Yu Minhong (俞敏洪) was a born fighter. Defying misfortunes from university entrance exam failures to rejection of visa to study abroad, the poor farmer’s son triumphed as China’s godfather in education. In a plot described as the Chinese version of “The Social Network” which was later immortalised in its own blockbuster “American Dreams in China (中国合伙人)”, he took his company, New Oriental Education & Technology (新东方), public in the New York Stock Exchange in 2006, the first Chinese education business to ever reach such achievement.
But tough as Mr. Yu is, nothing has quite prepared him for what is coming this summer. The moment the government’s “Double Reduction policy” (“双减”政策) came to light, his life’s work, New Oriental, got thrown into an existential crisis,.
These sweeping measures, articulated in a directive named “Guidance on the Further Reduction of Students’ Academic Burdens from Statutory Eduction and After School Tutoring (关于进一步减轻义务教育阶段学生作业负担和校外培训负担的意见)”, went nuclear on the entire private tutoring sector by:
- Banning all K9 academic after-school tutoring during weekends and holidays (advertising is also prohibited)
- Turning all tutoring businesses into non-profit, effectively cut off access to capital market
Unsurprisingly, as investors fleeing the market and Mr. Yu battling a free fall in New Oriental’s share price, there come familiar outcries of party assertion and ideological control. But things about China are never quite so black and white. If you have the patience, I will endeavour to pierce through the surface and unveil the 50 shades of grey in between on this topic.
China tutoring ban: why and why now?
Those with a strong political antenna would have noted that the directive above was issued by the State Department, China’s highest administrative authority, instead of Ministry of Education. This in itself is revealing, as it affirms that China has elevated eduction to a strategic industry of national importance. It in turn indicates that the government expects the education sector to uphold social stability, something it prizes above all things. But a tutoring segment running wild appears to be doing just the opposite. For that reason, the government felt compelled to insert itself to reinstate the role education to its rightful place.
To appreciate the link between education and social stability, one needs to first understand the evolution of China’s education system. In a period from the country’s Reform and Opening up (改革开放) in the late 1970s to the early 2000s, the Chinese education set-up can be broadly characterised by:
- Streaming: China legislated K9 education as statuary in 1986. This includes 6 years spent in primary schools followed by 3 years in junior high schools. Students are then separated into two distinct streams based on the results of Zhong Kao (中考, junior high school leaving exam). Those with better scores continue onto to 3 more years of senior high school before sitting for Gao Kao (高考, university entrance exam), while the remaining enrol in vocational academies.
- Selectivity and standardisation: Decade-long chaos under Mao’s Cultural Revolution devastated China’s education infrastructure. As a result, skilled labour was in an acute shortage as the country started its economic reform. Against this backdrop, the country’s education system was moulded into a giant filtering machine based on standardised teaching and testing, to churn out productive masses in the most possible efficient way. Following the same logic, a subset of schools were then prioritised for education resources to expedite development for top talents. This gave birth to what became known as elite schools (重点学校). Fed with high calibre students and aided by top teaching staff, these elite schools stood out for producing high achieving graduates.
- Limited flexibility: Once the battle line was drawn about elite and non-elite schools, a seamless production line developed for what Chinese parents consider a model student, starting from elite primary school, onto elite high school and finally elite university as the cherry on the top. So entrenched is this ecosystem that it has become very hard for one to play catch-up after one single mis-step.
This educational pyramid has served China well. But with time, the side-effect is equally obvious: a handful of elite schools raced ahead at the expense of the rest. The gap has widened so drastically that everyone chases after the elite schools. The result is more cut-throat competition at an increasingly younger age.
Ask any Chinese parents, “losing at the starting line (输在起跑线上)” is everyone’s worst nightmare. And their answer to this fear is private tutoring, and lots of it. Tutoring businesses, growth-hungry and armed with a abundance of capital, add fuel to the fire by their aggressive marketing tactics and ever encompassing offerings. Eventually, healthy rivalry gives way to a self-perpetuating spiral of “involution (内卷)”, an agricultural anthropology term widely adopted by Chinese netizens to vent their frustration about senseless competition with diminishing returns.
The bigger problem is that those who can’t afford tutoring are losing out. So the pyramid, once considered a relatively fair game that allows the smart and driven ones to move up the social ladder, now appears to favour the privileged. That’s how private tutoring businesses, such as Mr. Yu’s New Oriental, have crossed the red line of the Chinese politics: fortifying social and regional inequality that have already been brewing discontent.
Education sector’s other intersection with social stability lies in its influence on two other sensitive policy areas: property price and birth rate.
Designed as a package with the tutoring crackdown but receiving little English press coverage are measures aimed at diluting the concept of school catchment area. The allocation of Chinese public school places has one little known nuance: it is tied to house ownership, not just to where you live. No wonder financially able parents queue to fork out millions to acquire rundown flats in old city centres for their proximity to the elite schools.
To give you a flavour of this absurdity, Shanghai saw a marked house price increase in 2020, following a tweak in its primary school admission process. What happened was that private schools were asked to switch from selective admission to a lottery system. Students who decide to try their luck with any private schools forfeit the right to attend their local public school and will be assigned to a less sough-after school. Of course anxious parents can’t stand the thought of leaving their children’s future to fate. So purchasing a catchment area house became the only insurance available, thus the property price spike.
Given China’s deep-rooted house ownership culture, a run-away real estate market is the last thing any government would like to see. As a matter of fact, a politburo meeting held in April earlier this year specifically highlighted the need to stopping housing market speculation based on school catchment.
Never underestimate these political speeches. Different from the West where politicians just can’t stop talking, in China political message from the top has a direct steer on how middle-level officials formulate policies. And the signal here was crystal clear: break the perilous link between property price and school choice. Sure enough, tier 1 cities, such as Beijing and Shanghai, soon announced targeted adjustments, from quota system for elite schools to enlargement of the catchment area.
Last but certainly not least, the tutoring ban also dovetails with the government’s manifesto of reversing China’s unfavourable demographic trend. The high cost of raising children has long been blamed for the country’s dogged decline in birth rate. Today the issue is ever more pressing.
Compared to a replacement fertility rate of 2.1 children per woman, China’s figure of hovering around 1.5 looks treacherously low. The latest outlook is for negative population growth to start from as soon as 2025. Some shrewd tutoring operators, previously focused on academic training, are already pivoting towards offering daycare services. It is no secret that China suffers from a chronic shortage of early years childcare services, another stumbling block to its reproductive ambition. Whether it is on purpose or a blessing in disguise, is anyone’s guess. But hey, one stone, two birds – not too bad!
I hope by now I have done enough to show you why education is a common denominator for the three pillars of social stability: social mobility, housing market and birth rate. As such, it is evidently something too important to be left to the free rein of the market.
China tutoring ban: what next?
Ask what average Chinese parents think about the tutoring ban: most will nod in agreement about what the regulation aims to achieve, but remain sceptical about its approach. The prevailing view is that the current measures, drastic as they are, merely treat the symptoms, but not the disease.
So what is the disease? To my mind, it is a toxic combination of a perceived single track of success, where university is the gatekeeper of one’s career and livelihood, scarcity of good schools and well-paid jobs for the size of the population and the resulting feeling of insecurity.
To be fair, the government is trying to address at least part of it. Multiple initiatives have been announced recently to boost vocational training. Likely modelled after the Swiss system, the plan is to have half of the students going into vocational academies after junior high school. The goal is to help diversify career paths, alleviate the bottleneck of Gao Kao (高考), the tough national university entrance exam, while better meet the needs of employers.
It all sounds great on paper. But the unpleasant truth is that these Chinese vocational academies, long neglected as last resort for kids failing all other options, are nowhere near the standard of their Swiss peers. Most do not teach the right subjects or skills to prepare students for China’s modern day economy. On the job training and placements with employers are also few and far between.
Often students, feeling bored and de-motivated, struggle to find desirable jobs afterwards. For the lucky ones who do land on something interesting, the stigma associated with these institutions means that they can never achieve pay, progression and social recognition comparable with university graduates.
“If my kid can earn a decent living by going down the vocational training route, I won’t mind at all. After all, who wants to throw away hard-earned money on endless tutoring? But at the moment, I have no choice, because I don’t want my kid to do a job that will soon be replaced by machines.”
(Quote from one parent on WeChat which received many likes)
As long as most parents remain unconvinced about vocational training as a viable option for their children, the desire for elite university degrees, and the accompanying need for tutoring will not go away. And ironically, the government’s push may even exacerbate the problem, as the students now need to fight for fewer places in senior high schools, the prerequisite for going to university, given the 50% quota reserved for vocational academies.
Chinese social media sites are already full of ingenious ideas, from amusement park with complimentary math session, tutoring cruise, class to train parents on how to train their children to adult English class with on-site “childcare” services. Anyway, jokes aside, the parallel with past events, such as the Prohibition, is too hard to ignore and we all know very well what has happened from history books.
At this point, some of you may ask the million-dollar question: why not get rid of Gao Kao (高考), which seems to the source of all evils? Well, if you think the elephant in the room, Gao Kao (高考), is going to budge, think again. Despite complains of its limitations and rigidity, in China it is still widely considered a meritocracy, the last bastion of the country’s increasingly elusive social mobility.
The support from those in rural or less developed area is especially strong. Imagine if China adopts a more holistic assessment for university admission, how would they ever compete with middle class urbanites who have impeccable CVs including sports, arts and music instruments? And the government heard them loud and clear: abandoning Gao Kao (高考) threats their stated goal of common prosperity. So for both political and practical reason, Gao Kao (高考) will remain a staple of the Chinese school life for the foreseeable future.
Ending on a more positive note, I believe tearing apart the current business model of tutoring providers, if done thoughtfully, does have one silver lining: an opportunity to re-balance distribution of education resources.
Private tutoring giants have built up an army of bright graduates in recent years. Many will be looking for jobs soon. How to incentivise some of them to join the public education system or to help revitalise non-elite schools? Most tutoring businesses own impressive technology infrastructure to support their online courses. Can this e-learning capability be leveraged to level the playing field for less developed areas? If parents are no longer the target audience, can weaker public schools step in to become paying customers or partner with the tutoring operators for their superior curriculum and teaching materials? These are difficult questions to answer, but right ones to ask. And I hope there are people trying to figure them out.
As the Chinese saying goes, “the water that bears the boat is the same that swallows it up. 水能载舟, 亦能覆舟”. For the Chinese leaders, it reminds them to heed the public concerns. Tutoring companies are at risk of stirring a wave of grievance so they will need to go. For Mr. Yu, it means that his company, New Oriental, is after all a product of its time. It rose with the tide of China’s exam-oriented education philosophy, but right now the current has become simply too strong for it to keep afloat.
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