The term "two exemptions and one subsidy" (TEOS) has become increasingly used in China's educational domain. This article discusses the policy environment in which the term was developed, eligibility criteria, and standards and methods for subsidization. By analyzing a variety of policies, laws and regulations, and reports, the author concludes that TEOS is not in itself a legal concept, but raises questions of educational law research for further research, theoretical discussion and critique. (Contains 12 notes.)