hina’s version of the War on Coaching

The Chinese government is cracking down on the country’s private education industry, largely Western run. Tutoring and education services companies have been told to become NGOs. Core-curriculum tutoring, which is meant to help students pass the all-important entrance exams, has been banned and a big clampdown on online teaching from abroad and hiring of foreign teachers has been ordered.

The private sector education industry globally is big, as large as $120 billion. New Oriental, VIPKid and other companies that lead the English language teaching market particularly in China have suffered massive losses on the stock market after this. Some are saying it’s also part of Beijing’s aggression against tech companies while others say middle class China, now growing rapidly, needs some help in regulating such a sector, largely owned from the outside.


Gaokao is the college entrance examination, on which depends where life will go in the future. Chinese families spend thousands of dollars to ensure that kids get a seat in the better colleges. However, it’s part of the new middle and upper class elite life in China only. Most kids grow up in the rural areas where the income per capita is still low – around $2,635 – and college education is far away.

Some are speculating that these regulations are meant to reduce child raising costs which many think is leading to a demographic squeeze. Although the GoC has extended family size limits, interest in raising larger families than now is low and costs are mentioned as retardants. Meanwhile, China may also be trying to reduce exposure to the Western world, say critics. This is probably a bit of anti-China tirade on the side because China has a huge expat population and almost all are pro-Beijing. And the decisions have hurt Western companies.

Two issues are at work. One is the economics of private education, now largely in Western hands which has just got hammered. So Western investors are unhappy but not much can be done. China may have run out of need for these goods and the West has lost a major market, all inside China.

The other point is that the need for private coaching tutoring remains -so it’s possible that a local English and entrance education market will grow indigenously which China would much prefer. The South Korean experience shows that private sector education can’t be stamped out by regulations and in the end, if laws of supply and demand of the middle class are to be considered, private tutoring is here to stay, whether in China, US or Bangladesh.

Source: United News of Bangladesh