El Dorado Lost: Local Elites, Real Estate and the Education Business in China

This working paper examines the evolving, complex and multifaceted relationship between the real estate industry and the education sector in China. The current crises in the private education and real estate sectors caused by policy shifts reflect the inter-meshing of the two sectors. The industrialization of real estate and the expansion of private education in the 1990s were politically approved responses to the Opening Up Policy, while the contemporary policy shifts against private education and real estate are also primarily political in aim, motivated by President Xi’s Anti-Corruption and Common Prosperity campaigns. Fortunes were made in both the real estate and private tutoring sectors, which were in turn intimately related to local government finances. For three decades, there was a win/win situation for all three parties. The costs were considerable also, extending from sharply increasing house prices to excessively burdened children through the demands of private tuition and homework. The current assertion of Central Government authority will go some way to address these problems, but the challenges of providing commercial housing at affordable prices, and providing children with the skills to navigate the Gaokao examination system successfully, remain.