MCLC: $300 million for China study scholarship

[Denton, Kirk]

MCLC LIST
From: kirk (denton.2 at osu.edu)
Subject: $300 million for China study scholarship
***********************************************************

Source: NYT (4/20/13):
http://www.nytimes.com/2013/04/21/world/asia/us-financier-backs-china-schol
arship-program.html?ref=world&_r=1&

$300 Million Scholarship for Study in China Signals a New Focus
By KEITH BRADSHER 

HONG KONG — The private-equity tycoon Stephen A. Schwarzman, backed by an
array of mostly Western blue-chip companies with interests in China, is
creating a $300 million scholarship for study in China that he hopes will
rival the Rhodes scholarship in prestige and influence.

The program, whose endowment represents one of the largest single gifts to
education in the world and one of the largest philanthropic gifts ever in
China, was announced by Mr. Schwarzman in Beijing on Sunday.

The Schwarzman Scholars program will pay all expenses for 200 students
each year from around the world for a one-year master’s program at
Tsinghua University <http://www.tsinghua.edu.cn/publish/then/index.html>
in Beijing.

The program’s creation underlines the tremendous importance of China and
its market to Wall Street financiers and corporate leaders, who have
become increasingly anxious as security and economic frictions grow
between China and the West.

Mr. Schwarzman said his goal was to reduce such tensions by educating the
world’s future leaders, but his role in the project will also raise his
political profile in China, potentially giving him and his private equity
firm, the Blackstone Group <http://www.blackstone.com/>, increased access
to Chinese leaders. Many of them, including Xi Jinping, who became
president of China last month, attended Tsinghua, one of the country’s top
universities.

Mr. Schwarzman said he was donating $100 million from his personal
fortune, which Forbes estimated last month at $6.5 billion. He said he had
raised $100 million from donors, and expected to raise the remaining $100
million by the end of this year.

Many of the donors have sprawling business interests in China and
frequently deal with government regulators and state-owned enterprises
that have wide discretion over the activities of foreign companies.

The donors include Boeing, which is aggressively marketing jets in China,
the world’s second-largest aircraft market, and Caterpillar, which sells
earth-moving equipment in what has become the world’s largest construction
market. They also include JPMorgan Chase, Bank of America and Credit
Suisse, which provide financial services to the Chinese government and
state-owned banks.

The biggest donor after Mr. Schwarzman is BP, which produces and imports
natural gas in China and also has joint venture chemical plants and other
operations in the country.

The personal foundation of Mayor Michael R. Bloombergof New York is also a
donor. Mr. Bloomberg’s media company is trying to lease more news and data
terminals to state-owned banks, but it has been stymied by the government
since the company’s publication last year of an investigation into the
financial dealings of Mr. Xi’s family.

The scholarship’s advisory board is a who’s who of investors, diplomats
and other influential figures, some of whom also have political or
financial ties to China. It includes three former secretaries of state,
Condoleezza Rice, Colin L. Powelland Henry A. Kissinger; two former
treasury secretaries, Robert E. Rubinand Henry M. Paulson Jr.; a number of
university presidents and cultural figures, including the cellist Yo-Yo
Ma; former President Nicolas Sarkozyof France; and the former prime
ministers of three countries, Tony Blair of Britain, Kevin Rudd of
Australia and Brian Mulroney of Canada.

Many large Western companies have been pressing for closer ties with China
even as security experts warn about China’s military expansion and
territorial claims, and many smaller businesses and labor groups warn that
China seeks to dominate a wide range of industries.

Mr. Schwarzman said his concern was that as long as the Chinese economy
grows two to three times as quickly as the American economy, and with
European economies barely growing at all, tensions are likely only to rise.

“The idea was to deal with this problem in a generational manner,” he said
in a video interview from New York, adding later in an e-mail, “I feel
grateful to be able to have the resources to help change future leaders to
impact their countries’ and China’s destinies.”

The program plans to take in 10,000 students over the next 50 years,
forming an international network that can bridge differences between China
and the West, he said. Forty-five percent will come from the United
States, 20 percent from China, and 35 percent from Australia, Canada,
Europe, Latin America and the rest of Asia. Africa may be added later.

The scholarship program will not be Mr. Schwarzman’s first major foray
into China, where private equity firms like his have been trying to gain
entry. In 2007, as he was preparing to take Blackstone public, he sold a
$3 billion stake in the company to the China Investment Corporation
<http://www.china-inv.cn/cicen/>, the country’s giant sovereign wealth
fund. The deal stirred controversy in China
<http://www.nytimes.com/2007/08/03/business/03backlash.html> when the
value of the stake plunged, along with most stocks, during the global
financial crisis, drawing vehement criticism among some Chinese. Chinese
leaders brushed off the concerns, and the stock has since nearly recovered
when dividends are included.

Mr. Schwarzman said his scholarship program had nothing to do with
Blackstone or the China Investment Corporation. “This is a private thing
by me, it’s not a Blackstone initiative,” he said.

Mr. Schwarzman, 66, got his start at Donaldson, Lufkin & Jenrette, an
investment bank later purchased by Credit Suisse. Except for a brief stint
in the Army Reserve, he has spent most of his career at two Wall Street
giants: Lehman Brothers, whose sale he led in 1984, and then Blackstone,
where he is chairman and chief executive. On taking Blackstone public in
2007, he received $4.77 billion when his stake was converted to stock.

His name is also attached to the main branch of the New York Public
Library on Fifth Avenue, which was renamed for him after he pledged $100
million in 2008 
<http://www.nytimes.com/2008/03/11/arts/design/11expa.html>, which he has
since donated.

When it begins in 2016, the Schwarzman scholarship program will match the
111-year-old Rhodes in the number of students and the size of its
endowment.

The Rhodes endowment is worth about $203 million, according to its
trustees. It awards grants to 83 scholars a year, who typically study at
Oxford for at least two years though some stay on to complete a doctorate,
said Dr. John Hood, a former vice chancellor of Oxford who is the chairman
of the Rhodes trustees. About 200 scholars are on stipend at any one time.

Cecil John Rhodes, a British colonialist who made a fortune in South
African diamond mines, established the program in 1902 to bring scholars
to his home country, the leading imperial power of the day. Mr. Schwarzman
will be sending scholars largely from the industrialized world to study in
a less-developed country that is seen as a rising world power.

The program will be housed in a new facility at Tsinghua, Schwarzman
College. Ground breaking is scheduled for late this year, with a design by
Robert A. M. Stern, dean of the Yale School of Architecture.

Students will live in pods of eight bedrooms with a common living room, a
design taken from the executive education program at Harvard Business
School. The building will also include 12 residential suites for the dean,
director and visiting faculty; a two-story forum resembling the one at the
Harvard Kennedy School; an auditorium; and four classrooms.

The program will offer master’s degrees in public policy, international
relations, economics, business and, later, engineering. It will start each
June with a summer-long immersion program in Chinese culture and issues,
and an introduction to Mandarin, followed by a full academic year of
courses at Tsinghua.

David Daokui Li <http://www.sem.tsinghua.edu.cn/en/lidk>, a prominent
economist at Tsinghua who is the dean of the new scholars program, said
the university already offers a third of its courses in English, and more
than half in subjects like business and economics. Coincidentally, the
ivy-garlanded Tsinghua University was founded in 1911 with foreign money:
the United States chose not to accept part of the indemnities promised by
China after the Boxer Rebellion, a nationalist uprising against foreigners
that ended in 1901, and instead channeled the money to education.

While Mr. Schwarzman said that his main goal was to promote understanding
between China and the rest of the world, he acknowledged another, more
personal, motive.

When he was a senior at Yale in 1969, he was turned down for a Rhodes
scholarship and advanced to finalist but did not win a two-year fellowship
at Cambridge. He ended up going to Harvard Business School and Wall Street
instead.

“I didn’t get any of those, and wanted one,” he said.

Now that he has created his own international scholarship program, he
said, “Maybe even I might have been selected if I were back at Yale in
1969.”