The school is fairly young, it opened in 2003 and when I visited it (in May 2006) the headmaster told me that the competition for the school's spots was fierce. While a majority of the kids that I met were from Beijing there were also other children from far-away provinces.
The headmaster told me that before any kid is accepted by the school they find out how tall the parents and the relatives of the child is, so that the risk of the child growing too tall for a career in gymnastic is minimal.
Actually, when he told me this and I raised my eyebrows he looked at me and said: "well, just look at your own country and how tall people are over there. No wonder there are no good Swedish gymnasts." Fair enough!