China to Allow Foreign Capital into Medical Organizations

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Dec. 7 – China recently released a circular allowing foreign capital involvement in China’s medical institutions sector for the first time. Specialists believe the new policy will have a significant impact on the country’s ongoing reform of the medical industry.

The Chinese State Council forwarded the “Circular on Further Encouraging and Guiding Social Capital to Investing in the Foundation of Medical Organizations” on November 26, and gave permits to foreign enterprises to establish both profitable and non-profit medical institutions in China. The circular clarifies that China will offer favorable policies to Hong Kong, Macau and Taiwan investors who are interested in founding medical institutions and also encourages all kinds of foreign investment in medical organizations across China’s middle and western regions.

The circular says China will gradually relax restrictions on foreign share proportions in jointly invested medical institutions, and will finally open up the market to wholly foreign-owned medical organizations after first opening up several trial locations.

The government will simultaneously simplify the licensing procedures for foreign investors interested in establishing medical organizations. According to the circular, jointly-invested medical institutions need to get approval from provincial authorities, while wholly foreign invested medical organizations need to apply for a license from China’s Ministry of Health and Ministry of Commerce.

China’s medical sector is a field which foreign investors have been interested in for a long time. According to a 2009 report on CBN, a Chinese financial newspaper, China started to see foreign investment into special clinics and medical facilities in the early 1990s. However, foreign investors slowed down in 2005 when China’s public hospital-focused medical reform was widely criticized as “a failure” – leading to a surge in the price of medicine and other social problems. It was not until 2009 that China published the new plan of reform encouraging the entrance of “diverse investors” into the public health sector while ensuring fundamental medical services from public hospitals to the people.

In addition to foreign capital, the circular also welcomes private and social capital entrance into China’s medical institutions sector.

Analysts believe the new policy will improve service and management across the sector by introducing more competition to the market. Wang Jishan, vice president of the People’s Hospital of Peking University says the new policy will bring more opportunities for both hospitals and doctors.

“Doctor mobility will grow and doctor salary will see an increase too,” he added.