China’s Tsinghua University to cut off debt-laden investment arm, giving it away to Sichuan’s state asset watchdog

Tsinghua Holdings, which is 100 per cent owned by President Xi Jinping’s alma mater, will be transferred to the Sichuan State-owned Assets Supervision and Administration Commission for free, its subsidiary Unisplendour said in a stock filing to the Shenzhen Stock Exchange on Tuesday. The provincial government agency will then transfer the assets to Sichuan Energy Industry Investment Group (SCEI), a state-owned enterprise under its control.

The disclosure is a slight deviation from a plan announced at the end of 2021 that said SCEI would directly take over Tsinghua Holdings.

“The transfer to SCEI marks a major part of the government’s shake-up of university-related enterprises after years of debt-fuelled expansion,” said Liu Guohong, chairman at Shenzhen Fuwei Funds, adding that Sichuan’s state asset watchdog would have to shoulder Tsinghua’s bad debts.

Sichuan state-backed funds have been aggressive bidders for hi-tech assets among provincial-level state funds such as those in Anhui, Shenzhen and Beijing, according to Liu. Sichuan’s funds carry a mandate to support the development of local hi-tech industries. “It’s possible for Sichuan to relocate some of the projects to Sichuan afterwards,” he said.

The deal, which is awaiting regulatory approval, is part of China’s ongoing campaign to get the country’s universities to divest their investment arms after suffering a slew of problems from poor internal governance to a lack of sufficient supervision. Chinese universities are exclusively state owned and follow Communist Party directives.

In a government policy paper published in 2018, these entities are blamed for creating significant risks for “university asset security and the sustainable operation of universities”.