The development of independent colleges and their separation from their parent public universities in China

The study examines why many Chinese independent colleges—privately funded entities affiliated with public universities—did not separate from their parent institutions despite Ministry of Education (MoE) directives since 2008, and why separations accelerated in 2021. Context: private higher education (HE) has expanded globally; China has 7.08 million students in 773 private HEIs (28.58% of institutions), and independent colleges dominate the private bachelor’s market while relying on public university reputations and resources. Problem: by end-2020, about 240 independent colleges (over half of the 2008 cohort) had not separated; by end-2021, the number fell sharply to ~160. Research question: what factors, from the perspectives of key stakeholders (private funders, parent public universities, and government), affect separation decisions and implementation? Purpose and importance: to illuminate governance dynamics in China’s HE reform, inform policy and institutional management, and fill an English-language gap on independent colleges.

- Public–private partnerships (PPP) blur boundaries between public and private HE, with private involvement in public universities increasing via funding, service privatization, and corporatization. University–college affiliation models appear in Ghana, Latin America, Russia, and India, often to expand capacity while maintaining oversight. - In China, independent colleges emerged due to HE enrollment expansion (since 1999), constrained public funding, market demand for bachelor’s degrees, and private investment interest. Early government stance was tacit approval before formal regulation in 2003 named and framed 'independent colleges' and required progressive independence. - Independent colleges splice public university resources (brand, faculty, management) with private capital, typically paying 15–40% of tuition as management fees to parent universities, creating dependency and limited differentiation. - Separation feasibility depends on meeting standards for independent universities (campus, facilities, governance) and internal transformations, not just policy shifts. Provincial contexts and enforcement shape outcomes. - Stakeholder theory frames the analysis (power, legitimacy, urgency): multiple actors (students, staff, managers, shareholders, policymakers) have competing interests that influence governance and policy implementation.

Design: Qualitative case-oriented study within a national research project on governance of private universities in China, guided by stakeholder theory. Sites and participants: Three independent colleges in two provinces—Sichuan (western, relatively underdeveloped) and Jiangsu (eastern, developed, with the most independent colleges). Participants included independent college shareholders, senior managers, leaders from parent public universities; four provincial education officials (Sichuan and Jiangsu); two members of Sichuan Higher Education Provincial Review Committee; and three scholars researching private HE policy. Inclusion: ≥3 years in current role; mean age ~50 (range 38–72). Snowball sampling expanded the pool. Data collection: Fieldwork in 2020; COVID-19 necessitated mixed modes (online via WeChat and in-person). Semi-structured interviews used an interview guide (e.g., stakeholder identification; reasons for non-separation since 2008; interests of private funders, parent universities, central vs. provincial governments; reasons for 2021 spike; post-separation changes). 44 interviews with 31 participants (some interviewed twice), totaling ~45 hours. Document analysis: 31 policy and regulatory documents (14 national, 17 provincial) from official sources (e.g., 2006–2020 MoE directives; provincial regulations in Sichuan and Jiangsu) to contextualize policy evolution and implementation. Analysis: Thematic analysis using NVivo. Initial open coding produced 58 codes, consolidated into 20 themes and 11 categories across three analytical levels: (a) development of independent colleges; (b) challenges/policies; (c) stakeholder interests. Iterative memoing and transcript re-reading refined categories. Triangulation between interview and document data enhanced credibility. Anonymity preserved via pseudonyms.

- Persistent dependency and incentives: Independent colleges often lack separate campuses and rely on parent universities for libraries, labs, teaching, and brand; 15–40% of tuition is paid as management fees. Average size ~15,000 students implies parent universities receive tens of millions RMB annually, creating strong resistance to separation. - Investor calculus across development stages: Early-stage investors prefer to retain parent university branding and resources to ensure enrollments and revenue; MoE regulations transfer invested assets into the college’s legal person, limiting investor control and use of assets as collateral, while separation requires additional capital for facilities with uncertain returns—reducing investor enthusiasm. As colleges mature and brand dependence declines, separation becomes attractive to redirect fees into college development (e.g., campus, facilities) and gain operational autonomy. - Parent university strategies: Parent universities seek to maintain management fee income and leverage prior contracts to demand high 'break-up fees,' impeding separation. Leadership reputational concerns during tenure also discourage separation. - Government policy as catalyst: A series of MoE policies (2006–2018) urged separation, culminating in the 2020 Implementation Plan requiring all independent colleges to submit transfer plans by end-2020 and proceed promptly. The 2020 policy clarified pathways: (1) re-register as private (for-profit or not-for-profit); (2) convert to public (suitable where ownership is public or via state-owned entities); or (3) closure if neither feasible. It also compelled parent universities to acquiesce, reducing bargaining barriers. Result: MoE (2022) reported nearly 70 separations in 2021; the number of non-separated colleges declined from ~240 (end-2020) to ~160 (end-2021). - Provincial variation and capacity: Provincial governments balance expanding HE capacity with fiscal constraints. Some offer supportive measures (special funds, waivers of asset transfer fees), while others, facing budget limits, are reluctant to facilitate transfers, especially to public status. Implementation is hindered by cross-departmental coordination issues (land, planning, finance, taxation, personnel) and leadership influence levels. - Core mechanism: Policy implementation hinges on aligning stakeholder interests. Where MoE enforcement and local support reduce investor risks/costs and compensate parent universities appropriately, separations accelerate; misaligned incentives produce delay or stalemate.

The findings address why separations lagged for years and then accelerated in 2021: entrenched financial dependencies (management fees, asset control constraints) and investor risk-return concerns impeded action until the 2020 MoE policy increased urgency and reduced resistance by clarifying legal pathways, compelling parent university acquiescence, and signaling strong enforcement. Stakeholder theory helps explain outcomes: stakeholders vary in power (MoE/provincial authorities’ coercive and regulatory power; parent universities’ economic leverage; investors’ control over capital), legitimacy (public mandates vs. contractual claims), and urgency (policy timelines vs. institutional interests). Successful separation requires balancing these interests—negotiating viable break-up fees, ensuring investor asset protections and returns, and securing provincial support for land, finance, and approvals. The study also highlights how independent colleges gained legitimacy through successive regulations: initial affiliation provided social acceptance; later policy formalization both constrained and legitimated the model, enabling sustainable development post-separation when autonomy and reinvestment replace management fee outflows. Provincial heterogeneity underscores the importance of local governance capacity and fiscal health in translating central policies into practice.

This study shows that the separation of independent colleges from parent public universities in China is fundamentally shaped by stakeholder interests and incentives. Private funders prioritize access to resources and financial returns; parent universities prioritize management-fee income and institutional control; provincial governments prioritize expanding HE capacity with limited public finance. The 2020 MoE policy, by mandating transfer planning and clarifying re-registration pathways, realigned incentives and accelerated separations in 2021. Contributions: (1) provides an English-language analysis of China’s independent college reform through a stakeholder lens; (2) maps policy evolution and its implementation dynamics; (3) identifies financial and governance mechanisms (management fees, break-up fees, asset ownership constraints) that determine separation feasibility. Future research could: examine post-separation performance and quality outcomes; compare provincial implementation models and funding instruments; analyze legal/financial frameworks to safeguard investor interests while ensuring educational mission; and explore student and labor market impacts of separation.

- Case scope: Participants were from three independent colleges in two provinces and cannot represent all independent colleges nationwide. - Data collection constraints: COVID-19 necessitated online interviews, potentially limiting depth and observation opportunities. - Generalizability: Qualitative design and purposive/snowball sampling limit generalizability; findings illustrate mechanisms rather than provide nationally representative estimates. - Documentation and contract opacity: Some financial and contractual details (e.g., break-up fee negotiations) are sensitive and not fully accessible, which may limit completeness.