China’s private tutoring industry is booming despite economic slowdown

Amid China’s economic downturn, its booming education industry has become a bright spark in the gloom thanks to surging demand for after-school learning, resulting in an influx of investment capital.

Within the rapidly expanding private education sector, the fastest growth comes from after-school tutoring, such as private tutoring and English instruction classes as Chinese parents have no qualms about spending on such programmes to help their children.

“Parents can cut [other] discretionary spending, but they would never compromise on the education of their children,” said Anip Sharma, partner at management consultancy firm L.E.K. Consulting.

Such recession-proof spending on education is a component of the broader services industry that Beijing is counting on to offset the economic blow from the shrinking of traditional manufacturing industries compounded by the fallout from the US-China trade war.

Estimates of the size of annual revenues in the private education sector vary among industry experts, from L.E.K. Consulting’s 1.6 trillion yuan (US$238 billion) to audit and advisory firm Deloitte’s 2.68 trillion yuan. On the back of a compounded 10.8 per cent annual growth trajectory, the market could reach a value of as much as 5 trillion yuan (US$744 billion) by 2025, according to Deloitte.

That beats the pace at which the public education sector, run by the Ministry of Education, has grown. According to research firm Frost & Sullivan, citing data from the National Bureau of Statistics (NBS) and the education ministry, public education grew at a compound annual rate of 8.4 per cent between 2014 and 2017 to 4.19 trillion yuan (US$624 billion). Government spending on public education is about 4 per cent of the country’s gross domestic product.