China’s edtech crackdown isn’t what you think. Here’s why.

It's part of an attempt to fix education inequality and address a looming demographic crisis.

Child on laptop

In the past decade, China's private tutoring market has expanded rapidly as it's been digitized and bolstered by capital.

Photo: Getty Images

Beijing's strike against the private tutoring and ed tech industry has rattled the market and led observers to try to answer one big question: What is Beijing trying to achieve?

Sweeping policy guidelines issued by the Central Committee of the Chinese Communist Party on July 24 and the State Council now mandate that existing private tutoring companies register as nonprofit organizations. Extracurricular tutoring companies will be banned from going public. Online tutoring agencies will be subject to regulatory approval.

Much of the coverage around the latest crackdown has linked it with Beijing's war on Big Tech or focused on ideological control, which has been a major aspect of Beijing's handling of the state-run school system. But when it comes to the sprawling ed tech industry, experts say what's happening looks more like an attempt to cure tech-enabled ills that have exacerbated nationwide educational — and thus social — inequality.

The confusion stems from the overlapping timelines of two regulatory trends: The first is far tighter regulations on the private education market, which were handed down last Saturday but have been bubbling up since earlier this year. The second is Beijing's increasingly widening crackdown on Big Tech generally. But "the crackdown on private tutoring is a crackdown on tech-mediated harm, not part of the crackdown on Big Tech," Michael Norris, head of China Consumer & Tech Research at AgencyChina, a global marketing agency, told Protocol.

Beijing, or at least one of its major regulators, appears to agree. To calm spooked investors, China's securities regulator reportedly held a call Wednesday night Beijing time with major investment banks. On the call, senior officials at the China Securities Regulatory Commission stressed that the curtailing of private education is a targeted crackdown on problematic practices that occur in the particular market, not a blanket move that targets other industries, according to Bloomberg.

Moves against tech titans like Alibaba, DiDi and Ant Financial are aimed at addressing genuine problems in China's tech industry including unfair competition, lax cybersecurity and predatory lending. By contrast, the latest ed tech rules are intended to rectify unscrupulous practices like false advertising and VC capital-induced pricing wars that have disrupted the market and are increasingly excluding underprivileged children. Tencent-backed Yuanfudao, one of China's largest ed-tech unicorns that had been rumored for an IPO, is already transitioning away from K-12 after-school tutoring. It launched a new product on Wednesday, Pumpkin Science, which will instead focus on a so called "well-rounded education" (素质教育), not (banned) subject-specific training.

Sociologists and political economists believe that while Beijing's tightened grip on the private education sector might hamper the growing wealth and power of the online-learning companies, it is ultimately an attempt to avoid massive social unrest.

"Education has been crucial to [the] CCP's legitimacy as a people's party," Ye Liu, a sociologist at King's College London who studies education inequality in China, told Protocol. "The recent crackdown on ed tech and private tutoring can be seen as an attempt to respond to the concerns of the poor."

China is home to one of the world's largest learning-technology markets, powered by its 240 million K-12 students and eager families willing to shell out an average of 11% of annual family expenses for their children's future success. The state is the dominant education provider, but deep-seated anxiety over education inequality and the highly competitive nature of the gaokao has fueled a private tutoring bonanza. Many companies offer services online and tools that are equipped with deep learning technology that helps solve questions for students. These startups are backed by behemoths like Baidu, Tencent and Alibaba and have adopted the same cash-burning strategy — grab market share, at virtually any cost — that has given rise to the tech giants. Buoyed by the pandemic, China's ed tech industry once enjoyed exponential growth. Online education startups raised over $10 billion in 2020, about two-thirds of the world's total venture capital investments that went into this sector, according to HolonIQ, a market intelligence firm.

The staggering amount of money pumped into China's private tutoring market has led to shady practices, such as misleading advertising and use of fraud, that have disrupted the market and, in the eyes of the government, exacerbated education inequality, a huge pain point for hundreds of millions of Chinese families, even though some ed tech companies claim they try to tackle the exact same problem.

One common practice private ed tech companies have adopted is to attract new user subscriptions with cheap, heavily subsidized trial classes. Once the trial period is over, families have found themselves on the hook for significant upfront course fees, which have proven budget-busting for even members of the relatively wealthy urban middle-class. "I believe this use of subsidies to attract new parents, and make them pay upfront, was one reason that this sector was targeted," Norris said.

Why private education?

Insiders in the private education sector had long anticipated heightened restrictions, and they'd gotten advance word of the new policy guidelines that came down last weekend, according to Rui Ma, a China tech investor and analyst who hosts the podcast and newsletter Tech Buzz China. Ma told Protocol that tech entrepreneurs she talked to last week, when rumors about upcoming sweeping rules were widely circulating, "basically all said that they felt like this is clearly to address the demographic crisis."

The latest Chinese census, released on May 11, showed the slowest population growth in decades, and plummeting birth rates since 2011. To address it, Beijing announced a three-child policy on May 31. Yang Wenzhuang, director of the Department of Population Monitoring and Family Development at China's National Health Commission, said in July that economic and social policies related to education, housing and employment have become key factors "influencing families' fertility choices." To encourage families to have more babies, Yang said, the government will roll out supplemental policies to make life easier for parents. And that could include reduced education costs and Ministry of Education-led support for after-school services and summer care services in order to reduce the burden of education for schoolchildren.

"The demographic crisis is exacerbated by social inequality," Ma said. "[If] I am struggling to see any future for my kids without spending a ton of time and resources on it ... I'm gonna not have kids."


Niantic is building an AR map of the world

The company’s Visual Positioning System will help developers build location-based AR games and experiences; a new social app aims to help with AR content discovery.

VPS will allow developers to build location-based AR experiences for tens of thousands of public spaces.

Image: Niantic

Pokémon Go maker Niantic has quietly been building a 3D AR map of the world. Now, the company is getting ready to share the fruits of its labor with third-party developers: Niantic announced the launch of its Lightship Visual Positioning System at its developer summit in San Francisco on Tuesday. VPS will allow developers to build location-based AR experiences for tens of thousands of public spaces, Niantic said.

Niantic also announced a new service called Campfire that adds a social discovery layer to AR, starting with Niantic’s own games. Both announcements show that Niantic wants to be much more than a game developer with just one or two hit apps (and a couple of flops). Instead, it aims to play a key role in the future of AR — and it’s relying on millions of Ingress and Pokémon Go players to help build that future.

Keep Reading Show less
Janko Roettgers

Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

Sponsored Content

Why the digital transformation of industries is creating a more sustainable future

Qualcomm’s chief sustainability officer Angela Baker on how companies can view going “digital” as a way not only toward growth, as laid out in a recent report, but also toward establishing and meeting environmental, social and governance goals.

Three letters dominate business practice at present: ESG, or environmental, social and governance goals. The number of mentions of the environment in financial earnings has doubled in the last five years, according to GlobalData: 600,000 companies mentioned the term in their annual or quarterly results last year.

But meeting those ESG goals can be a challenge — one that businesses can’t and shouldn’t take lightly. Ahead of an exclusive fireside chat at Davos, Angela Baker, chief sustainability officer at Qualcomm, sat down with Protocol to speak about how best to achieve those targets and how Qualcomm thinks about its own sustainability strategy, net zero commitment, other ESG targets and more.

Keep Reading Show less
Chris Stokel-Walker

Chris Stokel-Walker is a freelance technology and culture journalist and author of "YouTubers: How YouTube Shook Up TV and Created a New Generation of Stars." His work has been published in The New York Times, The Guardian and Wired.


Why it's time to give all your employees executive coaching

In an effort to boost retention and engagement, companies are rolling out access to executive coaching to all of their employees.

Coaching is among personalized and exclusive benefits employers chose to offer their workforce during the pandemic.

Image: Christopher T. Fong/Protocol

Executive coaching has long been a quiet force behind leaders in the tech industry, but that premium benefit, often only offered to the top executives, is changing. A new wave of executive coaching services are hitting the market aimed at workers who would have traditionally been excluded from access.

Tech companies know that in order to stay competitive in today’s still-hot job market, it pays to offer more personalized and exclusive benefits. Chief People Officer Annette Reavis says Envoy, a workplace tech company, offers all employees access to a broad range of opportunities. “We offer everyone an L&D credit that they can spend on outside learning, whether it's executive coaching or learning a new coding language. We do this so that people can have access to and learn skills specific to their job.”

Keep Reading Show less
Amber Burton

Amber Burton (@amberbburton) is a reporter at Protocol. Previously, she covered personal finance and diversity in business at The Wall Street Journal. She earned an M.S. in Strategic Communications from Columbia University and B.A. in English and Journalism from Wake Forest University. She lives in North Carolina.


Microsoft thinks Windows developers are ready for virtual workstations

The new Microsoft Dev Box service, coupled with Azure Deployment Environments, lets developers go from code to the cloud faster than ever.

Microsoft hopes a new cloud service will address one of developers' biggest challenges.

Photo: Grant Hindsley/Bloomberg via Getty Images

Microsoft hopes a new cloud service will address one of the biggest challenges that developers have raised with the technology giant over the last several years: managing developer workstations.

Microsoft Dev Box, now in private preview, creates virtual developer workstations running its Windows operating system in the cloud, allowing development teams to standardize how those fundamental tools are initialized, set up and managed.

Keep Reading Show less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.


Okta CEO: 'We should have done a better job' with the Lapsus$ breach

In an interview with Protocol, Okta CEO Todd McKinnon said the cybersecurity firm could’ve done a lot of things better after the Lapsus$ breach of a third-party support provider earlier this year.

From talking to hundreds of customers, “I've had a good sense of the sentiment and the frustrations,” McKinnon said.

Photo: David Paul Morris via Getty Images

Okta co-founder and CEO Todd McKinnon agrees with you: Disclosing a breach that impacts customer data should not take months.

“If that happens in January, customers can't be finding out about it in March,” McKinnon said in an interview with Protocol.

Keep Reading Show less
Kyle Alspach

Kyle Alspach ( @KyleAlspach) is a senior reporter at Protocol, focused on cybersecurity. He has covered the tech industry since 2010 for outlets including VentureBeat, CRN and the Boston Globe. He lives in Portland, Oregon, and can be reached at

Latest Stories