BEIJING - China's new plan to inject RMB 4 trillion into the economy to stimulate growth and counter the effects of the global financial crisis will boost the overall health care sector and propel medical system reforms, according to analysts.

Health care might account for about one-tenth of the total funds slated to jump start China's economic expansion in the wake of the worldwide slowdown, suggest some analysts, but China has yet to identify the health care industry's full role in the stimulus.

"We don't have a quantifiable number so far for the proportion of the stimulus package to be invested in China's health system," said Shaojing Tong, China healthcare analyst at Merrill Lynch in Hong Kong.

The Chinese central government has only presented sketchy outlines of the $580 billion stimulus measures over the last week, which would include hospital improvements.

During a recent meeting headed by Premier Wen Jiabao, China's State Council - or cabinet - approved the stimulus package, but did not release intricate details of the plan.

The head of China's central bank unveiled the economic stimulus proposals during a meeting in San Paulo, Brazil of government finance officials from the Group of 20, which includes the world's leading economies, over the weekend.

"Of 10 areas of investment spelled out in the stimulus package, health care was listed as number four, which means that this is pretty high in the ranking," said Jinsong Du, an equity research analyst at Credit-Suisse in Hong Kong.

"But it is still unclear how much will be channelled into health care reform," said Du, who closely tracks China's health sector. Du told PharmAsia News that the first stage of China's sweeping reforms in the health system will involve a massive push to build new hospitals across the Chinese countryside and in urban centers (Also see "China’s Health System Reforms Set To Spark Hospital Construction Boom And Boost Medical Device Makers" - Scrip, 13 November, 2008.).

"The first round of the stimulus package will focus in part on rural health care," Du added.

In comments posted on the World Bank's website, David Dollar, who heads the Bank's office in Beijing, confirmed that portions of the stimulus funds would be aimed at improving China's health system.

But Dollar, who is the World Bank's Country Director for China, cautioned that the package might not be as substantial as portrayed in many press reports.

"The stimulus package is not as big as headlines suggest," Dollar stated in a World Bank-hosted blog. "The [RMB] 4 trillion is spread over more than two years; it includes some projects already included in revised budget plans; and much of it will be financed by bank lending, so that part is not in fact fiscal stimulus," Dollar added.

Merrill Lynch analyst Shaojing Tong agreed with that assessment: "The majority of the $586 billion is not actually new investment," he said in an interview.

Yet he added that new government funding will certainly be funnelled into extending and modernizing China's health system. "The government already has a plan to extend insurance to the uninsured populace and to improve hospital facilities," Tong told PharmAsia News. He said that new investments included in the economic stimulus blueprints will be earmarked to push forward with that plan.

- Kevin Holden (pharmasia@elsevier.com)

China’s Half Trillion Dollar Economic Stimulus Plan To Boost Healthcare Sector

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