BEIJING - 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 (S$968.14) 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 US$100 billion (S$134.86 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 labelled the sector “broken” and “hijacked by capital”, appear in line with President 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 organisation’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 Mr Xi’s administration has shown a willingness to dial back a longstanding clampdown on tech giants to galvanise economic growth, including by resuming game licences for Tencent Holdings Ltd. and Netease Inc.
Nearly three years of punishing Covid Zero restrictions have hobbled swathes of the world’s No. 2 economy, and a sudden reversal towards reopening suggested officials are keen to push for a recovery.
China’s education technology sector grew into a US$100 billion juggernaut as companies catered to parents seeking to give their children every advantage.
That explosive expansion drew billions from the likes of Alibaba Group Holding Ltd and Tencent, as well as global investors like Temasek Holdings Pte and Tiger Global Management.
But a backlash mounted against firms that employed hard-sell tactics to guilt parents into paying high sums for after-school tutoring.
Many experts criticised the proliferation of costly online classes for a variety of social ills, from poverty and disillusioned youth to a rapidly falling birth rate.
All that coincided with Beijing’s growing desire to assert control over an economy increasingly powered by data-rich Internet firms, which culminated in the historic Internet industry crackdown of 2021.
Many of China’s most prominent online tutoring firms have since either shut, downsized or pivoted to alternative businesses including - famously - livestreaming. BLOOMBERG
