Healthcare Dynamics and Corruption in China

In summer 2023, President Xi Jinping’s administration launched a nationwide anti-corruption campaign in China’s healthcare system. The campaign (still ongoing today) came after crackdowns in the real estate sector and education sector, overlapping with shocks in the financial sector.

The Chinese pharmaceutical and healthcare industry is valued at around $1.5 trillion. On a day-to-day basis, 90 percent of Chinese households have access to a nearby clinic, often within 15 minutes’ walking distance, for non-surgery related health issues, according to an official source, and developing community clinics in rural areas has been listed as a top policy directive in the 14th Five-Year Plan in 2021.

While a widespread community-based approach is effective in treating minor issues, China faces challenges in its capacity to provide large-scale advanced medical care. China uses a tiered ranking system for hospitals based on the levels of facilities and the number of staff members. Top-tier hospitals are qualified by their capacities, facilities, and equipment, and they enjoy better reputations that help them secure more talent, funding, and patients. People rely on them for addressing complex health related issues. Out of China’s 36,570 hospitals, only 1,651 are qualified as top-tier.

Parallel to the large hospitals, day-to-day healthcare in China relies on around 980,000 community-level clinics staffed by over 4.55 million people. There are 14.4 million healthcare personnel nationwide equipped to care for China’s 1.4 billion people (equivalent to 0.01 per capita), with 6.7 beds available per 1,000 people. In comparison, China’s proportion of healthcare workers per capita is higher than the global average (which stood at 0.008 in 2020) but lower than the United States’ and other developed countries’ (all over 0.015).

The limited number of qualified hospitals not only puts tremendous pressure on top-tier medical practitioners and patients, but also positions practitioners to exert near-unilateral decision making, with low accountability. This is a recipe for corruption.

Doctors often have a finite, designated number of hospital beds they are in charge of, and it is not uncommon for doctors to prescribe expensive treatments and medicines in pursuit of high kickbacks, according to a CCTV interview. To receive better treatments and medical attention, a patient’s family must often leverage personal connections (guanxi) and give “red envelopes” (i.e., cash) to both doctors and nurses. This also furthers inequality within healthcare as ordinary citizens often do not have access to top-tier medical care to begin with.

Three years of the COVID-19 pandemic revealed many of the problems within China’s healthcare system. The swift anti-corruption campaign following the post-COVID opening up has already brought down nearly 200 senior leaders of hospitals.