Benzinga | Jun 16, 2021 07:45AM EDT

China Plans To Crackdown On Private Tutoring Companies: Reuters

* China is planning a tough crackdown on the country's $120 billion private tutoring industry, Reuters reported.

* Sources told Reuters that the new rules would include trial bans on vacation tutoring and restrictions on advertising.

* The trial vacation ban, along with a bar of online and offline tutoring on weekends during term time, could severely affect tutoring companies' revenues to the tune of 70-80%.

* Gaotu Techedu Inc (NYSE:GOTU), New Oriental Education & Tech Grp (NYSE:EDU), TAL Education Group (NYSE:TAL), LAIX Inc (NYSE:LAIX), and Bright Scholar Education Holdings Ltd (NYSE:BEDU) are some of the companies that are expected to be affected.

* President Xi Jinping last week said schools should be responsible for student's learning rather than tutoring companies.

* Apart from protecting students from the cutthroat competition, the new rules are expected to act as a financial incentive for couples to have more children as it seeks to shore up a rapidly declining birth rate.