China Reveals Plans To Open Hospital Ownership For Foreign Investors Pushing Health Research

China will permit the establishment of wholly foreign-owned hospitals in several major cities and allow foreign investors to offer human stem cell and gene therapy services in designated free-trade zones, as part of a broader effort to attract foreign investment and stabilize economic growth.

A joint announcement made on Sunday by the Ministry of Commerce, the National Health Commission, and the National Medical Products Administration revealed that foreign investors will now be able to operate hospitals in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and the southern island province of Hainan.

However, the circular specifies that foreign investors are prohibited from acquiring public hospitals or engaging in businesses related to traditional Chinese medicine.

Detailed requirements and procedures for these new regulations will be provided later.

Additionally, China will further open the biotechnology sector to foreign investment in major free-trade zones, including those in Beijing, Shanghai, and the southern provinces of Guangdong and Hainan.

Starting immediately, foreign-funded companies will be allowed to conduct research on and adapt human stem cell and gene diagnosis technology, as well as offer related treatment services.

They will also be able to apply for market registration and production licenses that will be valid nationwide.

This policy shift comes less than two months after the Communist Party’s key policymaking third plenum, where leaders committed to further opening up the market.

It also follows Vice-Premier He Lifeng’s pledge to expand international cooperation and develop a new high-level open economic system.

“Foreign investment is a crucial component of China’s economy and plays a significant role in China’s modernization efforts,” He stated during the China International Fair for Investment and Trade in Xiamen on Sunday.

The decision to open up the medical sector is part of Beijing’s latest effort to counter the decline in foreign investment, which has been affected by a domestic economic slowdown and decoupling measures by the United States.

From November 1, all restrictions on foreign access to China’s manufacturing sector will be lifted under the latest “negative list,” a document specifying sectors closed to foreign and private investment.

In August of last year, Beijing introduced guidelines aimed at boosting foreign investment amid a sluggish post-Covid economic recovery.

Despite these efforts, foreign direct investment from January to July fell nearly 30 percent year on year to 539.5 billion yuan (US$76.1 billion), according to government data.

Vice-Premier He reported in Xiamen that by the end of 2023, China had nearly 1.18 million foreign-invested enterprises with a cumulative investment of 28.4 trillion yuan.

He encouraged foreign enterprises to take advantage of the favorable conditions, plan long-term investments in China, and continue to contribute positively to the economy.

Foreign chambers of commerce have frequently raised concerns about market access barriers in China, despite Beijing’s assurances about the country’s business environment.

The updated “negative list” released on Sunday by the National Development and Reform Commission and the Ministry of Commerce reduces the number of sectors closed to foreign investment from 31 to 29. This list was last updated in 2021.

In the first seven months of this year, foreign investment in manufacturing reached 154.48 billion yuan, a 3 percent increase from the previous year.

The revised negative list also eliminates foreign ownership restrictions on cloud services and other value-added telecom services in domestic pilot zones, particularly in key regions such as Beijing, Shanghai, Shenzhen, and Hainan.

This includes internet data centers, content delivery networks, and internet service providers.