The State Council previously issued the Implementation Plan of Reform on Vocational Education and the Modernization of China Education 2035, which showed the government’s positive attitude towards private vocational education. Investors’ concern on future expansion business model and profit distribution of higher education institutions are eased significantly. Moreover, according to the government work report delivered by the Chinese Premier, China targets to have an incremental recruitment of one million students for higher vocational schools. A vocational skills training initiative will be implemented with 100 billion yuan from the surplus in unemployment insurance funds allocated to provide training for the 15 million targeted attendees, helping jobseekers to upgrade skills or switch jobs or industries. Considering that the total student recruitment of higher vocational schools in 2018 was 3.69 million, an addition of one million students would be equivalent to a nearly 30% increase. Preferential tax and land policies are anticipated to be published which will provide catalyst for further sector rerating. As a result, medium/long term investment opportunities may arise for investors.

Bloomberg, The State Council

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