Tag Archives: school children

China bars for-profit tutoring in core school subjects -document

SHANGHAI (Reuters) – China is barring tutoring for profit in core school subjects to ease financial pressures on families that have contributed to low birth rates, news that sent shockwaves through its vast private education sector and share prices plunging.

The policy change, which also restricts foreign investment in a sector that had become essential to success in Chinese school exams, was contained in a government document widely circulated on Friday and verified by sources.

The move threatens to decimate China’s $120 billion private tutoring industry and triggered a heavy selloff in shares of tutoring firms traded in Hong Kong and New York including New Oriental Education & Technology Group and Koolearn Technology Holding Ltd.

All institutions offering tutoring on the school curriculum will be registered as non-profit organizations, and no new licenses will be granted, according to the document, which says it was distributed by China’s State Council, or cabinet, to local governments and is dated July 19.

More than 75% of students aged from around 6 to 18 in China attended after-school tutoring classes in 2016, according to the most recent figures from the Chinese Society of Education, and anecdotal evidence suggests that percentage has risen.

China International Capital Corp said the rules are “tougher than market expectations, and we expect material impact on future business and capital market activities.”

The pressure for children to succeed in an increasingly competitive society has given rise to the term Jiwa, or “chicken baby”, which refers to children pumped with extracurricular classes and energy-boosting “chicken blood” by anxious parents.

Existing online tutoring firms will be subject to extra scrutiny and after-school tutoring prohibited during weekends, public holidays and school vacations, the document said. China’s State Council did not immediately respond to a request for comment.

Curriculum-based tutoring institutions would be barred from raising money through listings or other capital-related activities, while listed companies would be banned from investing in such institutions, according to the document.

China’s for-profit education sector has been under scrutiny as part of Beijing’s push to ease pressure on school children and reduce a cost burden on parents that has contributed to a drop in birth rates. In May, China said it would allow couples to have up to three children, from two previously.

The policy aims to reduce burdens on students and family finances “effectively” within one year and “significantly” within three, the document said.

Three sources told Reuters last month that the crackdown is being driven from the top. In June the official Xinhua news agency quoted President Xi Jinping as saying schools, rather than tutoring firms, should be responsible for student learning.

FOREIGN INVESTMENT RESTRICTIONS

The new policy would also bar foreign investors from investing in China’s curriculum-based tutoring businesses through mergers and acquisitions, franchises, or variable interest entity (VIEs) arrangements, according to the document. VIEs are a commonly used structure to circumvent rules restricting foreign investment in certain industries.

Those which have already violated the rules must make corrective measures, it added.

“The worst case in our scenario analysis could imply 70%+ K12 revenue plunge for leaders,” Citi wrote, referring to kindergarten to grade 12.

New Oriental’s Hong Kong-traded shares slumped as much as 50.4% to their lowest since its listing late last year. Scholar Education Group and Koolearn Technology Holding Ltd both tumbled nearly 30% in Hong Kong.

“The regulations have not been published, and the Company has not received official notification of the regulations,” New Oriental, whose U.S.-listed shares slumped about 60%, said in a statement late on Friday.

TAL Education and Gaotu Techedu, whose U.S. listed shares also tumbled roughly 60% in response to the news, made similar statements about waiting for details.

Shares of other U.S.-listed Chinese education companies, including China Online Education Group, Zhangmen Education Inc and 17 Education & Technology Group Inc also plunged.

Education stocks also saw a sell-off in mainland China, with an index tracking the sector dropping nearly 5%.

The rules threaten the listing ambitions of numerous venture capital-backed education firms, including Alibaba-backed Zuoyebang, and online education platforms Yuanfudao and Classin, both backed by Tencent.

A broad crackdown on China’s massive internet sector has already rattled investors and saw Beijing launch a data-related cybersecurity investigation into ride-hailing giant Didi Global Inc just two days after it raised $4.4 billion in a New York initial public offering.

(Reporting by Samuel Shen in Shanghai, Tony Munroe in Beijing, Julie Zhu in Hong Kong and Tom Westbrook in Singapore; Editing by William Maclean, Andrea Ricci and Philippa Fletcher)

California reaches deal to fund school reopening for youngest children

By Dan Whitcomb

LOS ANGELES (Reuters) – California’s governor said on Monday he and Democratic lawmakers had reached a deal to fund the reopening of schools for students up to second grade, as the numbers of new COVID-19 cases in the state and country drop to their lowest this year.

A Reuters tally shows that COVID-19 infections are decreasing in the United States, with 68,240 new infections reported on average each day, or 27% of the peak daily average reported on Jan. 7. The United States has recorded 28,681,793 infections and 513,721 coronavirus-related deaths since the pandemic began.

California’s $6.6 billion budget package marks the latest effort by a U.S. state to get school children back in class after nearly a year confined to home learning by political leaders in the face of the coronavirus pandemic.

“You can’t reopen your economy unless you get your schools reopened for in-person instruction,” Governor Gavin Newsom, said at a Monday afternoon news briefing announcing the agreement with Democratic leaders in the state legislature.

But the deal does not include an order by Newsom, a first-term Democrat, for public schools to open by a certain date, and the governor conceded that negotiations may still need to take place with teachers’ unions.

“We expect all of our transitional kindergarten to grade two classrooms open within the next month,” Newsom said. “And our core belief is this: Once you dip your toe in … once you build trust, then we will start to see a cadence of reopening across the spectrum.”

The $6.6 billion will partly pay for personal protective gear and improved classroom ventilation. The deal would also make vaccinating teachers and other school employees a priority in California, the nation’s most populous state.

NEWSOM CRITICIZED

Newsom has imposed some of the harshest restrictions of any U.S. state on California’s roughly 40 million residents, and many businesses remain closed one year into the pandemic.

The governor, who was sharply criticized after he was photographed eating at a posh Napa Valley restaurant late last year despite ordering Californians to stay home, has seen his approval ratings dip and is the subject of a recall effort.

Despite plummeting numbers of COVID-19 cases, hospitalizations and deaths nationwide, most students across the United States remain stuck at home as governors and local leaders seek to navigate complicated political and logistical hurdles to reopen schools.

Public school students in many of Maryland’s most populous areas returned to in-class instruction on Monday.

“School buses are on the road this morning – a welcome sight as we give more young Marylanders the opportunity to get safely back in the classroom,” Governor Larry Hogan said on Twitter.

New Jersey Governor Phil Murphy on Monday announced that as of March 15, pre-K-12 teachers and childcare workers would be eligible for vaccination.

While New Jersey lags behind other states in making vaccinations available to teachers, Murphy said two-thirds of classes are already hybrid or completely in-person.

(Reporting by Dan Whitcomb; editing by Jonathan Oatis and Cynthia Osterman)