A sort ofWhen the Chinese leadership announced that private educational institutions that provided tuition fees for core school subjects would no longer be allowed to make profits in the future, it was a disaster for their stock prices. On Friday, the courses of Gaotu Education, Good Future Education and New Oriental Education Company shrank by 70% to 80%. Over the past few years, it is obvious that Chinese parents are under increasing pressure to prepare their children for better final exams at the end of high school, and private tuition is expensive. This is a thorny issue for the Chinese Communist Party. . There are two reasons why it is so radical now: On the one hand, during the pandemic, the pressure to buy online tutoring has increased greatly.Significant expansion of suppliers, the President of China Xi Jinping March is called “a mess” and a “difficult disease”.
On the other hand, the party was shocked by the sharp decline in population growth, which may soon become negative. Chinese parents usually regard high education expenses as the main reason for not having a second child, and often not having children at all. “The Chinese government has now stated that in order to achieve its social and political goals, it will not shy away from simply shutting down a large and profitable industry,” wrote Ernan Cui of Beijing-based analyst firm Longzhou Jingxun.
After such drastic changes in education policy, recent attacks on technology companies, and restrictions on real estate financing and Bitcoin mining, investors are now clearly uneasy. Most importantly, some economic indicators are showing signs of weakness, the country’s latest coronavirus outbreak is considered likely to expand, and doubts about the effectiveness of China’s vaccines have increased.
After the sharp decline in March and the long-term sideways consolidation since last Friday, the Chinese stock index CSI 300 is again facing significant pressure. Since then, it has fallen more than 7% to 4,751 points and fell to its lowest level in nearly nine months. The yield on China’s 10-year treasury bond fell to 2.871% on Monday, the lowest level in a year, but rose again to 2.94% on Tuesday. Guoyuan Securities trader Li Kunkun said that these trends are another obvious sign of uncertainty—especially because there are speculations that US hedge funds are now dumping Chinese assets because of the imminent imposition of investment restrictions. The mood is severely damaged. The national currency, the renminbi, interrupted its continued appreciation against the U.S. dollar at the end of May, and has recently fallen sharply.
