Revised law ushers in new era for private education

On 7 November 2016, the Standing Committee of the National People’s Congress passed a decision on the amendments to the Law on Promotion of Private Schools, which will take effect on 1 September 2017. The revised law reflects a major reform in the regulation of private schools in China; for the first time, it recognizes the legality of for-profit private schools.

According to the current Law on Promotion of Private Schools, promulgated in 2013, sponsors of non-profit private schools are generally allowed to demand “reasonable return” from schools. However, as the current law and its implementation rules did not specify a clear definition and criteria for “reasonable return”, it is difficult for the sponsors to obtain “reasonable return” in practice.

In contrast, the revised law explicitly classifies private schools into non-profit and for-profit schools. Preschools, high schools, higher education schools and non-degree education schools can be established as for-profit schools, but schools of compulsory education (i.e., primary schools and junior high schools) must be non-profit.

Yi Qian is a partner at AllBright Law offices in Shanghai, and Dannie Xu is an associate at the firm