The news that China is barring for-profit tuition in core school subjects sent shockwaves throughout the country’s vast private education sector. According to the new rules, all of these institutions that teach the school curriculum – or “cram schools” – will be registered as non-profit organisations, and no new licences will be granted.
Naturally, the news hit China’s $120 billion private tutoring industry hard, with share prices plunging and triggering a heavy sellof in shares of these firms. Part of the new ruling also bars these institutions from raising money; listed companies and foreign investors also won’t be allowed to invest in these institutions, according to Xinhua.
The reason for this sudden big change? To ease financial pressures on families that have contributed to low birth rates.
The “chicken baby” phenomenon
We all know that one major reason many don’t want to be parents or have more kids: the cost of raising them, and one of the biggest costs is education. It’s not uncommon to hear that parents would save money for years for a child’s education – not so much other costs like feeding and housing them. You’ve also probably seen many ads from banks and insurance companies that focus on saving and investing for a child’s education.
Reuters reported that in 2016, over 75% of school-aged students in China attended after-school tutoring classes, and since competition is so fierce in the country, it’s no surprise the numbers have risen since then. This has given rise to the popular term jiwa, or “chicken baby”, which refers to parents pumping “chicken blood” into their children with extracurricular classes.
The intense competition to get into the best schools translates into an unhealthy obsession with academic performance, and vicariously, tutoring. Because of the anxiety and high cost of educating a child, many parents don’t even consider having more children, even though China is now allowing couples to have up to three.
In this day and age, the cost of education is on the rise, fast. Chinese parents spend an average of 120,000 yuan up to 300,000 yuan a year on extracurricular tutoring for their children. According to a 2019 Shanghai Academy of Social Sciences report, raising a child from birth through junior high school costs US$130,000, with US$78,713.42 of that in education for a family in Shanghai’s upscale Jingan district; for low-income families, it’s 70% of their annual income of US$7,700, as Reuters reported.
So China’s latest policy to boost birth rates aims to “significantly” reduce financial burdens within three years, according to Xinhua. Will it also work in Singapore?
The situation in Singapore
Singapore families also spend a staggering amount of money on education, including tuition, in the hope of helping their children achieve academic excellence. According to the Household Expenditure Survey 2017/2018, families in Singapore spent S$1.4 billion on tuition.
It seems that parents are still obsessed with academic achievement, despite MOE’s efforts to de-emphasise it. The demand for the tuition industry hasn’t seemed to stop, as more and more tuition centres open to cater to this lucrative market.
As higher-quality tutors are likely to charge more, the implication is that economically-advantaged students will have higher-quality tuition than their economically disadvantaged peers. The top 20% of richer households spend nearly 4 times as much on tuition as those in the bottom 20%. This differential access to tuition could end up increasing educational inequality between children from economically disadvantaged and advantaged backgrounds.
Let’s not forget that the hyper-competitive environment in Singapore forces parents to put their children through hours of extra tuition, which impacts not just the family expenditure, but more importantly, family time and getting some decent rest. All of these also can impact a couple’s decision to have kids, or at least have another one.
Will China’s new strategy of making tuition non-profit work in Singapore? Perhaps. It would definitely take away the strain on household budgets, and it may also reduce the educational inequality among the different classes.
But it would leave a S$1.4 billion industry hole in the economy, and it still wouldn’t take away the competitiveness when it comes to entry into prestigious high schools or universities.