SHANGHAI/BEIJING, Oct 28 (Reuters) — China is subtly reducing regulatory pressure on private tutoring companies as part of its efforts to revive a struggling economy. This shift signals a tentative resurgence for an industry that suffered greatly from government restrictions three years ago, according to insights from industry experts, analysts, and data reviewed by Reuters.
While there has been no formal announcement regarding a policy change, sources indicate that policymakers are now permitting a growth rebound in the tutoring sector. Eight industry figures and two analysts revealed that this shift is part of Beijing’s broader strategy to promote job creation. Evidence of this change can be seen in the increasing activity among tutoring firms and recent statements from officials clarifying their stance on the industry. Interviews with five Chinese parents further highlighted this gradual liberalization.
The shift in policy follows the 2021 “double reduction” crackdown, which banned for-profit tutoring in core subjects to alleviate financial and educational pressures on families. This crackdown resulted in billions of dollars in losses for major providers like New Oriental Education & Technology Group and TAL Education Group, leading to significant job losses. Before the crackdown, the for-profit tutoring industry in China was valued at approximately $100 billion and employed over 170,000 people.
Despite the challenges, the industry has shown resilience. Parents like Michelle Lee, 36, continue to seek tutoring for their children in China’s highly competitive education environment. Lee spends about 3,000 yuan (around $420) each month on after-school classes for her children, including personalized math tutoring and online English lessons. She noted a change in the behavior of tutoring schools in recent months, stating they are now operating more openly than they did after the crackdown. “When the policy first came out, those tutoring organizations were a little scared, so they would hide, like closing the curtains during class. But it seems like they don’t do that anymore,” she said.
In the context of China’s high-pressure educational system, parents often feel compelled to turn to outside tutoring to ensure their children keep up. Lee expressed her feelings of inadequacy in trying to support her children’s education.
The Chinese Ministry of Education has not commented on its evolving stance regarding the tutoring sector. However, at a ministry press conference in March, Liu Xiya, a member of China’s legislature, noted that the government was gradually addressing “pain points” in education policy.
Lynn Song, chief economist for Greater China at ING, suggested that while the government may not openly admit that the crackdown was too harsh, there is a “tacit easing” back towards a more flexible regulatory environment. “The overall policy environment has shifted from restrictive to supportive, with a primary focus on stabilizing the economy,” Song stated, indicating that the tutoring industry would benefit from this broader shift.
Evolving Regulatory Landscape
Two executives from major tutoring firms informed Reuters that recent government efforts to ease restrictions have intensified in the past few months. A significant development was the August decision by the State Council to include education services in a 20-point plan aimed at boosting consumption, a key component of Beijing’s economic revitalization strategy. This announcement helped lift the stock prices of listed education companies as over 11 million university graduates entered the job market.
In February, the Ministry of Education released draft guidelines clarifying permissible forms of off-campus tutoring and introduced an online “white list” of companies authorized to provide tutoring in non-core subjects. Local authorities have also reduced inspections of tutoring schools compared to the peak of the crackdown, one executive noted.
The executives, who requested anonymity due to the sensitivity of the topic, reported that since August, officials have communicated that while the tutoring industry will remain regulated, there is a broader path for compliance and growth, provided companies adhere to restrictions on core academic subjects.
Claudia Wang, head of the Asia Education Practice at consultancy Oliver Wyman, noted that by eliminating some lower-quality providers, the government is looking to the education sector to help combat “super high” youth unemployment. “This is fundamental to the shift,” Wang explained.
Hiring patterns and other activities from listed education firms suggest an industry expansion this year. Data from research firm Plenum China shows that active licenses for extracurricular for-profit tutoring centers increased by 11.4% between January and June.
Both TAL and New Oriental have been hiring thousands of new employees this year, as reflected in their annual reports and job listings on major Chinese employment platforms. Furthermore, the number of schools and learning centers operated by these companies has rebounded, according to their data.
Despite the positive changes, New Oriental declined to comment on its response to the evolving regulatory landscape, while TAL did not respond to a similar inquiry. In its September annual report, New Oriental acknowledged ongoing “significant risks” related to the interpretation and implementation of education regulations, stating, “We are closely monitoring the evolving regulatory environment and striving to comply with government guidance.”
Innovative Approaches in Tutoring
Another factor contributing to the industry’s revival is its ability to adapt and persist. Although private tutoring services diminished, they found ways to continue operating, often redesigning their courses to comply with regulations or marketing them under alternative names. For example, mathematics courses are frequently branded as “logical thinking” classes.
Lisa, who runs an English tutoring school in Zhejiang province, explained that her institution shifted its curriculum to align with the rules against teaching core subjects. After laying off 60% of her staff post-crackdown, the school continued to offer classes by focusing on science-related topics taught in English, without explicitly labeling them as English classes.
Additionally, one-on-one tutoring has gained popularity as parents with the financial means hire tutors to teach their children at home. This trend has raised concerns among parents like Yang Zengdong, a mother of two from Shanghai. She highlighted the difficult choice families face: paying up to 800 yuan for a private tutor or investing significant time to help their children keep up with their studies.
“If the double reduction policy continues, the academic gap between wealthy families and others will widen,” Yang warned. “That wasn’t the intention of the policy, but it has become the reality, so changes are necessary.”
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