By Casey Hall and Laurie Chen
SHANGHAI/BEIJING (Reuters) – China is quietly easing regulatory pressure on private tutoring providers as the country looks to revive a stagnant economy and spur a nascent revival of a sector hit hard by a government crackdown three years ago , as shown by industry figures, analysts and industry experts. data reviewed by Reuters.
There has been no formal acknowledgment of a change in policy. But there is now tacit approval from policymakers to allow the tutoring industry to grow, in a bid by Beijing to support job creation, eight industry figures and two analysts familiar with the developments told Reuters.
The shift is evident in new growth among tutoring companies and moves by Beijing to clarify its approach, as well as in Reuters interviews with five Chinese parents who described a gradual liberalization in recent months.
Details in this story about the relaxation of policy enforcement and the increasing openness of guidance organizations’ activities have not previously been reported.
As of 2021, a government crackdown known as the “double reduction” policy banned for-profit tutoring in primary school subjects, aiming to ease educational and financial pressure on parents and students.
The move wiped billions of dollars from the market value of providers like New Oriental Education & Technology Group and TAL Education Group (NYSE:), and led to tens of thousands of job losses. Before the crackdown, China’s for-profit tutoring industry was valued at about $100 billion and the three largest players employed more than 170,000 people.
Still, the sector proved resilient as parents like Michelle Lee, 36, continued to seek tutoring to give their children an edge in China’s ultra-competitive education system.
Lee, who lives in southern China, spends 3,000 yuan a month, or about $420, on after-school classes for her son and daughter, including one-on-one math tutoring and online classes in English. She told Reuters that tutoring schools have operated more openly in recent months than they have since 2021.
“When the policy first came out, I think the tutoring organizations were a little scared, so they kind of hid, like closing the curtains during class,” she said. “But it looks like they don’t do that anymore.”
In China’s high-pressure educational environment, parents have little choice but to rely on outside tutoring so their children can keep up, Lee said, adding that she had “felt a huge sense of failure” when she tried to complete the education of to support her children.
China’s Ministry of Education did not respond to questions about the evolving approach to the tutoring industry.
At a ministry press conference in March, Liu
Lynn Song, chief economist for Greater China at ING, said China was unlikely to admit that the crackdown was “a bit too strong.” Instead, there would be a “tacit relaxation towards a more accommodative regulatory stance,” he said.
“The overall policy environment has shifted from restrictive to supportive as the main goal now is stabilization,” Song said, adding that the tutoring industry should benefit from the broader shift.
Evolving environment
Two executives at major tutoring companies working on regulatory issues told Reuters that government moves to ease the crackdown have accelerated in recent months.
Most notable was a decision in August by the State Council, China’s cabinet, to include education services in a 20-point plan to boost consumption – a key aspect of Beijing’s efforts to boost the economy. This measure boosted the shares of listed education companies and came about as more than 11 million university graduates entered the Chinese labor market.
That announcement followed draft guidelines from China’s Ministry of Education in February, which clarified what types of off-campus tutoring would be allowed, and last year’s introduction of an online “whitelist” of companies approved to provide tutoring teaching in non-core subjects.
In addition, local authority inspections of tutoring schools have recently fallen significantly from their peak at the start of the crackdown, one of the executives said.
Both executives said the message they have received from Chinese officials since August is that the tutoring industry will remain tightly regulated, but with a broader path to operate successfully and above board, provided operators continue to lift restrictions on teaching the not ignore core academic curriculum. They spoke on condition of anonymity because they were not authorized to speak to the media.
Claudia Wang, who heads the Asia Education Practice at consultancy Oliver Wyman, says that after weeding out some low-quality players, the government is pinning hopes on the education sector to help tackle “super-high” youth unemployment.
“I think this is very, very fundamental to the shift,” Wang said.
Hiring patterns and other moves by publicly traded education companies point to an expansion of the sector this year.
Active licenses for for-profit after-school tutoring centers increased 11.4% between January and June, according to research firm Plenum China.
TAL and New Oriental have hired thousands of jobs this year, according to data from their annual reports and a Reuters review of job postings on major Chinese employment platforms. The number of schools and learning centers of New Oriental and TAL have also recovered, according to data from the companies and Plenum China.
The companies’ shares have traded at their highest levels since 2021 on average this year, but still well below pre-crackdown levels.
New Oriental declined to comment to Reuters on how it was responding to the changing regulatory landscape, while TAL did not respond to a similar request. In its September annual report, New Oriental noted that “significant risks” still exist due to the way regulations and policies relating to private education are interpreted and implemented.
“We have been closely monitoring the changing regulatory environment and are making efforts to consult and work with government agencies to comply,” the report said.
CREATIVE CURRICULUM
Another reason for the industry’s revival is that it proved impossible to eliminate.
In practice, private tutoring providers, although smaller, continued to exist in various forms, often redesigning courses to circumvent restrictions or advertising them under code words. For example, math-related courses are often marketed as “logical thinking.”
Lisa ran an English tutoring school in the eastern province of Zhejiang, which adapted the curriculum to comply with rules banning the teaching of core subjects such as math and English.
Lisa, who declined to give her full name for fear of official retaliation, said she fired 60% of her staff after the crackdown. But the school maintained the classes by focusing on teaching science-related courses in English, without calling them English classes.
One-on-one tutoring, meanwhile, flourished as parents who could afford the higher prices hired tutors to come to their homes.
That worried parents like Yang Zengdong, a mother of two from Shanghai, who said the policy left families with the unenviable choice of paying up to 800 yuan per class for a private teacher or investing hours themselves into helping their children to keep up.
“If the double reduction continues, the academic gap between rich people and everyone else will widen,” she said.
“That was not the intention of the policy, but that is the reality, so of course it has to change.”
