Source: Chinese Government Website (gov.cn)

1. Policy Background & Strategic Significance

On September 7, 2024, the Ministry of Commerce, National Health Commission, and National Medical Products Administration jointly issued the "Notice on Conducting Pilot Work for Expanding Opening-Up in the Wholly Foreign-Owned Hospital Sector." The policy designates Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and the entire Hainan Island as pilot areas for establishing wholly foreign-owned hospitals.

This major policy initiative implements the strategic deployment of the Third Plenary Session of the 20th Central Committee regarding "promoting orderly opening-up in telecommunications, healthcare, and other sectors," marking a new phase in China's opening-up in the medical sector.

Policy Highlights: This represents China's first large-scale pilot of wholly foreign-owned hospitals in the medical sector, going beyond previous joint-venture models and demonstrating a higher level of opening-up.

2. Rationale for Selecting the 9 Pilot Cities

2.1 Medical Service Demand Perspective

These 9 provinces and cities share distinctive characteristics:

  • High openness: Home to numerous multinational corporations, regional headquarters, and international organizations

  • Concentrated expat population: Over 70% of China's total registered foreign residents

  • Diverse medical needs: Strong demand for multilingual consultations, international insurance claims, and personalized health management

Specifically:

  • Shanghai: 300,000+ registered expats

  • Beijing: ~150,000 expats

  • Guangzhou & Shenzhen combined: 200,000+ expats

These cities form the core clusters of China's foreign population.

2.2 Medical Management Level Perspective

Since 2000, China has implemented the "Interim Measures for the Administration of Chinese-Foreign Joint Venture and Cooperative Medical Institutions." Over 20+ years of development:

  • 60+ formal Chinese-foreign joint medical institutions operating nationwide

  • Most concentrated in these 9 pilot regions

  • Mature practices in medical supervision, hospital accreditation, and quality control

2.3 Foreign Investment Attraction Perspective

Factor

Data

GDP share

40%+ of national total

Foreign investment utilization

45%+ of national total

International flights

80%+ of national departures

These regions have superior business environments and dense international flight networks.

3. Impact Analysis on China's Medical System

3.1 Overall Assessment: Complementarity Over Competition

Wholly foreign-owned hospitals primarily serve:

  • Domestic residents seeking diversified medical services

  • Expats working, studying, and living in China

Their relationship with existing hospitals is complementary, not competitive.

3.2 Specific Impact Analysis

Impact on Public Hospitals:

  • Public hospitals remain the main body of medical services

  • 2023: 38,000 hospitals nationwide, including 3,855 tertiary hospitals

  • Public hospitals handle 83.5% of national outpatient visits

  • Foreign hospitals will divert some high-end clients but won't change public hospitals' dominant position

Impact on Medical Service Supply:

  • Enriches service tiers and meets multi-level, diversified needs

  • Introduces internationally advanced management concepts

  • Promotes overall improvement of domestic medical institutions

Impact on Employment Market:

  • Foreign hospitals may offer competitive salaries, but scope is limited and gradual

  • 7.723 million health professionals in public hospitals (end of 2023)

  • The "Two Allowances" policy provides good development environment for medical staff

4. Investment Entity Eligibility Requirements

4.1 Basic Requirements

Applicants must:

  • Be legal entities capable of assuming civil liability independently

  • Have experience in direct or indirect medical and health investment/management

  • Provide internationally advanced hospital management concepts and service models

  • Offer internationally leading medical technologies and equipment

4.2 Capability Requirements

Investment entities should be able to:

  • Supplement or improve local medical service capabilities

  • Expand diversified service supply patterns

  • Form distinctive advantages in certain specialty areas

5. Medical Quality & Safety Assurance System

5.1 Regulatory Requirements

Foreign-owned hospitals must comply with:

  • Basic Healthcare and Health Promotion Law

  • Biosecurity Law

  • Data Security Law

  • Regulations on Administration of Medical Institutions

  • Regulations on Administration of Human Genetic Resources

5.2 Information Security Requirements

Important Regulations:

  • Hospital information management systems must connect to local medical supervision platforms

  • Electronic medical records and medical equipment information storage servers must be located within Chinese territory

  • Strictly prohibited from conducting diagnosis/treatment activities involving human genetic resources without approval

5.3 Approval Procedures

Preliminary review by municipal-level health authorities, final approval by provincial-level health authorities.

5.4 Practice Management

  • Included in medical quality and safety management

  • Encouraged to participate in hospital accreditation

  • Subject to same supervision as domestic medical institutions

6. Human Genetic Resource Protection

Under "Regulations on Administration of Human Genetic Resources," foreign-owned hospitals face strict restrictions:

  • Blood disease hospitals prohibited

  • Hematology departments prohibited

  • Human organ transplantation technology prohibited

  • Human assisted reproductive technology prohibited

  • Prenatal screening and prenatal diagnosis technology prohibited

7. Basic Medical Insurance Designation

7.1 Policy Position

The National Healthcare Security Administration welcomes and supports qualified medical institutions of all types to become designated medical insurance institutions, treating all ownership forms equally.

7.2 Application Prerequisites

Category

Requirements

Pricing policy

Follow local medical service pricing standards

Fee policy

Implement unified medical service pricing

Pharmaceuticals

Prioritize essential drugs, insurance-covered medicines and medical materials

Payment methods

Implement DRG/DIP payment reform requirements

Supervision

Accept insurance agreement management, unannounced inspections

8. Future Development Outlook

8.1 Policy Support Directions

  1. Implement opening-up pilot — Strengthen policy interpretation through foreign enterprise roundtable meetings

  2. Increase policy support — Research adding medical sector encouragement items in the "Catalogue of Industries Encouraged for Foreign Investment"

  3. Strengthen service guarantee — Timely resolve difficulties in land, environmental assessment, energy, and financing

8.2 Development Expectations

  • More high-quality foreign medical institutions will enter Chinese market

  • Medical service supply will become more diversified and internationalized

  • Commercial health insurance will gain greater development space

  • China is expected to become an important international medical service center in the Asia-Pacific region

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