VI-4 Question: China's WTO commitments include opening the healthcare market to foreign investors. What has been achieved in this area? How can China regulate foreign-funded hospitals?
A: China is gradually opening its healthcare market according to the WTO schedule. China welcomes foreign investment in this market. Foreign investors can enter the market by investing 20 million yuan as registered capital, and can own up to 70 percent of a joint venture. One decade ago, foreign firms could own no more than 30 percent of a joint venture. Joint venture projects approved by provincial governments in China also must be approved by the Ministry of Health. The openness in the healthcare industry is impressive even by international standards.
Foreign investors have long been interested in the healthcare market in China. On December 30, 2003, the first comprehensive joint venture for-profit hospital owned by SK of South Korea started business in Beijing. Preliminary data show that so far, there are more than 200 joint venture hospitals in China, and 25 of them are located in Beijing. In the beginning, aggregate foreign investment in hospitals lingered around 20 million yuan. As the healthcare market has opened further, foreign investment has increased to 900 million yuan. The focus of foreign investment has shifted from dental, optical and plastic surgery to cancer and cardiovascular diseases. Joint venture hospitals primarily serve foreigners in China and certain groups of Chinese residents with special needs.
In the future, China will give foreign investors greater access to the hospital market. Hospitals can be private or public, for-profit or non-profit.
According to statistics, public health expenditures last year were close to 480 billion yuan, or about 5.3 percent of China's GDP. The expenditures will grow at an annual rate of over 10 percent. Foreign investors cannot keep their eyes closed to such a huge market. As income grows, demand for healthcare services will surge, which will fuel the further growth of the healthcare industry. At present, the healthcare market in China is not completely open to foreign investors. Down the road, it will be possible for foreign investors to set wholly owned subsidiaries in China.