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Detailed explanation of China's education policy

Date: 2022-10-24
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Detailed explanation of China's education policy

Education policy: preschool education, compulsory education and related training

As China has successively introduced restrictive policies for preschool education, compulsory education and related training, the market has panic selling education stocks. However, the long-term policy for higher education is good, and the long-term market should gradually return to rationality.

In 2021, restrictive policies will be introduced successively

▪ The Regulations on the Implementation of the Promotion Law of Private Education, revised in April 2021, stipulates that for-profit private schools for compulsory education shall not be established. At the same time, private schools of compulsory education are expressly prohibited from conducting related party transactions, and private schools of preschool and compulsory education are prohibited from controlling private schools through merger and acquisition, agreement control and other means (preventing the VIE listing structure of preschool and compulsory education).

▪ On July 24, 2021, the state issued the Opinions on Further Reducing the Student's Work Burden and Off campus Training Burden in Compulsory Education, and the existing discipline training institutions were uniformly registered as non-profit; Disciplinary training institutions shall not be listed for financing and shall not be capitalized.

Short selling event in January 2022

• On January 25-26, 2022, the share price of education shares fell sharply, and the market value fell sharply. According to the market news, many investors related to education stocks have received anonymous letters. It is mentioned that the Ministry of Education and other official institutions interviewed many education stocks listed in the United States and Hong Kong earlier, and said that overseas listed education stocks will be prohibited from holding any mainland school assets, mergers and acquisitions, etc. However, some securities companies said that after communicating with Hope Education, China Education Holding and Neusoft Education, the management of many listed companies said that they had not seen official documents, nor attended official meetings or received official notices. Therefore, the broker's analysis of rumored information is false, with incorrect file format and exaggerated content.

• Since 2021, the policy uncertainty that the market has paid attention to has had a negative impact on the stock price of the entire education industry, radiating the impact on the entire education sector, including higher education. However, the long-term policy for higher education is favorable. The valuation of vocational education and application-oriented universities has reached the bottom and there is much room for development. The industry is still in the golden age of mergers and acquisitions.

Education policy: higher education

▪ Different from compulsory education and training, higher education industry policies are better than private colleges

▪ Since the 18th National Congress of the Communist Party of China, laws and regulations such as the Law on Promotion of Private Education and the Vocational Education Law have been revised, and the legal protection of education in the new era has become more powerful. We will continue to deepen the reform of classified management of private education, and support and standardize the healthy development of private education. ▪ The current situation and characteristics of Nanshan University fully conform to the national policy guidance of vigorously supporting vocational education, and it has unique advantages and development space in the fields encouraged by the country.

▪ In response to the national vocational education policy, Nanshan University has successively built with enterprises Nanshan Aluminum Industry College, Modern Industry College, Nanshan Culture and Tourism Industry College, International Flight Industry College and other industry colleges, and pioneered a development path in terms of continuously improving the quality of discipline construction, innovating talent training mode, and exploring high-quality 'teaching, research, and production' cooperation.

▪ The policy uncertainty that the market has been concerned about since 2021 may have a negative impact on the share price of the entire education industry. However, the long-term policy for higher education is favorable. The valuation of vocational education and applied higher education has reached the bottom, and there is a large space for development. The industry is still in the golden age of mergers and acquisitions.

Detailed explanation of China's education policy

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