Implications of China’s New Private Tuition Sector Rules for Foreign Investors

China’s State Council and the Central Committee of Chinese Communist Party, continuing the trend of intensifying regulation on the private tuition sector which has gained traction in recent months, on 24 July 2021 jointly issued the Opinion on Further Alleviating the Burden of Homework and After-School Tuition for Students in Compulsory Education (the “Opinion”). The Opinion aims to reduce the burdens of homework and after-school tuition for students going through the “K9” years of compulsory education in China and has significant impact on the private tuition sector in China.  

Regulation of the private tuition sector has intensified in recent years. The “2018 Rule”, issued in August 2018, was the first rule to systematically regulate private tuition. In May 2021, the State Administration for Market Regulation imposed a maximum penalty on several EdTech giants for false advertising and misleading marketing. The Opinion introduces additional risks to the operations of tuition providers and consequential uncertainty for foreign investors.