China Cracks Down On Private Education Industry

The private education industry in China is estimated to be worth US$120 billion. Recently, this industry has been rocked by the new regulations issued by the Chinese government. With guidance from your economics tutor Singapore in your economics tuition Singapore class, discuss the implications of the new regulations. You may sign up for economics tuition Singapore with a reputable economics tutor Singapore should you need help with the subject. In response, the stock prices of these private education firms plummeted. Among them were New Oriental, TAL and Gaotu. Specialised in providing English language learning, New Oriental’s stock price plunged over 50 per cent from US$6.40 to US$2.93 on New York Stock Exchange 23 July 2021.

Stringent New Regulations

Under the new regulations, firms in the private education industry are required to convert to non-profit status, a fundamental change which may eventually drive them out of business. The authority will no longer approve new firms seeking to teach school syllabus in China. Existing firms will be subjected to regulatory reviews and will be required to apply for a license. Over the past decades, lucrative profit has been the key factor attracting many into the business of private education in China. New Oriental, a pioneer in private education in China was established in 1993 by a former Peking University English teacher Yu Minhong. From an initial focus on TOFEL and GRE targeted at students aspiring to study overseas, New Oriental has diversified its portfolio to cover English tutoring at different levels from elementary school to high school. In consultation with your economics tutor Singapore in economics tuition Singapore, discuss what have contributed to New Oriental’s exponential growth. In 2006, it became the first Chinese education institution listed on the New York Stock Exchange. However, with the new regulations in place, private education providers will no longer be allowed to raise funding through public listings or from foreign investors. You may consult your economics tutor Singapore in your economics tuition Singapore class about the possible implications.

Off-campus core curriculum tuition which prepares students for the various examinations will be banned. In addition, private education providers will no longer be allowed to engage foreign teachers outside of China for online tuition. Firms such as New Oriental, which has invested heavily in online tuition since 2015 and VIPKid, which has built its entire business model around offering affordable access to Western teachers online will be severely affected. With your economics tutor Singapore in economics tuition Singapore, discuss what has led to the Chinese government’s decision to ban online tuition taught by foreign teachers.

Possible Considerations

Analysts believe that these new measures reflect the Chinese government’s concerns over the various negative implications of private tuition. They include among others, increased costs for parenthood and the psychological impact on children. You may approach your economics tutor Singapore in economics tuition Singapore for an in-depth analysis on why increasingly competitive education race has caused unnecessary strain on both parents and their children. In China, a typical parent spends thousands of dollars per year per child on private tuition. Despite the government’s effort to reduce the burden of students, they have most of their after-school time occupied by the various private tuition classes.

The new regulations may be able to reduce the gap between the wealthy and the poor in terms of access to quality education for their children. However, some argue that this will not stop the very rich from seeking out private tuition for their children on one-to-one basis. Reference can be drawn from the case of South Korea. In 1980, private education was banned in the country. However, when it was later re-legalised in 1991, it grew even larger in size. There was a second attempt by the South Korean government to crack down on the private education sector in 2011 which met with limited success.

Linda Geng

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