UK universities are racing to enter China, but will they get 'arrows in their backs' from a government that disdains free inquiry? Chris Bunting reports

Dominic Houlihan has a simple way of describing the huge changes that China is experiencing. It is the bicycle test. "I remember flying into China about three or four years ago. I was arguing on the plane with an economics colleague about whether China was Third World or not. It was one of those arguments that goes nowhere, but when we arrived, the question began to resolve itself. You just had to look at the roads. The bicycles had gone. In their place, a fantastic number of Passats," says Houlihan, professor of biology at Aberdeen University and vice-principal for research and commercialisation.

He has been back since. "The Passats are still there, but now we are seeing increasing numbers of Audi A6s and BMWs in the traffic jams. This is a place that is moving fast."

In fact, it is moving quite slowly. The retreat of the bicycle in China's major cities has produced a horrendous gridlock to rival anything in the world but, if you were able to look through the tinted glass of some of those Audis, you might find a surprising number were carrying representatives of British universities desperate to seal their latest joint venture in the most exciting market in international ÖйúAƬ.

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There is a gold rush in Chinese ÖйúAƬ. "You can knock on 15 doors and get 15 polite refusals in many countries, but in China you knock on 15 doors and get 15 real expressions of interest. People want to do business," Houlihan says.

Jack Worden, dean of Napier University's Business School, says: "China is seen as the growth area. Vice-chancellors go out in their hundreds from countries such as Australia, Canada and New Zealand. The US has a problem because its (post-9/11) visa policy is stopping a lot of students getting into the country, but that means there is a great opportunity for the rest of us.

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"China is going to continue to experience rapid economic growth, particularly on the east coast in the area between Beijing and Shanghai. It is a well-ordered society with an education system that is established.

Their problem is that they do not have the educational capacity to cope with the advanced economy they are developing. There is an opportunity for us to take part in collaborative projects in China to help build that capacity."

Chinese ÖйúAƬ has expanded hugely in recent years. The total enrolment at public colleges and universities almost doubled from 6.43 million in 1998 to 12.14 million in 2001. That year, the Chinese Ministry of Education abolished rules that stopped candidates who were older than 25 and married from taking the national college entrance examination, opening up opportunities for hundreds of millions of older adults to seek a higher or further education that can sometimes double or triple their salaries.

There is still, however, a shortfall in provision. The British Council estimated in October that about 1.3 million qualified school-leavers every year are being refused university places in China through lack of capacity.

Some extra capacity has been gained by exporting students. Over the past six years, the number of Chinese taking further or ÖйúAƬ courses in the UK has increased tenfold. There are now about 32,000 Chinese students in British universities and 120,000 students studying worldwide.

A key shift in the Chinese Government's approach came last September, when regulations were unveiled allowing Chinese and foreign universities to establish joint-venture initiatives in the country. Nigel Relph, director of external relations at Queen Mary, University of London, says this was in part necessitated by the conditions of China's entry to the World Trade Organisation, but it also appears to be seen at high levels in the Chinese regime as a way of quickly building extra capacity. "The obvious conclusion from their point of view is that this is the solution they are going to move to. They can educate more people more cost-effectively if they bring our expertise to China," he says.

British universities have responded to the opportunity in a variety of ways. Perhaps the most aggressive approach has been taken by Nottingham University. It has set up a stand-alone campus at Ningbo, southeast of Shanghai, that it hopes will have 4,000 students in five years. Its long-term plan is to double that number. Instead of jumping into bed with an existing Chinese university - the model favoured by most British institutions - Nottingham is following the model developed on its campus in Kuala Lumpur, setting up a new institution.

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Nottingham's Chinese partner is Wanli Education Group, an independent provider that runs a full range of educational services, from kindergartens to the Chinese equivalent of a university college, but does not run a full university. Douglas Tallack, professor of American studies and pro vice-chancellor of Nottingham, is cagey about how much the university has invested in the scheme, saying it is commercially sensitive information. He will reveal only that about 30 per cent of the "total investment" has come from Nottingham and that that figure includes notional values given to contributions in the form of non-monetary intellectual property rights. In terms of hard cash, the university has made a "modest investment", one says.

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Perhaps the greatest risk of Nottingham's approach is to its reputation. By not linking up with one of the top Chinese institutions, the university is attempting to break into a highly stratified market. It is imperative that the new campus establish itself among the 100 "key" institutions in China and not slip into the broad mass of the 2,000 or so "other" ÖйúAƬ institutions that have been left to struggle with a massively increased intake on poor funding. Initial signs for Ningbo are encouraging, Tallack says. The first intake of 250 places, which had to be recruited very late in the Chinese university entrance process in March this year, were quickly filled.

Other UK institutions have stopped slightly short of Nottingham's ambition.

Queen Mary is working with Beijing University of Post and Telecommunications to develop two tightly focused joint honours courses - telecommunications with business management and e-commerce with management and law. The university has also set up a joint research laboratory with the Beijing institution, a move that helps to give it access to a potentially huge research market.

Napier has signed a memorandum of intent with Shandong University of Finance to develop a joint campus; Middlesex University is collaborating with the Research Institute of Tsinghua, in Shenzen; and Aberdeen University is working with the University of Petroleum in Beijing on a student and staff exchange programme. In the UK, Southampton University has launched the Centre for Contemporary China to forge closer educational and research links with the country.

Among many involved in the scramble for Chinese business, the consensus is that, although involvement in any foreign country has risks, investing in China is a good bet. Tallack says: "The reform movement in China is unstoppable. There will be ups and downs, but we believe that we are following a strategy that the UK Government is also following."

Indeed, part of the argument for investing in joint projects in China is to spread risk. Relph says: "We have a large number of students coming over here. If there was a cooling-off of the Chinese market, then surely what would happen is there would be a cooling-off of students going abroad to study. If we are providing education in China, we are going to have managed that risk."

The swings of the market are not the only dangers relevant to institutions rushing into China. Perhaps more significant are the political risk factors inherent in projects that rely heavily on a specific policy of a small group of Communist Party leaders in what many believe may turn out, in the medium term, to be a highly volatile political environment.

Maozu Lu, director of the Centre for Contemporary China and a senior lecturer in economics at Southampton, is an enthusiast for joint projects in China, but he sounds a cautionary note. "Do you know when the biggest business delegation to China from Britain was? It was about 200 years ago.

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There was a delegation of 700 people going to try to establish links. There were a lot of China dreams then, too. After that they had the Opium Wars and then look what happened."