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China’s Edutech Crackdown Expands to High-School Tutoring

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(Bloomberg) -- China’s government banned online tutoring firms from offering high-school curriculum classes during a current holiday, expanding a crackdown that has decimated a large portion of the country’s $100 billion private edutech industry.

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Regulators in Beijing told companies recently that they aren’t allowed to provide tutoring for school curriculum classes over the break, which lasts until the second half of February, said people familiar with the matter. The ban may last even longer and companies are required to wait for clearance before resuming such courses, the people said, asking not to be identified discussing private conversations.

This is the first time for officials to spell out that high-school tutoring is included in President Xi Jinping’s crackdown on the private education sector, part of a bigger campaign to rein in what his government deems a “disorderly expansion of capital.”

Back in July, China’s cabinet unveiled a sweeping overhaul that bans companies that teach the school curriculum from making profits, raising capital or going public. The regulations focus on the so-called compulsory education, which refers to schools from kindergarten to ninth grade, or K-9, without laying out a clear set of limits on high schools.

The enormous education industry has undergone a regulatory storm over the past year as Beijing zeroes in on a booming sector increasingly blamed for preying on anxious parents, placing undue pressure on children, stretching household budgets and even depressing the national birth rate.

Education companies like TAL Education Group and New Oriental Education & Technology Group Inc. have adapted to survive, including by expanding non-academic curricula and providing some after-school classes for free, laying off thousands of teachers and employees in the process.

Regulators have stepped up their oversight in recent weeks as students prepare for a new semester that starts around Feb. 21. On Tuesday, the Ministry of Education said it will guide local authorities to regulate high-school curriculum tutoring like they did with the K-9 tutoring, without offering details, part of key areas of work it laid out for 2022.

The ministry didn’t respond to a faxed request for comment.

As of Friday morning, high-school classes had disappeared on online tutoring platforms run by TAL, Gaotu Techedu Inc., Youdao Inc. and Alibaba-backed Zuoyebang, according to a news report by the Beijing Business Today. In a Jan. 26 online post, Zuoyebang notified users that all live-streaming courses on school subjects will be canceled for the winter holiday, and that the startup will arrange refunds.

Outside after-school tutoring, shares of regular school operators including China Education Group Holdings Ltd. and Hope Education Group Co. also had wild swings this year as investors and traders tried to parse a plethora of regulatory documents including ones on tuition fees.

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