China Issues Landmark Circular to Standardize and Improve Kindergarten Fee Policies

• Standardize kindergarten fee categories nationwide by 2026.
• Directly address declining birth rates by lowering costs for families.
• Establish clear boundaries between mandatory fees and optional services.
• Ensure affordability through government-guided pricing in inclusive kindergartens.
• Enhance transparency via public directory lists and disclosure requirements.

China just made a major move in early childhood education.

The National Development and Reform Commission (Guojia Fazhan He Gaige Weiyuanhui 国家发展和改革委员会), the Ministry of Education (Jiaoyu Bu 教育部), and the Ministry of Finance (Caizheng Bu 财政部) have jointly issued a circular aimed at refining kindergarten fee policies.

This isn’t just bureaucratic paperwork—it’s a sweeping regulatory framework designed to reshape how early childhood education gets funded across the country.

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What’s This All About? Understanding the Big Picture

The measure, titled “Notice on Improving Kindergarten Fee Policies,” serves a dual purpose.

On one hand, it’s implementing the “Preschool Education Law of the People’s Republic of China” to promote high-quality early childhood education nationwide.

On the other hand—and this is the critical part for policy makers and investors—it’s directly tied to national fertility goals.

By lowering the costs of child-rearing, China is trying to tackle one of its biggest demographic challenges: declining birth rates.

This is a long-term bet on education accessibility as a population policy tool.

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Breaking Down the Fee Categories: What Can (and Can’t) Be Charged

Here’s where things get specific.

The circular establishes clear boundaries around what kindergartens are actually allowed to charge parents.

No more grey areas.

No more surprise fees.

The approved kindergarten fee categories are:

• Nurturing and Education Fees (Baojiao Fei 保教费) — Standard preschool education services.
• Accommodation Fees (Zhusu Fei 住宿费) — For boarding services at residential kindergartens.
• Nursery Fees (Baoyu Fei 保育费) — Specific charges for “nursery classes” serving toddlers aged 2–3 years.
• Service-Related Fees and Proxy Fees — Charges for voluntary services parents select, or costs the kindergarten pays to third parties (like insurance or specialized supplies) on their behalf.

Here’s the critical restriction: kindergartens are explicitly prohibited from bundling core education services or government-subsidized items into these additional service or proxy fees.

Translation: You can’t hide mandatory education costs in “optional” charges.

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Two Different Pricing Models: One System, Two Paths

China’s kindergarten landscape is split into two distinct institutional types—and they operate under completely different pricing regimes.

Public and Non-Profit Private Kindergartens: Government-Guided Pricing

“Inclusive Kindergartens” (Puhuixing You’eryuan 普惠性幼儿园)—which includes all public institutions and non-profit private kindergartens—operate under government-guided pricing.

Here’s how it works:

• Nurturing and accommodation fees at public kindergartens are classified as administrative charges.
• Provincial-level education, reform, and finance departments establish standard “benchmark” rates and allowable floating ranges.
• Individual kindergartens can’t just set prices wherever they want—they operate within these guardrails.

This approach prioritizes accessibility and affordability for families across the income spectrum.

Profit-Oriented Private Kindergartens: Market-Adjusted Pricing

For-profit private institutions get more flexibility—but not a free pass.

These kindergartens can determine their own fees based on operational costs and market demand.

That said, there are two important strings attached:

• They must report their rates to local education authorities.
• The government reserves the right to conduct cost investigations to curb predatory or excessively high pricing.

Translation: Competition is healthy, but price gouging gets shut down.

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How Fees Should Actually Be Calculated: The Cost Auditing Framework

Here’s where it gets interesting from an operational standpoint.

When adjusting fees for inclusive kindergartens, authorities must follow a specific methodology.

Step 1: Conduct cost audits.

Pricing must be based on actual operational costs after deducting government subsidies and social donations.

Step 2: Factor in broader considerations.

Local economic development, public affordability, and the nature of the institution must all be weighed into the final decision.

What counts as operational costs?

• Staff salaries and benefits.
• Social security contributions.
• Office expenses.
• Maintenance.
• Rent.
• Depreciation (excluding government-funded assets).

What doesn’t count?

Losses from disasters or accidents cannot be passed on to parents through fee increases.

This is a significant protection mechanism for families.

Additionally, proxy fees must be charged at actual cost only—kindergartens are strictly prohibited from profiting off price differences or receiving kickbacks from suppliers.

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Transparency and Oversight: New Systems to Keep Everyone Honest

The circular introduces several mechanisms designed to prevent abuse and protect families from hidden charges.

Directory List System

Local authorities will publish a directory of approved service and proxy fees.

If a fee isn’t on this list, kindergartens can’t charge it.

It’s that simple.

Public Disclosure Requirements

Kindergartens must maintain visible fee lists including:

• The nature of the institution.
• Specific fee items.
• Standards and rates.
• Legal basis for each charge.

This information must be displayed on:

• Institutional websites.
• WeChat accounts (critical for Chinese digital culture).
• Campus noticeboards.

Transparency by default.

Payment Frequency Restrictions

Fees may be collected monthly, quarterly, or by semester.

What’s forbidden: pre-collection of fees across entire semesters.

This prevents kindergartens from holding excessive cash upfront.

Cracking Down on Hidden Fee Schemes

The circular explicitly prohibits several deceptive practices:

• Charging fees under the guise of “Transition to Primary School” classes.
• Packaging charges as interest groups or specialized parent-child classes.
• Linking donations to admission decisions (a practice that historically squeezed wealthier families and disadvantaged poorer ones).

These protections address real problems that existed in China’s kindergarten system.

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Supporting Infrastructure: Making It Work on the Ground

Regulations only work if the system behind them is functional.

The circular mandates that local governments provide fiscal support to ensure kindergarten sustainability.

One concrete benefit: kindergartens will receive residential utility rates for water, electricity, gas, and heating, rather than higher commercial rates.

This cost reduction passes directly to institutions, reducing pressure to charge families more.

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When Does This Take Effect? Timeline and Implementation

The new kindergarten fee regulations are set to take effect on January 1, 2026.

That gives local departments time to:

• Update their specific management measures.
• Establish local fee directories.
• Strengthen supervision infrastructure.
• Prepare to crack down on illegal charging behavior.

This isn’t a surprise—it’s a phased transition to a standardized system.

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What This Means for Investors and Market Players

If you’re tracking China’s edtech or early childhood education sector, this circular matters for several reasons:

For public and non-profit operators: Expect tighter margins as government-guided pricing keeps fees capped, but also stability and predictability in the regulatory environment.

For for-profit private kindergartens: You keep pricing flexibility, but increased scrutiny from authorities means cost transparency becomes non-negotiable.

For service providers: Proxy fees are now formalized as legitimate line items, but they must be at-cost only—no markup opportunities.

For the broader ecosystem: This standardization creates a more level playing field and reduces information asymmetry between institutions and families.

It’s a policy designed to balance affordability with sustainability—a challenging needle to thread in any market.

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The Bigger Context: Why China Is Doing This Now

Early childhood education policy isn’t abstract in China right now.

The country faces a genuine demographic crisis, with birth rates falling significantly in recent years.

High costs of child-rearing—including kindergarten fees—are a documented barrier to family formation.

By standardizing and often reducing kindergarten fees, China is taking a direct policy lever to address this challenge.

It’s government using regulation to reshape economic incentives at a critical life stage.

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References

• Notice on Improving Kindergarten Fee Policies – National Development and Reform Commission
• Official Website of the National Development and Reform Commission (NDRC)
• Official Website of the Ministry of Education of the People’s Republic of China