Guangdong to Pioneer Wholly Foreign-Owned Hospitals as China Eases Investment Restrictions

Source: People’s Government of Guangdong Province

On 8th September 2024, two significant announcements were made regarding foreign investment in China.
The Ministry of Commerce, the National Health Commission, and the National Medical Products Administration jointly issued a notification to expand pilot projects in the healthcare sector, allowing Guangzhou and Shenzhen to establish wholly foreign-owned hospitals.

On the same day, the National Development and Reform Commission and the Ministry of Commerce released the full text of the “Special Administrative Measures for Foreign Investment Access (Negative List) (2024 Edition)” (2024 FI Negative List)," which will take effect on 1st November, 2024. The new negative list reduces the restrictions from 31 to 29 items, removing requirements such as "publication printing must be controlled by Chinese parties" and "prohibitions on the application of processing techniques for traditional Chinese medicine." As a result, restrictions on foreign investment in the manufacturing sector have been effectively eliminated.

According to Wei Jianguo, former Vice Minister of Commerce and Vice Chairman of the China Center for International Economic Exchanges, Guangdong, as a major manufacturing province and a hub for foreign investment, has already achieved a "zero restriction" status in its free trade zone. He noted that the nationwide relaxation presents both opportunities and challenges, emphasizing that Guangdong has a first-mover advantage.

The notification specifies that wholly foreign-owned hospitals will be allowed in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and throughout Hainan (excluding traditional Chinese medicine and public hospital acquisitions). Detailed conditions and procedures for establishing these hospitals will be announced later.

In the biotechnology sector, foreign-invested enterprises will be permitted to engage in the development and application of human stem cells, gene diagnosis, and treatment technologies in designated free trade zones and Hainan Free Trade Port, aimed at product registration and production.

Previously, Guangdong had already gained experience in Sino-foreign medical cooperation. For instance, the Guangzhou Modern Hospital International Oncology Center is a joint venture established by Singapore's Perennial Holdings Private Limited and the Caritas Medical Group. The establishment of wholly foreign-owned hospitals marks a significant step in China's opening of its service sector to foreign investment and reflects the accelerating pace of high-level opening-up.

Key Changes in the 2024 Negative List

The 2024 edition of the Negative List includes the following critical updates:

• The number of restrictions has decreased from 31 to 29.
• Notable deletions include:

1. 1. The printing of publications shall be controlled by the Chinese party.
   2. It is prohibited to invest in the application of steaming, frying, moxibustion, calcination, and other processing techniques of traditional Chinese medicine decoction pieces, as well as the production of confidential prescription products of proprietary Chinese medicines.

These changes indicate a comprehensive removal of foreign investment restrictions in the manufacturing sector, effective from November 1, 2024. The previous version of the Negative List will be abolished concurrently.

This significant shift underscores China's commitment to enhancing foreign investment access and reflects broader efforts to attract international capital and expertise across various sectors.

Disclaimer: This document has been translated into English.  If there is any inconsistency or ambiguity between the English version and the Chinese version, the Chinese version shall prevail. The full text of the measures, in Chinese, can be found below: https://www.gd.gov.cn/zwgk/zcjd/gnzcsd/content/post_4491662.html and https://research.hktdc.com/sc/article/MTc5NTU5ODU1Ng