Chinese Government Likely to Approve One Nonprofit Private Education Company Per Year

[Image source=AP Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] On July 7, the Chinese government, which imposed strong regulatory measures on private education, plans to grant permits only to non-profit private education companies, the Wall Street Journal (WSJ) reported on the 8th (local time).

According to the report, Chinese private education companies such as Gaotu and Yuanfudao have been in discussions with regulatory authorities over the past few weeks regarding providing private education services to students in grade 9 and below (equivalent to the 3rd year of middle school in Korea).

Under the new regulatory system, private education companies are allowed to provide private education services to students on a non-profit basis, but they can generate revenue through other businesses such as professional exam preparation classes for adults.

However, newly licensed private education companies must establish and operate a non-profit foundation that can charge tuition fees. This foundation cannot request public donations and must be registered as an organization under the Chinese Ministry of Civil Affairs.

The government will set the upper limit for tuition fees.

WSJ cited sources saying that the authorities will grant permits to about a dozen companies, but the exact number has not been finalized.

Earlier in July, the Chinese government banned private education institutions from pursuing profits in subjects related to compulsory education (elementary and middle school), such as mathematics.

Additionally, private education institutions were prohibited from raising funds through initial public offerings (IPOs), and all private education related to school curricula was banned during vacations, weekends, and public holidays.

As a result, the stock prices of listed companies in China's private education sector plunged for a period of time.

This content was produced with the assistance of AI translation services.