Why China cracked down on education and upended a US$70 billion tutoring industry, with millions of jobs and students affected

  • ‘Discourse and ideology need to be controlled by the central government’, and Beijing ‘aims to rectify education itself’, industry insider says
  • President Xi Jinping started criticising China’s after-school tutoring sector years ago, saying it ‘violated the laws of education’ and imposed a heavy burden on families

When the representatives of several after-school tutoring giants were called in for a meeting with China’s Ministry of Education in March, they were told that their teaching materials and content would be treated as publications – subject to advanced censorship.

Those who attended the meeting said the representatives agreed to fully cooperate but explained that they could not simply change the handouts overnight. The proposal also would not be an easy task for education authorities, as it would require quite a few staff members to conduct the regulatory review, according to a source who asked not to be identified because of the sensitivity of the discussions.

Then, last month, before the ministry had even put together a detailed plan, the State Council banned those tutoring firms from making a profit by teaching core subjects after school. China’s cabinet also restricted foreign investment in such companies, after years of this being a key avenue for such test-prep firms to raise money in the for-profit industry.

And just like that, a sector worth tens of billions of dollars – and long considered essential to succeeding in Chinese school exams – was upended.

“This unprecedented crackdown is from the top and is beyond the education ministry,” the source said. “The intention is not to particularly target the private sector, but it aims to rectify education itself.

“It’s a real concern from the state level, because discourse and ideology need to be controlled by the central government. But the after-school tutoring sector has built up its own set of discourse over the past few years, and this runs contrary to the state’s intention.”

The tutoring industry is seen by many well-off families, and the nation’s rapidly growing middle-class, as a means to a better life and enhanced social status. The industry also employs millions of workers, according to China News Weekly, a state-run news magazine based in Beijing. Many of them are part-time staff who are looking to earn more money on the side or pay for their university degrees.

And while a number of small education firms went bankrupt or shut down during the pandemic, some larger online education platforms expanded due to surging demand, acquiring massive amounts of financing. A total of 13 Chinese education institutions were publicly listed in 2020. One of those was listed on the mainland, and the others were in Hong Kong and the United States, according to PwC, one of the Big Four accounting firms.

Data mining and analysis platform iiMedia Research estimated that China’s online education market grew by about 10 per cent to 454 billion yuan (US$70.25 billion) in 2020, while the Frost & Sullivan research and consultancy firm forecast last year that the country’s online education market was on track to be worth US$99.3 billion by 2023.

Chinese tech giants, including Alibaba, Tencent and ByteDance, also jumped on the bandwagon in recent years and invested in the education sector. Alibaba owns the South China Morning Post.
“The market is quite reckless, and the central government is now sending a signal that education needs to keep a certain distance from capital because excessive capital involvement will reignite social injustice and is inconsistent with some of the Chinese government’s philosophies,” said Miao Lu, secretary general of the Centre for China and Globalisation (CCG), a Beijing think tank.

She added that the central leadership has always been very adamant about its grasp on ideology in education, given that China is a socialist country.

“It is like the central government yanked on the emergency brake, but had the government not done so, the vicious competition of capital would not stop. There is always a balancing process in China’s policymaking, and I think it will balance back,” she said.

The education crackdown falls under President Xi Jinping’s redesign of the education system ahead of next year’s National Party Congress, which will shake up the top echelon of Chinese politics, according to a Beijing-based political science academic who asked not to be identified because of the sensitivity of the matter.

“The after-school tutoring service helps the middle class maintain their social status and strengthen their self-reinforcement,” the scholar said. “On the one hand, they need to rely on the middle class for economic growth, but on the other hand, an overly powerful middle class can be a challenging force to authorities, too.”

More than two months ago, rumours were already swirling about a more draconian crackdown on the industry. Insiders said most education firms were waiting and watching, and some were discussing how to go about the transition.

Before that, Chinese authorities had already restricted homework and curbed live-streaming hours for online tutors. Earlier this year, the Central Commission for Discipline Inspection, the highest internal control institution of the Chinese Communist Party, said the state should strengthen its supervision of the online education industry, which was “under a whirlpool of capital”. In June, the education ministry set up a new department to supervise after-school tutoring.

President Xi had also previously criticised the after-school tutoring sector in 2018, when he said it had “increased the burden of students and families’ financial burden” and “violated the laws of education”, as well as “disrupted the normal order of education”.

“The conscientious industry cannot turn into a profit-seeking industry. The off-campus training institutions must be regulated by the law so that they can return to the normal track of educating people,” according to the speech published in Xi Jinping: The Governance of China, Volume Three.

Meanwhile, despite its crackdown on after-school tutoring, China has been investing heavily in vocational education, which is part of both its Made in China 2025 plan to upgrade its hi-tech industries and lessen its dependence on imports, and of the Belt and Road Initiative to link economies into a China-centred trading network.

China now has the world‘s largest vocational education system. In 2020, the central government allocated 25.71 billion yuan to boost vocational education, according to Xinhua. Chinese authorities have emphasised that, for students who do not have the opportunity to attend a university, vocational education is another way for them to better themselves.

However, middle-class parents are generally not fans of vocational schools, and the new crackdown is causing a great deal of concern.

“I’m terrified every day. I don’t know if the classes I signed my daughter up for can be completed. I can’t accept having to stop sending my daughter to after-school tutoring classes, because the school-selection mechanism has not changed, and every parent wants their children to go to a better school to receive a better education,” said Ms Zhang, a Beijing-based mother, who asked not to use her full name.

The sector has already started to see lay-offs. Last Tuesday, in a virtual meeting with more than 9,000 staff members, Zhang Xinbang, the co-founder and chairman of US-listed education services firm TAL Education, said it was “unavoidable” for the company to lay off some employees, according to one who was at the meeting.

Miao from the CCG said future changes to education in China will still need to take market forces into consideration, at least to some degree, because it is impossible to rely entirely on the government.

“Since the reform and opening up, especially in recent years, market-oriented education has helped China realise the modernisation and internationalisation of education, and these have played a very positive role in the process,” she said. “The country will still need them in the future.”

Author: Cissy Zhou, SCMP

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