China has announced new policies to attract foreign investment by permitting wholly foreign-owned hospitals in major cities and allowing foreign investors to offer human stem cell and gene therapy services in designated free-trade zones. This move is part of China’s broader strategy to revitalize foreign investment and stabilize economic growth.

According to a joint announcement from the Ministry of Commerce, the National Health Commission, and the National Medical Products Administration, foreign investors will now be allowed to establish and operate hospitals in key cities including Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, and Shenzhen, as well as in the island province of Hainan. However, these foreign entities will be barred from acquiring public hospitals or engaging in businesses related to traditional Chinese medicine. Detailed requirements and procedures for these investments will be provided at a later date.

The biotechnology sector is also set to see increased foreign involvement, especially in major free trade zones such as those in Beijing, Shanghai, Guangdong, and Hainan. Effective immediately, foreign-funded companies can now conduct research and development in human stem cell technology and gene diagnostics, and offer related treatment services. They will also be able to apply for nationwide market registration and production licenses.

This policy shift follows a recent commitment from the Communist Party’s third plenum to further open China’s market. Vice-Premier He Lifeng emphasized the importance of foreign investment, highlighting it as a crucial component of China’s economic development and modernization. At the China International Fair for Investment and Trade in Xiamen, He underscored China’s intent to expand international cooperation and build a more open, high-level economic system.

The new regulations are part of China’s ongoing efforts to address a decline in foreign investment, exacerbated by a domestic economic slowdown and geopolitical tensions, particularly with the United States. Starting November 1, all restrictions on foreign access to China’s manufacturing sector will be lifted, according to the latest “negative list”-a document that outlines sectors restricted from foreign and private participation.

Despite a nearly 30 percent drop in foreign direct investment during the first half of the year, totaling 539.5 billion yuan (US$76.1 billion), Vice-Premier He revealed that China had nearly 1.18 million foreign-invested enterprises by the end of 2023, with a cumulative investment of 28.4 trillion yuan. The updated negative list reduces restricted sectors from 31 to 29, also removing foreign ownership limits on cloud services and other value-added telecom services in pilot zones, particularly in key regions like Beijing, Shanghai, Shenzhen, and Hainan.

These changes aim to improve China’s business environment and attract more foreign investment, offering promising prospects for growth and economic development.