14 April 2016

China's 13th Five Year Plan: Health and aged care

China’s growing middle class and aging population is driving increased demand for improved health and aged care services and products. Recognising that the Chinese Government alone cannot meet this demand, the 13th Five Year Plan promotes the idea of a “Healthy China” with aims to establish an integrated health and aged care system. This will be established through a range of measures, including health care system reforms and encouraging private investment in the health and aged care industry. Foreign investment is viewed favourably due to its ability to introduce international best practices in to the Chinese market.

Key focuses are medical and health system reform and food and medicine safety.


The Plan details a number of key targets in the health and aged care space:

  • Increase the number of qualified doctors and medical assistants to 2.5 per 1,000 persons
  • Increase the number of general practice doctors to 2 per 10,000 persons
  • Systematically train 500,000 resident doctors to adequate standards
  • Establish 1-2 public hospitals in each county
  • Maintain the proportion of urban and rural citizens with health insurance above 95%
  • Reduce premature mortality from critical chronic diseases by 10%
  • Reduce the infant mortality rate to 7.5%, the mortality rate for children under 5 years to 9.5% and the mortality rate for childbirth to 18 per 100,000 persons.

The land of opportunity?

Opportunities for international businesses in China

As China’s demographics alter and its population becomes older and increasingly more urban, China’s growing middle class is beginning to demand higher quality health care. This trend is already generating opportunities for offshore service suppliers, and we expect to see more opportunities for international providers offering packaged health, medical and leisure services. Others are likely to take advantage of specific policies which encourage cross border investment – for example, China’s policy to allow Hong Kong entities to set up wholly-owned hospitals.

The Plan also promotes the concept of “smart health care”. This covers a wide range of initiatives, including internet-based health information platforms and electronic health records. As a result, we expect China’s demand for various types of technology and innovation in the health sector to increase, presenting a unique opportunity for foreign investors with expertise in advanced medical research and technology to provide system solutions for a growing Chinese market.

In recent years, Chinese regulators have continuously promoted favourable policies directed at increasing foreign investment in the aged care industry. In addition to these longer term policies, tax incentives as well as administrative fee deductions and waivers which were provided to domestically-owned aged care facilities are now being offered to foreign-invested aged care facilities. This is a significant development, particularly as the China-Australia Free Trade Agreement (signed in June 2015) opens the door for Australians to establish wholly owned for-profit aged care institutions in China.

Opportunities for local businesses in China

We expect to see an increase in M&A activity across the health care sector broadly.

In particular, we expect to see increased supply and distribution activity in the pharmaceutical sector in response to the Five Year Plan specifically encouraging companies to further strengthen their distribution channels and research and development capabilities. We also anticipate the introduction of new pharmaceutical products and medical equipment to the market.

The Plan also encourages the development of commercial health insurance institutions – opening up further opportunities for the health insurance industry.

The opening up of the aged care market is likely to result in a significant growth in public-private partnerships focussed on aged care facilities.

From planning to implementation

To achieve the Plan’s objectives, China will need to address a number of gaps in its laws, regulations and policies for the health and aged care, including:

  • the regulation of health care professionals practising in multiple regions
  • professional indemnity insurance of health care professionals
  • practical issues for investors in health and aged care facilities, e.g. moving from a non-profit to for-profit entity, and obtaining land for longer-term investments.

Please contact one of our China experts to understand how the Plan is likely to impact you or to discuss new developments as its implementation progresses.

For an in-depth analysis of opportunities and implications for other key sectors, please see China’s 13th Five Year Plan: the land of opportunity.

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