NON-government education began to recover in the mid-1980s. Since this time, non- government schools began developing rapidly, despite operating in what remained an ambiguous environment.

The Education Law forbids any person or enterprise from making profit the aim of educational activity. More specifically, the Shanghai government also has imposed a strict limit on the tuition fees of non-government schools, with the aim of preventing over-charging. Annual tuition fees for non-government colleges should not exceed 10,000 yuan (US$1,210) in Shanghai. For middle schools and primary schools, the figure is around 7,000 to 10,000 yuan (US$845 to 1,210) a year.

Yet despite such restrictions, profitable business has already became a fact in some non-government schools.

"Some investors are less interested in education than in acquiring land cheaply and making a profit," said one insider, who asked to remain anonymous.

As the price charged for land intended for educational use is much lower than that for commercial use, some investors are hungry to acquire land at the preferential price. They use only a fractions of the land for a school and make a profit on the rest.

According to article 51 of the Law on the Promotion of Non-government Education, promulgated last September: "After non-government schools deduct school-running costs, reserve a development fund, and draw other necessary costs, founders can receive reasonable rewards from the school-running surpluses." The item is taken as a signal that the non-profit policy has some flexibility.

"It is a sensitive topic to talk about rewards from non-government education," said Liu Guoyong, a researcher from the Shanghai Non-government Education Institute, affiliated to the Shanghai Academy of Educational Sciences. To receive reasonable rewards from running a school was only a "policy" to be carried out in a special period, in accordance with China's national conditions.

Non-government education in China was still in its early stage, according to Zou Rongxiang, president of the Shanghai I&C Foreign Languages College.

"In foreign countries, most non-government schools are supported by fees and charity donations, instead of being seen as a form of investment which seeks a return," he said. "But in China today, the development of private enterprises has just started, so most entrepreneurs haven't the economic power - or even the idea - of making such donations yet."

"Encouraging non-government capital to invest in education is a good way of enabling ordinary people to receive an education, I think it has a bright future," said professor Jin Linxiang, from the East China Normal University.

According to a recent investigation by the central bank, about 20 per cent of residents' bank savings are dedicated to education. This means the country has at least 1.6 trillion yuan (US$190 billion) to be spent on education. Undoubtedly, this is good news for non-government schools.

But risks exist alongside the opportunities.

Projections of Shanghai's statistics show that around 2010, the number of junior school graduates will drop to only 70,000 to 80,000 per year from 184,000 presently. But after five to seven years, the number of students should rebound to about 150,000.

"So this period will be a turning point for most non-governmental schools. Will they survive the shortage of resources and students?" Zou asked.