By Anton Kozyrev
In January of 2023, fresh demographic data from the People’s Republic of China caused a stir. For the first time in 60 years, China’s population had experienced a contraction, with its 2022 population falling by 850,000 from that of 2021. While the phenomenon of deaths exceeding births is a common expectation for many developed nations around the globe, China’s situation poses unique challenges.
For the most part, experts suggest that this demographic change is the result of government policies, including the well-known “One Child Policy.” The government ended this policy in 2016, switching to a strategy of encouraging couples to have two children. However, there is little evidence to suggest that this strategy has been successful in mitigating the impacts of the 35-year long One Child Policy. As the BMJ reports, the two-child policy has led to an estimated 5.4 million extra births – falling short of an optimistic, best-case projection of 20 million. Bloomberg cites a particular challenge stemming from a lack of confidence in the pursuit of marriage and the benefit of raising two children among younger Chinese. With such formidable demographic factors, it seems highly likely that China’s population is entering a period of substantial aging – wherein the elderly and their need for care will threaten to outpace the ability of the working-age population to provide for them. Clearly, the government finds itself in a position where it must take action.
Perhaps it was fortuitous timing. Perhaps it was farsighted wisdom. But regardless of the impetus, in 2016, on the heels of the reversal of the One Child Policy, paramount leader Xi Jinping announced an initiative called “Healthy China 2030,” with the stated goal of addressing potential shortcomings in the nation’s healthcare system and better equipping it for future challenges. The proposal is ambitious. As per McKinsey, an overarching priority of the policy is to “create a 16 trillion RMB broader healthcare ecosystem by continuously strengthening preventative care, optimizing healthcare management and services, and taking care of key segments of the population, such as women and children.” In the context of China’s population decline, it is worth taking a closer look at the future prospects of China’s healthcare sector.
In past decades, Chinese policy goals and the tools utilized to advance them have typically been elucidated through Five-Year Plans – a staple of command economies inherited from the Soviet Union intended to provide guidance on national development. China is currently undertaking its 14th Five Year Plan, which places a particular emphasis on the development of the healthcare sector.
The plan includes several measures aimed at improving the country’s healthcare system. The plan calls for increased investment in healthcare infrastructure, including the construction of new hospitals and the expansion of existing facilities. It also emphasizes the importance of promoting innovation in healthcare, particularly in areas such as digital healthcare technologies, artificial intelligence, and big data. The plan aims to improve access to healthcare services, particularly in rural areas, and to strengthen the quality and safety of healthcare services across the country. Additionally, the plan includes measures to increase investment in research and development, with a focus on developing new treatments and therapies for diseases such as cancer and diabetes. In essence, it represents a substantial commitment to improving the state of healthcare in China and ensuring that citizens have access to high-quality, affordable healthcare services.
The nation’s healthcare system was thrust into the spotlight during the COVID-19 pandemic as China became the first nation to face the contagion. In the wake of the pandemic, China’s shortage of healthcare workers has received renewed attention. While certainly a global phenomenon, it is especially acute in China, partly due to an urban-rural divide. A study published in the BMJ in 2016 identified the shortage of nurses as a key issue in the sector. The study found that there is a significant shortage of nurses in China, particularly in rural areas, where the nurse-patient ratio is often below the recommended level.
This shortage of nurses has significant implications for Chinese healthcare going forward, as nurses play a critical role in providing frontline healthcare services and ensuring patient safety. Without an adequate number of nurses, healthcare delivery and quality may be compromised, particularly in underserved regions. A long-term solution to such an issue will require significant investment in the improvement of working conditions and career development opportunities, as well as education and training. Fortunately, the Healthy China 2030 framework aims to address precisely this issue of education and training.
While China has formidable challenges ahead of it, it has successes that it can build upon.
A major tenet of Chinese healthcare development has been the expansion of access to healthcare over the past decade, a phenomenon explored in a recent study published in BMC Public Health. The study found that China’s healthcare reform has led to notable improvements in health resources, such as an increase in the number of hospitals and healthcare workers. These improvements have resulted in expanded access to healthcare services for many citizens, particularly those living in urban areas. However, the study also highlighted several challenges that need to be addressed, including the unequal distribution of healthcare resources between urban and rural areas. Despite these challenges, the efforts to expand access to healthcare have been laudable and concrete, and the country’s healthcare system is in a position to continue to evolve and grow.
China has also made inroads in advanced medicine and pharmaceuticals. In fact, the Chinese pharmaceutical industry is projected to grow to $332 billion in sales by 2025, as per PricewaterhouseCoopers. Undoubtedly, China’s pharmaceutical sector has undergone significant growth and development over the past few decades, with an increasing number of pharmaceutical companies expanding both domestically and internationally.
However, there are still challenges that the industry must address. The gap analysis between Chinese pharmaceutical academia and industry from 2000 to 2018, published in Scientometrics in 2020, highlights that while there has been a significant increase in collaboration between academia and industry in the sector, there is still a gap in knowledge transfer and collaboration. Addressing such a gap will be crucial to enhancing the industry’s R&D capabilities and ultimately improving the quality of healthcare in China.
Furthermore, an article regarding innovation networks in the Chinese pharmaceutical industry published in Industrial and Corporate Change in 2017 emphasizes the importance of innovation networks in facilitating the transfer and absorption of foreign knowledge into the Chinese pharmaceutical industry. Through collaborative research and ventures with Western companies in China, innovation has benefited. While the sector has made strides in this area, development will likely be furthered with adoption of strategies such as the “Made in China 2025” platform, which prioritizes modernizing and scaling-up China’s domestic sectors – including healthcare.
Much like how China modernized and developed through the 1990s and 2000s, Chinese healthcare may benefit from innovative practices and approaches – including those found within the country’s private sector. As Dr. Lucy Xiaolu Wang, Assistant Professor in the Resource Economics Department at the University of Massachusetts Amherst notes, Chinese metropolitan areas such as Shenzhen have seen growth in the adoption of artificial intelligence technologies in the healthcare space. And this does not stop at a data analysis standpoint.
“The exact usage of AI in cities like Shenzhen with healthcare varies – it’s not just an algorithmic approach, but also the application of AI to hardware,” Wang said, “The promotion of AI in healthcare is not only embedded in the planning by the State Council, but also an active area in local regulations in cities including Shenzhen.”
Wang refers to industrial robots with applications in the field of healthcare, such as the four-armed laparoscopic surgical robot pioneered by Shanghai-based MicroPort MedBot. The robot has already been utilized in two remote surgeries in Xinjiang and Jiangsu – in areas with very little existing medical infrastructure.
Wang also noted Ping An Insurance’s forays into the healthcare space. The company unveiled the “Ping An Smart Healthcare” platform that continually monitors the health provider network in search of deficiencies – and then proposes steps to correct them. According to Ping An, the platform utilizes over 3,000 AI models for a variety of uses in medicine, ranging from patient self-diagnosis to AI imaging.
Undoubtedly, China faces a substantial challenge in developing and expanding its healthcare sector, given its compounding factors of understaffing and demographic issues. But the country has well-established guidelines and plans for its future forays into healthcare, and it appears to be leaning into artificial intelligence, hoping to reap the rewards of the nascent technology. Time will only tell if China’s preparations are sufficient to address both present and future challenges in the healthcare space.