Other BriefingsChina’s Education Sector: Latest Trends and Policies
China’s education sector is expansive, driven by a large student population and a growing demand for diverse educational services. It is dynamic, witnessing ongoing innovation and adaptation to address evolving educational needs and preferences. China has made notable progress in delivering high-quality education, known for its rigorous standards and competitiveness.
However, with the implementation of policies like the double reduction policy (to reduce the pressures of homework and after-school tutoring), the Chinese education sector is going through a period of adaptation. In this article, we discuss the impact of government policies on the education market in China and how key stakeholders have been impacted.
Understanding the education market in China
China has the largest state-run education system in the world, with 293 million students and 18.8 million teachers in over 518,500 schools as of 2022. While the country mandates nine years of compulsory education—comprising six years of primary and three years of middle school education—higher education accessibility has become extremely common, with over 10 million college graduates in 2022. Moreover, the fiercely competitive job market has established advanced degrees as the prevailing standard, where a bachelor’s degree no longer ensures career success.
Given this high demand, the Chinese education market is one of the most lucrative areas for global investors. According to the China Education Market (K-12, After-School Tutoring & Higher Education) Report: Insights, Trends and Forecast (2019-2023), the Chinese education market is estimated to reach US$572.51 billion (RMB 4.09 trillion) in 2023, growing at a compound annual growth rate (CAGR) of 11.3 percent, for the period spanning from 2018 to 2023. A prominent subsector in China’s education market is the education technology (edutech) segment since 2017.
Impact of China’s policies on the education market: Banning private tuition
The education sector is a major focus for Chinese policymakers. In 2019, the State Council issued a blueprint for the country’s education development in the coming decade, focusing on establishing a modern, high-quality, and balanced system for equal and competitive education, and marking a shift from “capacity” (exam-oriented) to “quality”.
Two years later, in July 2021, the Chinese government launched a sweeping clampdown on its private tuition sector, banning tutors from providing for-profit classes on school curriculum subjects. This so-called “shuangjian” (double reduction) policy sought to limit homework and after-school tutoring, aiming to ease financial burdens on families and workload for students. More specifically, the campaign focused on regulating compulsory education (Grades 1-9) and made it illegal to offer classes in Chinese, English, and mathematics for profit. Non-academic extracurricular programs, such as art and sports, remain unaffected, and there is minimal impact on high schools (Grade 10 to 12) in both academic and non-academic education.
Crafted to address the perceived “disorderly expansion of capital” in China’s US$100-billion (RMB 714.55 billion) education industry, this policy affected both online and offline tutoring services. Consequently, numerous tuition companies have faced financial distress, bankruptcy, and market value losses, which has triggered layoffs and disrupted initial public offering (IPO) plans.
The underground resurgence of the private tutoring industry
Many question the effectiveness of the ban of private tuition when the system of entrance exams, in which high schools and colleges admit students mainly based on scores from once-a-year tests, still prevails. Getting into an elite college often means a greater chance of securing a good job in the already competitive Chinese market. As the pressure for test preparation remains, the double reduction policy has not affected overall demand for better education, with parents realizing the necessity of after-school tutoring to prevent their children from falling behind.
In the face of such a high demand and a lucrative market, some companies had already quietly resumed private tutoring services. The for-profit tutoring industry has therefore transformed into an underground market, with agents and tutors privately coordinating with parents through WeChat groups or private platforms. Many private tutors who used to teach big classes run by major education companies now teach smaller groups, in many cases one-on-one, to avoid detection by officials. To make up for the loss in student numbers, many are charging higher fees, according to parents and private tutors. The government, in some cases, turns a blind eye to the underground market.
Despite challenges, the after-school tutoring market in China is projected to grow, driven by a focus on outcome-based education.
China’s Ministry of Education released draft regulations for the country’s after-school tutoring industry, just before the Chinese New Year holiday on February 8. The 20-article draft is open for public comment until March 8 and marks the first comprehensive national-level guidelines for this sector. The development follows more than two years after China initiated a broad crackdown on the private tutoring industry in mid-2021, fundamentally reshaping the landscape of the sector.
For more information, read our article: China’s New Draft Regulations for After-School Tutoring
Noticeable industry trends in the education sector in China
Over time, China’s education sector has seen various emerging trends, including increased technology integration, a preference for personalized learning, and a growing emphasis on holistic education encompassing academics and life skills.
Technology integration
China has led global edutech investment since 2015 but the pandemic spurred digital changes as it did globally. Virtual classrooms and online learning swiftly adapted to technology platforms, making China the world’s largest market for educational technology with over 400 million students.
Additionally, growing device proliferation plus internet penetration means that a large pool of untapped learners in Chinese families are skipping offline training centers and going directly online. An increasing integration of online and offline learning methods has been observed, which represents a substantial opportunity for providers offering tutoring and enrichment programs in either mode. Further, basic AI elements are integrated into responsive apps that adjust to various learning levels. The mobile education market has expanded, with firms developing crowdsourcing apps for homework help and quick teacher engagement.
STEM learning
Driven by national policies, China has put in a lot of effort into promoting science, technology, engineering, and mathematics (STEM) education. Recent years have seen K12 STEM programs flourish nationally through new technologies and supplementary materials. In 2022, the Ministry of Education (MOE) proposed fostering students’ interdisciplinary literacy by explaining interdisciplinary concepts based on core aspects of each subject area and then applying these core elements to real situations.
Instructors are encouraged to implement STEM in their teaching. According to research from consulting firm Crayfish.io, it was reported that rising middle-class parents pay substantial sums of money for STEM-related education for their children, such as courses in coding, robotics, and 3D printing, among others. They also noted that content and technology related to STEM learning are in high demand throughout China.
International schools
In February 2023, New Oriental International Education published the “2023 China International School Research White Paper,” revealing a net increase of 19 international schools in mainland China in 2022 compared to 2021. Despite a slower growth rate, the data indicates a continuing upward trend. The number of students in international schools rose by 23 percent in 2022 compared to 2019, reflecting the recovery of China’s international education post-pandemic. Further, Chinese students with intentions to study abroad have increased by over 23 percent in applications for higher education in 2022, with a particular preference for master’s programs among Chinese students.
This trend has also stimulated the demand for language classes. For example, the English Language Training (ELT) market in China is projected to grow by US$70.81 billion (RMB 506.05 billion) from 2022 to 2026, with a CAGR forecast of 19.75 percent. This growth is driven by the rising demand for ELT, coupled with enhanced employment opportunities for English speakers. However, recruiting experienced foreign teachers remains a significant challenge for these schools, which is essential for maintaining their international status.
Vocational, upskilling, and adult education market
Vocational education continues to be encouraged by the government. In April 2022, the Standing Committee of the National People’s Congress passed an updated regulation, highlighting the government’s ongoing support for vocational education. This legislative move is part of broader efforts to enhance China’s vocational education system in response to the growing demand for skilled labor.
China’s dynamic economic landscape and changing demographics have fueled a rise in interest-based online learning among adults. With the rapid pace of economic change, professionals seek continuous upskilling and reskilling, often looking for accessible, practical learning content to enrich their lives. For many working adults in China, pursuing degrees via part-time masters or MBA programs can be time-consuming, expensive, and stressful. The adult learning industry in China generated RMB 576.2 billion (US$80.63 billion) in revenue in 2022 and is anticipated to reach RMB 1 trillion (US$145.97 billion) in 2027, exhibiting a 12.6 percent CAGR from 2022 to 2027, according to Frost & Sullivan’s Industry Report on the Adult Learning Market in China.
The overseas Chinese community
Facing the impact of the “double reduction” policy, private tutoring firms in China are exploring new opportunities overseas. Previously instrumental in preparing students for studying abroad, these firms are now shifting their focus to the children of Chinese nationals living abroad. Notably, Think Academy, a subsidiary of Beijing-based TAL Education Group with global branches, including in the United States, Canada, and Singapore, reported triple-digit year-on-year growth in the fiscal quarter ending November 2022. Recognizing substantial market potential overseas, TAL Education Group’s president and CFO, Alex Peng, highlighted this trend in an earnings call. Additionally, 51Talk, a Chinese language tutoring platform, divested its mainland China business in June 2022 and now exclusively offers online English tutoring services to K-12 and post-secondary students outside the Chinese mainland. Despite the divestiture, the U.S.-listed firm reported a more-than-doubled net revenue in 2022, operating at a net loss.
Business prospects and how to get into the China market
China’s education landscape rests on consistent fundamentals: a large market and sustained demand for quality education at all levels. However, entering or expanding in the sector poses challenges, especially for small enterprises and new entrants. High barriers include demands for service experience, technical expertise, and robust sales channels. The primary hurdle involves navigating a distinct regulatory environment and adapting content and technology to local standards, language, and educational preferences, incurring additional costs. Overcoming these challenges requires establishing a digital presence, forming local partnerships, and adhering to new privacy and data transfer regulations.
(With inputs from Arendse Huld and Melissa Cyrill.)
About Us
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
Dezan Shira & Associates also has offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Dubai (UAE). We also have partner firms assisting foreign investors in The Philippines, Malaysia, Thailand, Bangladesh.
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