Customary Education Regulatory Regime Prior to the Interim Provisions
Under the national education regulatory regime in China, Overseas Institutions that want to establish and operate academic programs in China for Chinese citizens must partner with a Chinese party, in accordance with the Sino-foreign Cooperation in Education Regulations and their implementation measures (collectively, "Sino-foreign Education Regulations"). To date, foreign investment in such Sino-foreign joint education institutions has been capped at 50%.
In 2020, Hainan FTP articulated plans to allow qualified Overseas Institutions to operate independently in Hainan FTP without a Chinese counterparty institution involved, in accordance with the Master Plan for the Development of Hainan FTP (effective June 1, 2020) and the Special Administrative Measures (Negative List) for Foreign Investment Access in the Hainan Free Trade Port (effective February 1, 2021). However, for years, it was not clear to the public how such an operating model would be put into practice in Hainan FTP. In April 2023, media reports suggested that the Hainan Provincial Government anticipated the first independent school in Hainan FTP to be wholly owned and operated by a German university.
In this context, the Interim Provisions issued in March 2023 finally articulated the eligibility of Overseas Institutions to operate independently in Hainan FTP, the permitted governance structure, and the regulation of curriculum, enrollment, and tuition.
Difference between the Interim Provisions and the Sino-Foreign Cooperation Education System
The chart below provides the key distinctions between the new Interim Provisions and the longstanding Sino-foreign Education Regulations.
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Items
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Interim Provisions
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Sino-foreign Education Regulations
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Program Restrictions
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Highly qualified Overseas Institutions in science, engineering, agriculture, and medicine are permitted to establish and operate independent institutions (i.e., vocational education programs, undergraduate, and postgraduate) in Hainan FTP.
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Overseas Institutions must partner with a Chinese counterparty to set up and operate higher education programs in China.
Such Sino-foreign joint education institutions may provide education at various levels including postgraduate, undergraduate, secondary schooling, self-study, examination preparation, tutorial, pre-school education, and vocational training courses.
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Eligibility Criteria
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Overseas Institutions that intend to set up an independent institution in Hainan FTP must:
- have an excellent global reputation;
- possess unique strengths in science, engineering, agriculture, and medicine; and
- maintain a proven track record of producing graduates that have promising career prospects.
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No specific criteria; both the Chinese and foreign educational institutions should have basic capabilities to handle the Sino-foreign joint education activities.
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Governance
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No composition requirements are imposed on the members of the decision-making body of the independent institution. However, the president must reside in China for at least six months per year.
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Comprehensive requirements in terms of the governance and decision-making body of the Sino-foreign joint education institution. For example, one-third of members of the Council, Board of Directors, or Joint Management Committee are required to have at least five years of teaching experience and half the members must be elected from the Chinese counterparty.
Further, the president or major administrative principal of the institution must be a Chinese citizen and reside permanently in China.
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Curriculums and Enrollment
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Independent institutions have more flexibility in terms of the curriculum and enrollment. There is no curriculum filing requirement for independent institutions and they are encouraged to introduce international courses and teaching materials.
Independent institutions have discretion to determine the scope, standards, and methods of enrollment.
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Curriculum and textbooks must be filed with the local authority.
Students enrolled must be included in the national uniform plan of university entrance by taking Gaokao, which is the rigorous college entrance exam. General brochures and advertisements for the enrollment of students must be filed with authorities.
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Tuition Fees
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Tuition and fees are determined by reference to standards applicable in the home country of the Overseas Institution.
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Tuition must follow standards set by the government and must be disclosed to the public. Without pre-approval, tuition cannot be increased.
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Next steps
China is about to land its first foreign-owned college in Hainan. Similar to other countries (such as India), Hainan FTP is working to attract foreign universities with preferential education regulatory policies and tariff exemptions relative to teaching materials and scientific research instruments and equipment. To complement these initiatives, Hainan FTP also has implemented favorable policies regarding corporate income tax and individual income tax.
Hogan Lovells’ Education Team in Greater China has been closely tracking this and other governmental activities that affect the establishment and operation of academic programs in China. We are pleased to offer strategic and practical advice and assistance with the prospective operation or expansion of educational institutions in China.
Authored by William Ferreira, Sherry Gong, Flora Feng, Stephanie Gold, and Lin Zhu.
