of doctoral students has almost doubled since 2019, reaching around 200,000.
This has intensified competition for academic positions and research funding. Postdoctoral researchers increasingly face uncertain employment prospects, while the requirements for promotions and permanent appointments have become more demanding.
Applications to the National Natural Science Foundation of China, the country’s principal source of central government funding for scientific research, have increased by 80% since 2021 to approximately 200,000. However, the total funding distributed through the programme has grown by only 3%. Consequently, the success rate of applications has fallen from 22% in 2013 to 12% last year. The foundation has increased financial assistance to young researchers by 50% this year, partly in an effort to address growing dissatisfaction among academics.
Meanwhile, universities are increasingly adopting employment practices similar to those followed by Western institutions, where researchers may have to work for several years before securing permanent positions. Academics have raised concerns that some institutions recruit junior researchers to improve research output without offering them realistic prospects of long-term employment.
Despite these challenges, official figures suggest that China’s universities are not facing an overall shortage of funds. Government data show that spending on university research increased by 11% last year to 341 billion yuan, equivalent to approximately $47 billion. However, businesses are contributing an increasing share of research funding. In 2024, companies accounted for nearly half of the new research funding received by universities.
This growing dependence on corporate funding has its limitations, as businesses generally prefer to invest in research with commercial potential rather than projects focused on fundamental scientific exploration. Funding is also concentrated among well-established universities, leaving smaller institutions at a disadvantage.
The intense competition has also raised concerns about academic integrity. Pressure to publish research papers and secure grants has encouraged questionable practices, including the use of paper mills that sell research publications and allegations of payments to secure favourable publication outcomes. Some researchers have also reportedly entered financial arrangements with companies to meet research funding requirements linked to academic promotions.
Experts believe that tighter financial conditions could eventually encourage universities to focus more on the quality and impact of research rather than the number of papers published. However, the immediate consequences for young researchers remain significant, with uncertain careers and fewer opportunities creating growing dissatisfaction across the academic community.
While China’s push towards technological leadership continues, its universities are now being forced to balance ambitious research goals with financial constraints and an increasingly competitive academic environment.
