The Role of Healthcare in China's Economic Development

The Role of Healthcare in China's Economic Development

Introduction

Healthcare sector has played a remarkable role in China's economic development. We know that China's economic and social reforms over the past 25 years have met tremendous success. However, the development of the healthcare sector is now far behind its economic development. A review of China's key health indicators makes clear the case for change. Life expectancy and infant mortality trends, for example, illustrate that although China's healthcare system has made progress over the last ten years, improvements have slowed recently. Similarly, indicators such as the reported incidence and mortality rates from infectious diseases have increased in recent years.

Background and Literature Review

Inadequate spending is only part of the problem. Just as serious are the lack of access to affordable healthcare, the inefficient use of healthcare resources and a lack of high-quality patient care.

Without changes to the current system, more than 500 million Chinese will continue to find medical treatment out of their reach, due to the high cost of seeing a doctor. On the bright side, the efficient reallocation of even relatively small amounts of money can go a long way to improving access to affordable healthcare for literally hundreds of millions of Chinese, especially in rural areas.

Improving the healthcare system is important to raise living standards, and is a key requirement to achieve the “xiao kang” objectives (in which most of China's people would be “moderately well-off”) and harmonious society as outlined by the government. The healthcare sector in China will need to undergo drastic changes to achieve the government's objectives. The Chinese government clearly understands the magnitude of the problem and has articulated its commitment to closing the significant gaps in the healthcare sector and has emphasized the need for public and private sector cooperation.

The issue is the re-orientation of the Chinese economy - allegedly from export-led growth to much more of domestic-demand led growth. Is this a correct presentation of Chinese economic challenges? Can it be done in the way most people think? Have we made a correct assessment what re-orientation really means?

First, China's economic growth has not been export-led. It has been an investment-led economic growth. Obviously, trade and expanding trade has been important to China, but less so than what most people think. China's trade story is principally about processing trade: China must import in order to export. As multinational firms have re-structured their supply chains, assembly hubs have been placed in China, but a considerable part of the production there is nothing but assembling imported input goods. There is little value added in such trade. Extremely high levels of investment (private and public) have spearheaded growth, especially in recent years. High investment has affected trade volumes, but has had surprisingly small effects on creation of value added in the export-oriented sectors.

Second, the obsession with China's bilateral trade surplus is a cul de sac. It will lead nowhere - intellectually and politically. China's increasing share of EU's and America's import is not ...