Against the backdrop of a large-scale exodus of foreign investments, the Chinese Communist Party (CCP) has announced plans to allow foreign capital to establish wholly-owned hospitals in Beijing, Tianjin, and nine other locations, sparking heated discussions online about the goals and effects of this initiative.
According to a notice jointly issued by the CCP’s Ministry of Commerce, the National Health Commission, and the National Medical Products Administration, the CCP intends to expand the opening in the medical field. This expansion will allow foreign-owned hospitals (excluding traditional Chinese medicine and excluding the acquisition of public hospitals) to be established in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and Hainan Island. These nine locations are relatively affluent cities and provinces in eastern and southern China.
This policy permits foreign-invested enterprises in Beijing, Shanghai, Guangdong, and Hainan, the four free trade pilot zones, to engage in the development and application of techniques such as stem cell research, genetic diagnostics, and treatments. The document states that all products that have been registered for listing and approved for production can be used nationwide.
Internationally, netizens are skeptical about this development:
– “Twenty years ago maybe one could be fooled, but now only fools would venture into this.”
– “Foreign investors are not fools. Taiwanese investors will inform them of the CCP’s tricks.”
– “Just having the ability to establish a hospital in Shanghai doesn’t mean you can conduct business in China! Likewise, having a foreign-owned hospital, which is a private hospital, doesn’t mean you can use medical insurance. Moreover, foreign-owned hospitals will charge high taxes! Therefore, the premise is still under CCP control. As long as the CCP exists, it doesn’t count as openness!”
– “Many public hospitals operate at a loss. It is estimated that the financial support cannot sustain too many unprofitable hospitals, hence they are throwing out this hot potato. Will the profitable business be taken over by foreigners?”
The Ministry of Commerce of the CCP stated that this new policy is a pilot project aimed at implementing the commitments made by the CCP Central Committee under the leadership of Xi Jinping at the Third Plenum held in July.
The CCP’s Third Plenum of the 20th Central Committee concluded under high-pressure stability maintenance in July, with the official meeting communiqué formally putting forward proposals to promote “deepening reforms” and “China-style modernization.” Party media People’s Daily advocates for “great reform and opening up,” claiming to “further advance comprehensive deepening reform.” However, the Plenum communiqué also specifically addresses “national security,” stating the need to “improve the mechanism for foreign national security” and emphasizing the CCP’s “centralized and unified leadership” in comprehensive deepening reform.
One of the purposes mentioned in the CCP document to allow the establishment of foreign-owned hospitals is to attract foreign capital. Beijing is trying to attract more foreign investment to boost its sluggish economy. As China lifts restrictions on foreign investment in these areas, it is facing increasing resistance, with the pessimistic sentiments of foreign investors posing a threat to economic growth.
Data released by the CCP’s Ministry of Commerce on August 16 also shows that foreign investment continues to leave China. In the first seven months of this year, China’s foreign direct investment (FDI) decreased by 29.6% compared to the previous year. In 2023, China’s total foreign direct investment (FDI) was USD 33 billion, an 82% decrease from 2022, marking the lowest level since 1993.
According to the CCP’s Ministry of Commerce data, China’s actual use of foreign capital in 2023 was USD 163.3 billion, a 13.6% decrease from 2022, when it was USD 189.1 billion.
The CCP’s State Administration of Foreign Exchange data shows that China’s foreign direct investment debt in 2023 was only USD 42.7 billion, a staggering year-on-year decrease.
Bloomberg cited the latest international balance of payments report from the CCP’s State Administration of Foreign Exchange, revealing that in the second quarter of this year, China’s foreign direct investment debt decreased by nearly USD 15 billion. This is the second time in recorded history that this data has shown a negative value, and the outflow amount exceeds the USD 12.1 billion in the third quarter of the previous year.
This figure highlights the significant withdrawal of foreign investors from China. If China’s foreign direct investment debt continues to decrease for the rest of the year, it may set a historical record of a “net outflow for the year” for the first time since 1990.