China has banned private schools from making money from the nine-year compulsory education system.
The Standing Committee of the National People’s Congress passed the new law on Monday at the behest of the Education Ministry.
The ministry believes the new law is necessary to restrict private schooling in this area since the compulsory education programme, which is a nationwide free system funded by the central government, must embody the state’s policies, and reflect fairness and public good.
However, in terms of fairness, private schools are considered as complementary to public education, especially for kids of migrant workers.
Migrant workers’ children cannot easily access public education because they are hindered by restrictive criteria, including local residency permits, to apply for public school places in major cities like Beijing and Guangzhou.
The new rule leaves room for private education providers to choose whether to register as either for-profit or non-profit high schools.
But only non-profit private primary and middle schools will be allowed from September 1, 2017, academic year.
Once registered as a non-profit private school, providers will be restricted from earning profits and money raised must go back into operating their institution.
“Generally, private schools gain a return of 25% in profit,” said Wang Tongsheng, an official from the education bureau of Lianjiang county in Fujian province in a report by the China National Radio on November 5.
When the new law takes effect next year, the loss of profit may discourage investors to start new private schools and existing institutions may face difficulties in covering operation costs.
The new law is likely to affect over 12 million students who go to private primary and middle schools, according to the data released by the education ministry in 2015.
As of 2015, there are 5,859 private primary schools and 4,876 private middle schools in China.