New rules have China private education firms bracing for a hit

Changes sent shockwaves across China’s $120bn private tutoring sector, leading to a huge sell-off in listed firms.

China’s private education firms are bracing for a “material” hit to their operations after Beijing announced new rules barring for-profit tutoring in core school subjects to ease financial pressures on families. News of the rule changes on Friday, after a leaked document circulated on social media, sent shockwaves through China’s $120bn private tutoring sector and triggered a massive sell-off in the shares of companies including US-listed TAL Education Group and Gaotu Techedu. Chinese regulators on Saturday published reforms that will fundamentally alter the business model of private firms teaching the school curriculum, as Beijing aims to overhaul a sector it says has been “hijacked by capital”. The new regulations ban firms that teach school curricula from making a profit, raising capital or going public. Regulators also said no new licences will be granted.