On September 8, 2024, the National Development and Reform Commission and the Ministry of Commerce released the “Special Administrative Measures for Foreign Investment Access (Negative List) (2024 Version)”, which will take effect from November 1, 2024.
According to the 2024 version of the “negative list”, the number of restrictive measures has been reduced from 31 to 29, removing restrictions such as “Printing of publications must be controlled by Chinese parties” and “Prohibition of investment in the application of traditional Chinese medicine processing techniques such as steaming, stir-frying, roasting, and calcining, as well as the production of TCM products with confidential prescriptions.” With this, foreign investment restrictions in the manufacturing sector have been completely lifted.
On the same day, the National Health and Family Planning Commission and the Ministry of Commerce jointly issued the “Notice on Carrying Out Pilot Work for Establishing Wholly Foreign-Owned Hospitals,” proposing to expand openness in the medical field through pilot programs. Specifically, it proposes allowing the establishment of wholly foreign-owned hospitals (excluding traditional Chinese medicine hospitals, and not including the acquisition of public hospitals) in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and Hainan Province. Detailed conditions, requirements, and procedures for setting up wholly foreign-owned hospitals will be notified separately.
In the biotechnology field, foreign-invested enterprises in free trade test zones in Beijing, Shanghai, and Guangdong, as well as in the Hainan Free Trade Port, are permitted to engage in the development and application of human stem cell technology, gene diagnosis, and therapeutic technologies for product registration, marketing, and production.
According to the notice, overseas investors can set up or acquire wholly foreign-owned hospitals in the above-mentioned areas. Except for investors from Hong Kong, Macao, and Taiwan, other overseas investors are not allowed to establish traditional Chinese medicine hospitals in these provinces (municipalities).
The notice requires that proposed wholly foreign-owned hospitals must meet the basic standards established by the state; the approval authority for setting up wholly foreign-owned hospitals is delegated to the provincial level.
Additionally, the establishment and changes of wholly foreign-owned hospitals should follow the procedures and requirements stipulated by the “Regulations on the Administration of Medical Institutions”, the “Detailed Rules for Implementation of the Regulations on the Administration of Medical Institutions”, and the “Administrative Measures for Foreign Investment in the Commercial Sector”.
In fact, China currently has some wholly foreign-owned medical institutions, but allowing foreign capital to participate in the development of cutting-edge biomedical technologies is unprecedented.
Analysts believe that the current national negative list now only has 29 items, narrowing the gap with the free trade zone version, which has 27 items, indicating that the national version is moving closer to the free trade zone version, while the free trade zone version is extending further into the opening of service industry investment.
With China’s aging population and the growth of an absolutely wealthy demographic, a blue ocean market for high-end medical services has emerged. Coupled with the relatively weak competitiveness of the domestic medical industry, there is significant appeal for foreign investment.
