China Moves to Limit Private Sector Role in Elementary Schools

China moved to restrict the role of private schools in the early years of education, part of a broader effort by President Xi Jinping to strengthen the role of the state and the Communist Party in society.

Individuals and private organizations will be barred from takeovers -- via mergers, acquisitions or deals -- of schools providing compulsory education, which covers the first nine years of schooling, according to revised rules from the State Council published on Friday evening.

The regulations, which take effect on Sept. 1, also bar foreign-owned entities from controlling private schools offering education through year nine. All compulsory-education schools must follow the leadership of the Communist Party, the State Council said.

Provincial authorities will now be allowed to cap tuition fees at private schools that use state-owned assets or receive government subsidies. All private compulsory schools must be non-profitable, the State Council said.

Speculation about the coming rules spread on Chinese social media earlier this week, sending education stocks plunging on May 11. Technology stocks have also been volatile this year as Beijing moves to tighten its scrutiny of private-sector giants including Alibaba Group Holding Ltd.

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