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Tim Culpan

Capitalists Are No Longer Welcome in China's Classrooms

As Beijing makes clear what’s truly important for the nation, profit is being squeezed out of private tutoring, an investor darling.

Primary school students can face long days at school (above) and then at private tutoring classes.

Primary school students can face long days at school (above) and then at private tutoring classes.

Photographer: Geng Yuhe/VCG/Getty

There were plenty of signs that an assault on China’s for-profit tutoring was coming. But few predicted that Beijing would lob a hand grenade into the industry, and in so doing let the entire world know that it sees childhood education as a policy priority and not just a hot capitalist income stream.

Over the weekend, the government decreed that offering after-hours education to students could no longer be done for profit, nor funded by capital raising or allowed to go public on equities markets. The move could destroy a 1 trillion yuan ($154 billion) industry built on convincing parents of the need to keep schooling kids late into the night and during the weekend. The move against the commercial education business is of an entirely different scale than the crackdowns in recent months that reined in other powerful, prominent sectors. 

Whereas Ant Group Co. (fintech), Didi Global Global Inc. (logistics), Alibaba Group Holding Ltd. (e-commerce) and Tencent Holdings Ltd. (social) found themselves in regulatory crosshairs over issues ranging from data privacy to anti-competitive behavior, big education providers are under fire for their core operations: charging money and profiting from teaching schoolchildren. Big Tech had the option to adjust course and pay a fine. The giants in tutoring — TAL Education Group, New Oriental Education & Technology Group and Gaotu Techedu Inc. — may be left with no business model at all.

President Xi Jinping has taken an interest in the topic. As far back as March, he noted the industry’s tendency to exploit parental anxiety, comparing it to a chronic disease: “On the one hand, parents want their children to be healthy and have a happy childhood; on the other hand, they are afraid their children will lose right from the starting line in the competition for marks.”

Such concern over the welfare of parents and children extends further than their emotional well-being. It cuts to the heart of the government’s focus on disparities between rich and poor, and revised policies on population control after China last year recorded a fourth consecutive decline in birth rate.