China has unveiled a plan to allow the establishment of wholly foreign-owned hospitals in some major cities, in a move to further open up its medical sector.

The pilot work plan, released by the National Health Commission (NHC) and three other government departments on Friday, grants approval to the cities of Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, and Shenzhen, as well as the island province of Hainan.

According to Liu Guoen, head of the Institute for Global Health and Development of Peking University, the move has demonstrated a stronger commitment to openness made by the Chinese government.

Medical services, along with telecommunications, education and culture, are among a number of sectors that China pledged for a "wider opening in a well-conceived way" in a package of comprehensive reform plans rolled out by Chinese authorities in July.

In a statement released on Friday, the NHC noted that medical services have high domestic market demand and strong investment interest from foreign investors. Wholly foreign-owned hospitals are expected to help meet the public's diverse healthcare demands.

In 2023, the number of hospitals in China topped 38,000. Public hospitals accounted for less than one-third of the total yet received 83.5 percent of the total patient visits nationwide, according to official data.

Chen Hao, director of the drug policy and management research center at Wuhan-based Tongji Medical College in Huazhong University of Science and Technology, said foreign-owned hospitals, generally positioned toward the high-end market, can supplement China's current domestic healthcare system, which primarily focuses on providing public welfare medical services.

"This will help to establish a multi-tiered healthcare service structure," Chen said.

China has allowed the establishment of joint-venture medical institutions with foreign investors since 2000 and currently has over 60 foreign-invested joint-venture medical institutions.

In 2014, the government issued a document to permit the establishment of wholly foreign-owned hospitals in Beijing, Tianjin, Shanghai, and the four provinces of Jiangsu, Fujian, Guangdong and Hainan. The document, however, did not lead to the prominent development of wholly foreign-owned hospitals due to multiple factors such as policies and market adapting obstacles facing the hospitals.

Compared with 10 years ago, the new pilot program appears to be more well-prepared regarding policy guidance, supportive measures, and supervision.

Concerning the pilot program, the NHC and the Ministry of Commerce have promised to provide clear policy interpretations for foreign enterprises and address challenges facing key foreign investment projects in areas such as land use and financing. End-to-end support will be provided to ensure projects are launched, constructed, and operational as soon as possible, according to the authorities.

The work plan also stipulates that wholly foreign-owned hospitals are permitted to operate as general, specialty, and rehabilitation hospitals, explicitly excluding traditional Chinese medicine hospitals and blood disease hospitals, while prohibiting the foreign acquisition of public hospitals.

It restricts wholly foreign-owned hospitals from performing medical activities with significant medical or ethical risks, such as human organ transplantation, assisted human reproductive technologies and psychiatric inpatient treatment.

Liao Xinbo, formerly a senior health official in Guangdong and now an internet celebrity, told the media that regulators must consider various issues, such as market supervision and data security, and improve policies across all stages to provide the conditions necessary for foreign-funded hospitals to survive and thrive.

According to Liu Guoen, foreign-owned hospitals will likely need an observation period, and the investment might be cautious initially. At the same time, he remains optimistic about the investment prospect.

"The pilot program is a concrete action for China to fulfill its commitment to reform and opening up, sending a very positive signal," he said. "It will also certainly help China better advance its reform and inclusive development in the future."