China's education authorities are warning colleges and universities to be away from risk investment in stocks and bonds, amid a continuously frantic national entry into the stock markets over the past months.

Wu Qidi, Vice Minister of Education, said on Thursday, "Colleges and universities should not invest in companies with funds allocated by the state finance, funds for infrastructure constructions and tuition fees collected from students."

" Nor should they misappropriate the money to buy stocks," Wu said, without mentioning what penalties offenders will face. Most institutions of higher learning in China are funded by the government and even private colleges are non-profit organizations by law.

High university officials have been found to dip into their purses to speculate in the stock market.

Shan Ping, former head of Tianjin University in the northern port of Tianjin, was expelled from the National People's Congress, China's top legislature, in December last year for misuse of research funds.

He was found to have invested 100 million yuan (US$12.8 million) of university funds in stocks and shares between 2000 to 2001, causing a loss of 37.6 million yuan.

After four years in the doldrums, China's stock markets began to rebound at the beginning of 2006, with the benchmark Shanghai Composite Index hitting the 5,000-point mark for the first time last Thursday since it was established 18 years ago.

Wu also reiterated that institutions of higher learning as well as their internal organs are not allowed to be engaged in illegal business operations or fund raising among teachers and other work staff.