“Double Reduction” policy of China nearly destroys off-campus education industry
In the afternoon of July 23, a 16-page "Opinions on Further Reducing Compulsory Education Students’ Burden of Homework and Off-campus Training" (hereinafter referred to as "Opinions") began to circulate in China. This document is called the “Double Reduction” policy by the Chinese education industry. According to "Opinions", **disciplinary educational institutions are prohibited from financing and capitalized operations; teaching on weekends and other statutory holidays are prohibited; all educational institutions should become non-profit institutions.** As a result, education stocks plummeted.
Take TAL（Tomorrow Advancing Life）for example. In 2019, TAL grew tenfold in five years. But now its market cap has shrunken by about 70%.
So when invest in China stocks, we must follow policy direction and focus on the industries favored and supported by the country, such as chips, lithium batteries, and Photovoltaic robot. One of the main goals of the “Double Reduction” policy is to reduce education cost and thereby increase fertility rate.