False hope

Make no mistake: China’s online tutoring sector isn’t coming back to life. 

Some context: In 2021, the “double reduction” policy decimated Chinese online tutoring companies by banning after-school tutoring for primary and secondary school students. 

• But markets have been gunning for a policy reversal ever since a recent State Council directive called for boosting "education consumption." 

That’s a false hope:

• The recent State Council directive specifically supported after-school tutoring in non-compulsory subjects like art and music. 
• This doesn’t conflict with the “double reduction” policy, which only targets compulsory subjects. 

An SCMP article also mistakenly pointed to rampant private tutoring as evidence of a softened official stance. 

Get smart: There’s a big unregulated black market for private tutoring due to the difficulty and high cost of regulating these small, dispersed private tutors. 

• That doesn’t mean big public companies like TAL and New Oriental can play the same game. 

The bottom line: Imperfect enforcement doesn't mean policy reversal. 

• We don’t see any signs that Beijing is abandoning its original stance on “double reduction.”