China Wants to Go Down on Private Education

In addition to broad regulatory changes in big tech and big data (as discussed in a previous article), perhaps the most antagonistic China has appeared towards a single sector has been its recent stance on private education. The state went so far as to claim its education sector has been “hijacked by capital” in a public rebuke that has since been republished across many recent news articles commenting on the education reforms.

The new reforms ban companies formed in the future from teaching curriculums or afterschool programs for-profit and require many current for-profit schools and private tutors to register as non-profit organizations. Private tutors and schools can no longer provide education related to school syllabi on weekends or during vacation. Also, to combat the growing uber-competitive pre-Kindergarten years of Chinese students, private education companies and tutors are no longer able to teach children under six.

It may be surprising to hear a “socialist” or “communist” state allowing private education. That’s understandable; private education (especially for-profit, but not only) stratifies society through a lens that some children deserve a better education than others. Only, China hasn’t been particularly much into leftist thinking and has shown more interest in acting as a technocratic, neoliberal state. The first “Law on Promotion of Private Education” went into effect in 2003 and kicked off a future of government support for for-profit educational providers in China. The private education sector proliferated to approximately $260 billion by 2018, compared to $207 billion in private education spending by the United States in 2018. However, only $12 billion in the United States went towards private, for-profit education as even Americans are weary of for-profit education.

Chinese for-profit education companies had an unprecedented boom last year in venture capital funding due to the changing technological shift of education from in-classroom to virtual options during the pandemic. As populous as China is, only 1.9% of 11 million students who take China’s national college admission test are accepted into top-tier universities. The pressure from the parents of Chinese children to be one of that 1.9% is immense. Parents who can afford private education or for-profit afterschool classes often buy them to do anything possible to give their children an edge.

Private education companies were known in China for mass marketing that preyed on the parental paranoia of not doing everything one could for their child to succeed. The advertising often regularly blamed parents who didn’t or couldn’t purchase additional education for later poor life outcomes. Some private educators and tutors are undoubtedly beneficial for increasing standardized test scores, and some may even be exceptional. Still, by and large, a number of the virtual opportunities that sprang up over 2020 and 2021 garnered a reputation for being “busy work” or boring and with uncertain benefits.

The misleading marketing campaigns and the weak educational offerings backed with capital from the most prominent Chinese firms, like Tencent and Alibaba, were already poorly timed with other recent policy developments in China. The state has just started actively combating its low birthrate through tax incentives and moving to a two-child policy and a subsequent three-child policy over the past few years. One problem: parents were dumping their life savings into for-profit online classes for a single child. They certainly could not afford to bring more children into the world and ruin their lives by failing to provide tedious, mind-numbing virtual classes.

Boosting the low birth rate of China has been a top priority for President Xi Jinping for a while now. The outlook is pretty terrible. China is getting older, and its workforce is shrinking and thus faces worries that its younger citizens will be unable to generate the necessary economic productivity for the state, not to mention unable to sustain their senior’s standard of living. China just reported its lowest number of births in 2020 since 1961 and, even with intervening policy measures, will likely exhibit a decline in population within a few years.

Developed nations more commonly exhibit population stagnation today. The United States Census just reported the second slowest growth rate since the government began counting demographics in 1790. The growth rate over the last decade ended in COVID-plagued 2020 at just over 1.35%. There were undoubtedly compounding effects of the virus suppressing births and catalyzing deaths. Still, nationwide data for the past couple of decades across many developed countries show a decline in population growth. Prosperous countries have to worry about a world where a lack of population growth may stymie economic growth.

Population growth rate has typically driven about half of all economic growth throughout history, with technological advances to account for the other half. Population growth was roughly zero for most of human history, only to take off and soar during the industrial revolution – going from 0% to 1.9% annual growth rate. That growth rate may not sound like an incredible amount, but when compounded over thousands of years sums to an astonishing number. There is plenty of debate within economics academia on the role of population growth on economic growth in developed countries. Some disagree with the need for population growth for per capita economic growth. Still, throughout would history, population growth has been highly correlated with economic development.

Whether population growth lasts into the future as a critical driver of economic growth for developed countries remains to be seen; however, it has been faithful through history and needs to be addressed in the short term. Someone has to pay for the pensions! World powers like China most likely face internal pressure to have as large a national economy as possible to compete on the world stage, just like the solution for the United States’ population issues that One Billion Americans stooge Matt Yglesias is known to voice.

So one of the most powerful countries in the world has a potentially very consequential population decline looming and… damn! Oh yeah! It caused a good chunk of that decline in the form of an absolutely draconian lack of forethought that is honestly unseen throughout much of history. Complete absence of prescience with that one! And even if one was to be sympathetic to the intended purpose of the policy (which was also poorly conceived), obviously, the one-child policy should not have lasted into the 2010s.

Where does private education fit?

China tacked on a child to their policy, allowing legal siblings in the country in 2016, and then enacted a three-child policy this year. It is still pretty early, but the results so far have been a further decline in birth rate each year since the enaction of the two-child policy. Now, China has to focus on not just mending bad domestic policy but also on progressing towards an increasingly pro-family agenda to avoid potential economic consequences.

The United States has Biden’s American Families Plan as its answer for combatting the falling birth rate, which will potentially pass via budget reconciliation later this year. Biden’s plan is not too different from the proposed idea behind China’s most recent private education laws – taking financial pressure off parents during a time of extremely high wealth inequality. The American Families Plan would be the most significant investment in child care, paid leave, and early education in many decades by the United States. The plan may not go quite as far as People Policy Project’s Family Fun Pack, but it is a great many steps in the right direction.

China at least seems to be taking similar steps towards combating parental anxiety over the increasingly taxing financial burden of education. For 37 years, all families’ hopes and dreams were put onto a single child. Those investments in their child’s education created a hypercompetitive education system among the middle and upper-classes.

Meanwhile, the money invested in that hypercompetitive money pit could have better served the more impoverished and rural areas lacking educational opportunities to close generational wealth gaps. The brightest Chinese are extremely smart and well-educated, but the more rural educational offerings significantly limit China’s ranking among world peers. Tertiary educational attainment isn’t everything, but I prefer the United States’ 44% to China’s 17% of the population going on to higher learning. Having the brightest in the world is great, but China needs to extend educational funding to rural areas and build a more extensive base of educated citizens.

During the announcement of its new three-child policy in May, China emphasized its intention to provide further government support for education and child-rearing. The recent crackdowns on private education and housing speculation around school-district housing are just the first steps China has taken to combat the growing educational financial and anxiety burden.

1. This article is dumb and totally misses the point.
2. Love Matt Bruenig, Peoples Policy Project, and the Family Fun Pack. All cosigned.