China further tightens edtech rules in fresh blow to private tutors

The latest restrictions appear in line with Xi Jinping's broader objective of reining in China's increasingly powerful private sector

China will further tighten oversight over its battered online education sector, in a clear signal that Beijing’s not yet prepared to unshackle the private tutoring arena despite loosening curbs on tech giants. 

Edtech companies plunged after the Ministry of Education published a new set of restrictions that limit the fees and operating times of private tutoring services for primary and middle school students. Firms offering non-curricular tutoring will be required to end physical classes by 8:30pm and online sessions by 9pm, while limiting one-time charges to 5,000 yuan ($720) and mandating a special trust account with state-designated banks for pre-paid fees.

Scholar Education Group fell as much as 30 per cent in Hong Kong on Thursday — the biggest fall since last July, when Beijing first rolled out sweeping curbs that decimated a once-thriving $100 billion sector. New Oriental Education dropped 9.3 per cent at one point, with similar or sharper declines from peers including Virscend Education Co., China Education Group and Hope 

Education Group.

The new policies further pummel private education services, which have struggled since the government’s surprise move last year to ban those companies from making profits, raising capital, or going public. The latest restrictions from Beijing, which has labeled the sector “broken” and “hijacked by capital,” appear in line with Xi Jinping’s broader objective of reining in China’s increasingly powerful private sector.

Thursday’s proclamation echoed some  of the phraseology employed during 2021’s clampdown. Among other things, tutoring firms that want to list shares will be subject to a strict regulatory review to avoid “barbaric growth” of the industry.
 

In a document issued by 13 agencies, including the nation’s top securities regulator, the government pledged to address outstanding issues in the quality, safety, standards and pricing of tutoring services to alleviate household financial burdens.

Tutoring firms will be required to meet the new regulatory standards by June 2023 or face “serious consequences.”
 

“It is necessary to clarify the non-curriculum tutoring organization’s domestic and overseas market standards and processes, to strictly control the gates, and to do a good job in regulatory supervision and guidance to prevent barbaric growth,” the agencies said. 
 

The curbs come even as Xi’s administration has shown a willingness to dial back a longstanding clampdown on tech giants to galvanize economic growth, including by resuming game licenses for Tencent Holdings and Netease.