China implemented groundbreaking initiatives to relax foreign investment restrictions in its healthcare sector.
The latest policies permit foreign enterprises to participate in cell and gene therapy to a certain extent (“CGT”) and establish wholly foreign-owned hospitals in some key pilot cities (including China major cities such as Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and Hainan. These developments demonstrate China’s commitment to expanding its healthcare landscape and attracting international capital.
November 29, 2024: Release of a Detailed Work Plan
On November 29, 2024, the National Health Commission (NHC) and three other governmental agencies implemented a comprehensive work plan for the creation of wholly foreign-owned hospitals in nine cities. This marks China's determination to open up its healthcare market and support foreign investment in this sector (which used to be completely closed to foreign investment.
September 8, 2024: Pilot Program Expansion Announced
The Ministry of Commerce (MOFCOM) issued a circular on September 8, 2024, announcing pilot programs for the opening of the medical sector. Amongst them, the circular lifted restrictions on foreign-invested enterprises (FIEs) engaging in CGT within select free trade zones (FTZs) and enabled the establishment of wholly foreign-owned hospitals in certain cities.
In the meantime, the “Special Administrative Measures for Foreign Investment Access (Negative List) (2024 Edition),” developed by MOFCOM and the National Development and Reform Commission (NDRC), was updated and published.
Foreign Investment in CGT
Foreign investment in human stem cells and gene therapy was previously prohibited as this sector was highly protected.
With this Circular, FIEs can now participate in developing and applying human stem cells, gene diagnostics, and related treatment technologies within these FTZs:
- Beijing Pilot Free Trade Zone
- Shanghai Pilot Free Trade Zone
- Guangdong Pilot Free Trade Zone
- Hainan Free Trade Port (FTP)
These initiatives are limited to registering, listing, and producing innovative medical products for nationwide use.
However, FIEs must still comply with China’s stringent regulations, which cover human genetic resource management, clinical trials, drug registration, and ethical compliance. While the pilot program currently applies to four regions, it may be expanded to other cities like Tianjin.
Establishing Wholly Foreign-Owned Hospitals
In 2014, a pilot program allowed wholly foreign-owned hospitals in seven cities, but due to regulatory constraints, most foreign investments continued under joint venture models.
The current policy provides greater autonomy for foreign investors, enabling them to fully establish international healthcare standards and practices. However, compliance with regulations on health data, pre-approvals, and capital flow remains critical.
With the Circular, foreign investors are now allowed to establish p wholly foreign-owned hospitals (excluding traditional Chinese medicine and public hospitals) in the following cities:
- Beijing
- Shanghai
- Tianjin
- Nanjing
- Suzhou
- Fuzhou
- Guangzhou
- Shenzhen
- Hainan Island
