Isn't the Chinese solution just to convert these for-profit education companies to non-profit education companies? That only hurts these companies and their shareholders. Parents who want their children to be competitive will continue to enroll their children in these after-school classes; now that they are non-profit perhaps they will be cheaper and parents can afford more classes!

In addition to what you said, this policy is supposed to alleviate a complementary problem for kids in the top 1-20% socioeconomic class. There, the biggest issue is that there is excessive competition to no good end. This policy is supposed to alleviate that and bring more room for fostering creativity