FDI encouraged in health sector

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China’s Minister of Health, Gao Qiang, is encouraging foreign direct investment (FDI) in the health sector according to Xinhua. Foreign investors are being encouraged to open joint venture hospitals in which they can own as much as 70% of the private medical facility.

“Foreign invested hospitals will be strictly supervised by the Chinese government but there will be no intervention in the economic management of these hospitals,” said Gao.

Currently, 96% of China’s medical and health resources go into public hospitals, which the minister said was too high. To change this, the government is going to put forward a series of reforms that will allow more private investment in the country’s medical services.

This announcement came on the heels of an announcement by the Vice Minister of Finance, Wang Jun, calling for more private investment in the sector to meet the voracious demand for better medical services from urban and rural residents.

Official figures show China’s spending on public health care has risen by more than 20% a year for four consecutive years, the fastest growth rate of all sectors, but the country’s health system continues to remain in disarray.

Beijing has budgeted RMB31.28bn to fund the health system in 2007, an 86.8% increase from 2006.

As the incomes of Chinese citizens have increased, demand for private medical services has surged. In 2005, China had 18,703 hospitals, of which only 2,027 were private. That figure is likely to rise as Beijing moves to promote FDI in the sector.