Xinhua Insight: Private school law brings false alarm and business boon

Like many middle-class parents, Zhang Xun was anxious when she heard about an amended law passed this week targeting private schools.

The Law to Promote Private Education Institutes, adopted Monday and to take effect in September 2017, bans for-profit private schools from enrolling students from primary to junior high school, the period covered by the country's nine-year compulsory education program.

FALSE ALARM

Zhang's initial reaction was shock as the news spread around social media chat groups popular with wealthy parents of private school students.

"I'm totally lost," said one message. "What does it mean?" asked another. However, concerns that their children's schools would be shut down turned out to be unwarranted.

Education officials told Xinhua that all licensed private schools in China are registered as non-profits, meaning they will not be affected by the law.

"Most online reports misunderstood the law," said Wang Feng, an official with the National Center of Education Development Research. "The worries were unfounded."

Xie Huanzhong, an official with the Ministry of Education, explained to lawmakers during deliberation of the amended law that non-profit schools are those required to re-invest all their profits into school operations, regardless of whether they charge tuition.

To the public, the law's definition of "for-profit" didn't appear so straightforward, since even some non-profit schools charge prohibitive fees. Keystone Academy, an elite school in Beijing, charges annual tuition of over 200,000 yuan (29,500 U.S. dollars) per student, four times the disposable income of an average Beijinger in 2015.

Deputy Education Minister Zhu Zhiwen said it will be business as usual for operators who want their schools to remain non-profit and continue to charge fees in line with market demand and operational costs.

DEMAND FOR ALTERNATIVES

China rolled out its nine-year compulsory education program in the 1980s. Parents are required to send their school-age children to study, and funding for public schools is guaranteed by the state.

After three decades, the program now covers most of the country, but demand for an alternative has also emerged.

On the one hand, the growing middle class has come to expect something better. On the other, many newcomers to big cities are denied access to public schools. Without a city "hukou," or household registration, the children of migrants can only enroll in public schools in their hometowns.

According to the Ministry of Education, China now has about 162,700 private schools nationwide with more than 45.7 million students. While public schools continue to deliver the best results for primary and junior high school education, private institutions have become as popular as public schools at the pre-school and junior college levels.

China Insights Consultancy estimates that private education in China is an 800-billion-yuan (118 billion U.S. dollars) market and is expected to maintain an average growth rate of 15 percent over the next few years.

Deputy minister Zhu said compulsory education is a basic public service provided by the government, but it does not exclude private institutions from delivering customized instruction to meet demand.

For families like Zhang's, private schools offer an opportunity to bypass the "gaokao," China's highly competitive college entrance exam, by preparing students for college overseas.

"There are excellent public schools out there, but the competition is fierce," she said. "And their teaching methods are sometimes counterproductive to developing students' creativity."

"We're not against public schools. We just want to have choices," said Zhang, who runs a tutoring company that organizes science and nature programs for children ages 4 to 12.

GOOD FOR BUSINESS

Education experts say the amended law will indeed boost the development of private institutions, especially those that offer a non-standard curriculum.

A director of an English tutoring institute who asked to remain anonymous said it is good news that his institution can finally be registered as a for-profit enterprise, which will help generate returns for shareholders.

"It is definitely a stimulus," said Wu Hua, an education professor at Zhejiang University. "On the stock market, we expect to see a surge in the education sector led by investment in [alternative curriculum] institutes."

An expert working for ETU School, a private school in Beijing, said she believes a lot of positive progress can be achieved by for-profit entities in the education sector, including promoting social equality by expanding access to education for the poor.

For example, Bridge International Academies, a for-profit school chain, is providing education to 100,000 students in Africa. The chain has secured funding from the Bill and Melinda Gates Foundation and the Chan Zuckerberg Initiative, said the expert.

"We can't simply say 'for-profit' is bad and 'non-profit' is good," she said. "A number of non-profit entities are not as efficient and waste more resources." Endite