º¬Ðß²ÝÉçÇø

China¡¯s foreign investment access policies in the healthcare sector have evolved from cautious exploration in the early days of reform and opening up, to gradual liberalisation after joining the WTO and, in recent years, to comprehensive opening. This process fully reflects the demands of economic development and the progress of healthcare sector reform.

Exploratory stage (1978¨C2001)

In the early period of reform and opening up, the Chinese government began to allow foreign investment to enter the healthcare sector through co-operative arrangements. In 1989, the Several Provisions on the Establishment of Hospitals and Clinics for Foreign Guests and Overseas Chinese, and on the Practice of Foreign Doctors in China prohibited foreigners from establishing wholly foreign-owned hospitals, but permitted overseas Chinese to establish non-profit wholly owned hospitals, and allowed foreigners to set up joint-venture or co-operative hospitals.

Gradual opening stage (2001¨C2017)

In 2000, the Interim Measures for the Administration of Sino-Foreign Equity Joint and Co-operative Joint Medical Institutions reduced the minimum Chinese shareholding requirement. The Catalogue for the Guidance of Foreign Investment Industries (2011) reclassified foreign-invested medical institutions from the restricted to the permitted category. In 2014, the National Health and Family Planning Commission and the Ministry of Commerce jointly issued a Notice on Launching Pilot Programmes of Establishment of Wholly Foreign-Owned Hospitals, either through new establishments or acquisitions, in seven provinces and cities, but prohibited the establishment of traditional Chinese medicine hospitals.

Opening stage (2017¨Cpresent)

Since 2017, China ordered the full lifting of regional and quantitative restrictions on the establishment of foreign-invested medical institutions, but this process has only been gradually realised. In September 2024, the Notice on Carrying out Pilot Work to Expand Opening up in the Medical Field planned to allow the establishment of wholly foreign-owned hospitals in several major cities (excluding traditional Chinese medicine hospitals and M&A of public hospitals). In November 2024, the Pilot Work Plan for Expanding Opening up in the Field of Wholly Owned Hospitals allowed the establishment of wholly foreign-owned hospitals.

Current foreign investment rules

Policy and regulatory system. China has established a relatively comprehensive policy and regulatory system for foreign investment access. The Foreign Investment Law and its implementing regulations serve as the fundamental legal framework. The Regulations on the Administration of Medical Institutions and their implementing rules provide detailed provisions on the establishment, operation and supervision of medical institutions. There are other laws and regulations such as the Basic Medical and Health Promotion Law and the Regulations on the Supervision and Administration of Medical Devices.

Forms of foreign investment access. Investors can quickly enter the Chinese market by forming joint ventures or co-operative arrangements with domestic medical institutions or enterprises.

Wholly foreign-owned medical institutions allow foreign investors to better implement their own development strategies and management models, maintaining operational independence and autonomy.

Foreign investors may also enter the Chinese market by acquiring domestic medical institutions or taking equity stakes in domestic medical enterprises.

Fields of foreign investment access. Hospitals are the primary focus for foreign investment, with foreign-invested hospitals mainly serving the high-end medical market and forming differentiated competition with domestic hospitals. The establishment of foreign-invested clinics provides patients with more convenient and more personalised medical services. Other medical institutions, such as foreign-invested rehabilitation centres, introduce advanced rehabilitation concepts and technologies, while foreign-invested elderly care institutions bring advanced service models and management experience.

Restrictions on foreign investment access. In certain key projects, Chinese parties may still be required to maintain a controlling stake. The pilot work plan stipulates that wholly foreign-owned hospitals may not establish psychiatric hospitals, infectious disease hospitals or traditional Chinese medicine hospitals, nor may they carry out medical activities with high ethical risks. Foreign-invested medical institutions must meet qualification requirements in personnel recruitment. For example, the proportion of mainland Chinese staff in management and healthcare professionals must exceed 50%.

Foreign investment policy outlook

Policy trends. In specialised areas, foreign investors may be granted greater development space to fully leverage their advantages in technology, capital and management.

The government will simplify approval procedures for foreign entry into the healthcare sector, improve approval efficiency and reduce operating costs for foreign investors. Intellectual property protection will be strengthened to provide robust safeguards for innovation and R&D achievements of foreign enterprises.

The government will establish and improve the regulatory system for the healthcare sector, strengthening supervision of service quality, medical safety and pricing in foreign-invested medical institutions to ensure lawful and compliant operations.

Market opportunities. As demand for medical services rises, China¡¯s healthcare market continues to grow. Foreign enterprises have clear advantages in medical technology R&D, high-end medical device manufacturing and advanced healthcare management models. Favourable policies provide strong support for foreign investment in China¡¯s healthcare sector.

Challenges and risks. China¡¯s domestic medical institutions have established a vast service system and certain technological capabilities, so foreign-invested medical institutions will face fierce competition from both public and private domestic hospitals.

Foreign-invested medical institutions may encounter challenges arising from cultural differences. Adjustments in service concepts and management models will be required to adapt to the Chinese market environment. In addition, changes in medical insurance policies and adjustments in industry regulatory policies may affect the operations and development of foreign enterprises.

Foreign-invested medical institutions in China may also face talent shortages, particularly in high-end medical technology and management professionals.

Li Hongmei is a partner and Li Xintong is a paralegal at ETR Law Firm
Jeffrey Quan, a senior partner of the firm, also contributed to this article.