China’s education crackdown flunks economics – Reuters

China’s education crackdown flunks economics – Reuters

HONG KONG, June 21 (Reuters Breakingviews) - Beijing is mastering subtraction, but struggling with basic economics. A crackdown on the country's $120 billion tutoring industry may help address manic competition for college preparation, which distorts the labour supply and suppresses the birth rate. It's a byproduct of a widening wealth gap, however, and this approach could make it worse.

Chinese tiger parents serve investors well. Families in Shanghai's Jing'an district, for example, spent around $80,000 per child on educational services before they even reached high school, a 2019 state think-tank survey found. Multiplying by 400 million middle-income people produces a massive market. TAL Education (TAL.N) and Gaotu Techedu (GOTU.N) are among the companies that rode the thesis straight onto U.S. bourses.