The Business of K-12 Education in China

This working paper examines the evolution of K-12 education in China, especially between 1985 and the present day, drawing extensive interviews with participants in the educational sector. China has been hugely successful in reaching almost 100 percent literacy, overcoming gender inequality in educational provision, and performing well in harmonized test scores. However, the model is not readily transferable to other emerging markets as it rested on a complex intermeshing of public and private interests seen in the “walking on two legs strategy.” This sanctioned the provision of K-12 education both by the Central Government and by “social forces,” including local governments, state-owned enterprises and the private sector. The paper describes how three different types of capital—political, financial and educational—became involved in the industry with their relative importance fluctuating over time. The resulting marketization of educational provision after 1985 led to excessive profit-driven strategies symbolized by heavy investments by the real estate sector in K-12 education. There were major quality issues, including in the vast private supplemental tutoring industry. The level of dysfunctionality was exacerbated by a rigid examination system in China that determined future life opportunities. The score in the gaokao examination determined which college a student could attend, which in turn fundamentally shaped their future careers. This encouraged parents to spend heavily on children’s education, which became a form of conspicuous consumption, often undertaken at the cost of the happiness of the children themselves. Since 2016, the Central Government has sought to address some of the major challenges through radical policy shifts. In 2021, it was ruled that core parts of tutoring company business had to be conducted on a non-profit basis. This caused stunning losses in value of leading Chinese private tutoring and edtech companies, who were listed in the United States. However in the absence of a modification of the gaokao system, it is unlikely that parental demand for educational services will decline, suggesting that new forms of excessive profit-making and dysfunctionality may arise going forward, despite the radical shifts in public policy.