China eyes independents to solve school spaces crisis

Melanie Butler looks at the story behind new laws governing private education

Qin Hongyu researches public education policy for a Beijing think tank. His wife, Zhang Mei, is a university researcher who has lived in Beijing for twenty years. The couple don’t have a Beijing hukou, the registration permit of permanent residence which allows access to local state education. They are struggling to get their daughter into a state primary school.

‘The local government does not provide sufficient education services compatible with the demands of the permanent population,’ Zhang Mei told the official government news website Xinhuanet in June.

To understand the boom in private schools it is important to grasp a simple fact: China’s major cities do not have enough state schools to meet the needs of permanent residents. This is because, until last year, central government funding for education was distributed not to the region where children lived but to the place where they were registered, even though many were not even born there.

Thirty eight per cent of the population of Beijing – over eight million people – do not have a local hukuo. The figure rises to 40 per cent in Shanghai and to an astonishing 69 per cent in Shenzhen, according to the UK’s Financial Times.

Even people with the correct permits are not guaranteed access to schools. The megacities, now actively trying to crack down on migrant numbers, are using a scoring system for school entry based on parents’ background, education and property ownership.

‘The score indices are favorable for advantaged groups but unfair to rural migrant workers’ children,’ Qin Hongyu told Xinhuanet. The poor are forced to send their children ‘home’ to the region where their parents come from or enrol them in cheap and often unregistered private schools.

Even the wealthy middle class, armed with the correct hukuo, struggle to fulfil the property requirements known as xuequfang. One parent told Sixth Tone magazine he had paid £320,000 for a 350-square-foot flat to ensure his son could get into a good state primary school in Shanghai.

In 2016 the average annual fees for a place at a private school run by Bright Scholar Education, the New-York-listed company that runs 51 schools, were £4,500, according to Reuters. No surprise then that the middle classes have poured into the private sector.

Nor is it surprising, given the link between residence and education in China, that the schools themselves are often owned and operated by property companies wanting to lure buyers to their new developments. Over 90 per cent of the shares in Bright Scholar, for example, are owned by the sister and daughter of Chinese property tycoon Yeung Kwok-keung.

“ The schools themselves are often owned and operated by property companies ”

Private-sector growth has led to schools with scores of methodological approaches designed to attract parents anxious to avoid the hyper-competitive local education system: bilingual schools or schools offering the International Baccalaureate, British A-levels or American AP. They can also opt for schools accredited by the government of British Columbia or in joint ventures with famous British names such as Harrow and Dulwich (see July issue).

Until recently, all schools had to be not for profit under Chinese law, although ‘reasonable returns’ were allowed – and have indeed enabled companies to raise money from investors in stock markets from Hong Kong to New York.

From September all this will change. Anxious to reduce undue Western influence and reassure parents that fees will be controlled – they can rise as high as £23,000 a year for a top boarding school in Beijing – the Chinese government has changed the rules governing private schools.

While high schools and kindergartens are allowed, for the first time, to make a profit, primary and middle schools are covered by laws on compulsory education and must remain not for profit. They will not be allowed to keep ‘reasonable returns’ and must report their tuition fees to local authorities. Schools covering the years of compulsory education must also cover the Chinese national curriculum, including classes in political ideology. But they can teach bilingually and offer foreign-style education as an addition.

The share price of some of the large listed education companies plunged when the news was announced last year, but have recovered since. Investors were comforted when it became clear that education groups could form separate legal entities providing education to both the not-for-profit and for-profit sectors.

Besides, if the Chinese government plays too tough, it could end up without the extra school spaces it desperately needs.