On July 24, 2021, with a quiet document, the Chinese Government declared war on the nation’s massive private tutoring industry. The policy was called “Double Reduction.”
The market reaction was instant and brutal. Billions of dollars in value were wiped from education giants like TAL Education and New Oriental. Stocks plummeted by as much as 60% in days.
For Chinese families, this was a shock. The $100 billion industry was suddenly gone. An ecosystem built on the hopes and fears of the middle class was dismantled by decree.
But, this move did not come from nowhere. It was a response to a deep national crisis. The tutoring industry was only a symptom of a much deeper problem. At the heart of this pressure is the Gaokao, the national college entrance exam. It is a “single-plank bridge” that decides a student’s entire future. Success is the only path to a good university and a good job.
The system is a brutal funnel
The first test, the Zhongkao, cuts the student body in half at age 15. Only about 50% go to academic high schools. The rest are sent to vocational schools, a path widely seen as a failure.
This created a phenomenon known in China as neijuan, or “involution.” It is an arms race where everyone works harder just to stay in the same place. If one child gets tutoring, all must.
The private tutoring industry grew to feed this anxiety. It became a parallel education system, fueled by billions in venture capital. Marketing preyed on a parent’s deepest fear: that their child would “lose at the starting line.”
This created a triple burden. Students lost their childhoods to endless homework and classes. Mental health issues soared. Parents faced a crushing financial burden. The high cost of education was also blamed for China’s falling birth rate. This was a direct threat to long-term national security.
The state saw this as a loss of control. The industry was creating inequality, as the rich could buy a better education. It also undermined the Communist Party’s ideological control over the young.
And thus, the resultant “Double Reduction” policy was not a reform. It was a regulatory guillotine.
Its core rule was simple: all tutoring firms for core subjects must become non-profits. This instantly killed the business model.
The government also banned new licenses. It cut off all access to capital, banning IPOs and foreign investment. Publicly listed firms could no longer invest in the sector.
It also banned tutoring on weekends, holidays, and summer vacations. These were the industry’s most profitable times. The goal was clear. This was part of President Xi Jinping’s “Common Prosperity” campaign. It was a move to curb the “disorderly expansion of capital.” It was a reassertion of state control. The government, not the market, would control the education of China’s youth.
The results were devastating. The industry collapsed. Within a year, 95% of offline tutoring firms were gone.
New Oriental, a market giant, saw its value drop by 90%. It laid off 60,000 employees. The company pivoted to selling agricultural products on live streams just to survive. Other giants like TAL and Gaotu met similar fates. Millions of young, educated tutors lost their jobs overnight.
The winners and losers
The policy created clear winners and losers. The losers were middle and lower-income families. They could no longer afford the group classes that gave their children a chance. The winners were the wealthy. They were unfazed by the ban.
But, the policy’s most predictable outcome was a new black market. The government destroyed the supply of tutoring but did nothing to reduce the demand.
This underground market is secretive, unregulated, and incredibly expensive. Tutors are disguised as “nannies” or “family consultants.”
The policy’s greatest irony is that it massively increased inequality. It took a widely available service and made it accessible only to the rich.
Did the policy work? On the surface, some students got more sleep. Anxiety briefly fell. But the core problem was never touched.
The Gaokao and Zhongkao still loom over every family. The pressure did not disappear – it just changed form. The government misdiagnosed the problem. It attacked the symptom, the tutoring industry, while leaving the disease, the high-stakes exam system, untouched.
Lessons for India
And, this story is an urgent lesson for India. We see the same pressures here. Our system is also built on high-stakes exams like the JEE and NEET. These are our “single-plank bridges.”
This has fueled our own massive coaching industry. Cities like Kota are symbols of this pressure. And, the toll is devastating. The parallels to pre-crackdown China are impossible to ignore.
But, the most important lesson is that a China-style sledgehammer on coaching centers would be a disaster for India. It would not stop the demand. It would simply create an expensive, underground black market. This would lock out middle-class and poor families. It would make our education system more unequal, not less.
In this context, India seems to be choosing a different, wiser path. In 2024, the government released guidelines to regulate coaching centers, not annihilate them. This framework bans misleading ads and enrollment of young children. It aims to curb the worst excesses.
This is a pragmatic short-term step. But regulation alone is not enough. The only true, long-term solution is deep, systemic reform. We must cure the disease, not just manage the symptoms. This is the promise of India’s National Education Policy (NEP) 2020. The NEP aims to focus on critical thinking and holistic learning. It calls for reducing exam pressure and creating multiple, respected pathways to success. It tries to break the idea that one exam defines a life.
Thus, if you think of it, India stands at a fork in the road. The government must pursue a two-pronged strategy.
First, it must enforce its new regulations on the coaching industry. Second, it must commit to the long, difficult task of implementing the NEP’s vision.
China’s failed experiment is a cautionary tale. By learning from it, India can avoid a costly mistake.
(Jayant Shilanjan Mundhra is an independent business analyst who runs newsletters called Decoding the Dragon and BharatNama and actively presents deepdives on listed Indian companies, public policies and Chinese strides in varied domains.)
Published – October 24, 2025 09:54 pm IST
