If that wasn't the deal they promised the universities, then the universities have every right to act surprised.

The Chinese government breaks their promises all the time as convenient, they’ll only pretend to open up a bit and then promptly close things back up once they got what they wanted. That should have been, and most probably was, expected also.

even if they were genuinely surprised, there's nothing stopping them from pulling out, is there? sure, the government can seize the campus or whatever, but the real value to them is the branding + profs, both of which can be unilaterally revoked.

1. Sunk costs.

2. They don’t really care and already expected this.

I believe these are also JVs with lots of Chinese capital involved.

What costs? I bet the government paid for the campuses. It has an incentive to keep citizens inside their borders. Universities already charge top-dollar for admission of overseas students, so they might not make much more trading a price drop for a volume rise.

They definitely have some exposure, NYU shanghai for example is a huge effort from both shanghai municipal sources and NYU proper. The government does provide subsidies in the form of land, but the venture typically books land appreciation right away which they are loathe to lose (the same thing happened with Microsoft’s Beijing campus). So perhaps it is more accurate to say they have something to lose even if their initial investment wasn’t that large.