Local governments in China have been instructed to withhold business licenses for new tuition centers while existing ones must be registered as "non-profit institutions."
Besides being barred from offering courses during the school holidays, the tutoring platforms will also be banned from going public and raising further capital from listed firms or foreign funds.
Week in China reports nine major cities, including Beijing, Shanghai, and Guangzhou – the biggest markets for Chinese edtechs except for Shenzhen – have been selected as pilot cities to implement the strict new guidelines.
The Financial Times reports that the tutoring crackdown provides a window into the mounting stresses and strains of middle-class life in China's big cities.
To outsiders, the world's second-largest economy can often seem relentless, immune to even the worst pandemic in a century and notching persistently significant increases in consumer spending as prosperity spreads rapidly across society.
But is this is the real reason for the crackdown, stress?
No.
Going back to the post on the waiting list to join the Chinese Communist Party, Beijing sees problems on the horizon.
China provides nine years of free compulsory education, covering primary school and junior middle school. Beyond that, tens of millions of students have to sit the zhongkao, the Senior High School Entrance Examination, and gaokao, a standardized college entrance exam held annually, to compete for positions in higher levels of education.
According to data from New Oriental, 17 million children were eligible for the zhongkao in 2019. About 10 million, or 60% of them, went on to take the gaokao. Private educational groups set out to help these students (and their parents) prepare for the brutal talent screening tests.
The underlying trends shaping China's tertiary education system for more than a decade are not necessarily as well suited to the staffing requirements of programs like the Made in China 2025 initiative.
As policymakers push for national self-sufficiency in key industrial supply chains such as chipmaking, the call for more skilled workers has become more pressing.
As a result, the government has been putting a much heavier emphasis on vocational training instead of the continuing expansion in tertiary education (aka the number of university places).
In April, as scrutiny of the off-campus tutoring schools increased to a new level of intensity, Xi Jinping called for efforts to speed up the development of a "modern vocational education system" to cultivate a new generation of high-quality, technical professionals.
Fewer humanities students and more STEM graduates - that is the reason for the crackdown.
