China is escalating a crackdown on its online education sector, forcing once high-flying startups to mothball plans for multi-billion-dollar initial public offerings this year.
Just months ago, edtech outfits were one of the hottest investments in China’s post-Covid internet industry, pulling in more than $10 billion of venture funding last year from powerhouses like Alibaba Group Holding Ltd., Tencent Holdings Ltd. and SoftBank Group Corp. Then Beijing stepped in.
President Xi Jinping suggested in March the surge in after-school tutoring was putting immense pressure on on China’s kids, signaling a personal interest in curbing excesses. That led to warnings in state-owned media and penalties aimed at predatory practices that play on a nation’s obsession with academic achievement. Now, the country’s education ministry plans to create a dedicated division to oversee all private education platforms for the first time, according to people familiar with the matter.