The Globalization of China's Health Industry

Industrial Policies, International Networks and Company Choices

Marco R. Di Tommaso, Francesca Spigarelli, Elisa Barbieri, Lauretta Rubini

• Publisher: Palgrave Macmillan
• Year: 2020
• ISBN:
  9783030466718
• Topic: Business
• Subtopic: International Business
• Index: Business

This book explores the ongoing transition of China's economy by examining how its healthcare industry is growing and changing. The coronavirus pandemic has reinforced one of the authors' key points: in our complex, fragile, and interconnected societies, the production of health is a vital strategic 'industry'. The case of China is particularly salient, because of its economic and geopolitical significance, and the scale of the healthcare challenge it has faced.

Adopting a multi-level perspective, the authors examine the entrepreneurial role of the Chinese government as it seeks to strengthen the competitiveness of domestic firms. They analyze the strategies employed to improve China's technology and capacity for innovation, and discuss China's strategies and policies to ensure knowledge acquisition and creation in the long-term, with particular reference to international scientific collaborations. This book is a must-read for students, researchers, and policymakers interested in the prospects and challenges posed by the growth of the Chinese healthcare industry and its global impact.

© The Author(s) 2020

M. R. Di Tommaso et al.The Globalization of China’s Health IndustryPalgrave Studies of Internationalization in Emerging Marketshttps://doi.org/10.1007/978-3-030-46671-8_1

Begin Abstract

1. On Health Production and Demand: And Why an Effective Health Industry is Vital for China (and the Rest of the World)

Marco R. Di Tommaso¹ , Francesca Spigarelli² , Elisa Barbieri³ and Lauretta Rubini¹

(1)

Department of Economics and Management, University of Ferrara, Ferrara, Italy

(2)

Department of Law, University of Macerata, Macerata, Italy

(3)

Department of Economics, Ca’ Foscari University of Venice, Venice, Italy

Marco R. Di Tommaso (Corresponding author)

Email: [email protected]

Francesca Spigarelli

Email: [email protected]

Elisa Barbieri

Email: [email protected]

Lauretta Rubini

Email: [email protected]

Keywords

Health goods and servicesHealth and economic growthHealth industryHealthcare providersFinanciers and producers

End Abstract

1.1 Introduction

Health goods and services can be seen as inputs in a production function that has people’s health as the only output. While this is an intuitive and reasonable statement, it is also clear that in our societies the production of health goods and services have some other important additional “outputs”. Bearing this in mind, in this introductory chapter we aim to exploring other relevant rationales, referring to a multi-product production function, in which people’s health and “other outputs” are jointly produced and demanded. Given the general purpose of this book, we will in particular consider how, in the Chinese case, these “additional outputs” might be considered relevant (Di Tommaso et al. 2017, 2020; Rubini et al. 2017).

1.2 Health, Economic Productivity and Growth

Increases in population’s health status have often been considered to have a central and positive impact on countries’ economic performance (Barro 1996; Well 2007; De Bloom et al. 2004, only to cite some). “The-healthier-the-richer” model further implies that investing in population’s health would improve productivity, with the positive effect of boosting economic growth, income and economic wealth. The very intuitive assumption here is that improvements in health status of the nation’s population lead to a more productive workforce. The so-called “Preston curve” (Preston 1975), first elaborated by Samuel Preston in 1975, reveals a strong positive correlation between health and GDP (Preston 2003; Deaton 2004; World Bank 2007; Marmot 2006): countries with higher health status in general have higher incomes than countries with worse health status and this holds over time, as Fig. 1.1 shows for 2017.

Fig. 1.1

The Preston curve, 2017. (Source: Authors’ elaboration on World Bank data)

In the case of China, population’s life expectancy, the most common proxy of a nation’s health status, has grown clearly in the last decades of accelerated industrialization and development. The growth has been particularly rapid between the 1960s and 1970s, but life expectancy has gradually continued to grow at a pace which is comparable to that of advanced economies (Fig. 1.2).

Fig. 1.2

Life expectancy at birth. (Source: Authors’ elaboration on World Bank data)

Life expectancy at birth reflects the overall mortality level of a population. It summarizes the mortality pattern that prevails across all age groups—children and adolescents, adults and the elderly. At the world level, life expectancy continues to climb and it is projected to increase from 73.5 years in 2018 to 74.4 in 2022, “bringing the number of people aged over 65 globally to more than 668 million, or 11.6% of the total global population” (Deloitte 2019, p. 4). Similar growth trends are foreseen for China, as illustrated in Fig. 1.3.

Fig. 1.3

Life expectancy at birth, expected trends, China. (Source: Authors’ elaboration on Un World Population Prospects, 2019)

In the light of these data, considering the trends in life expectancy and per capita GDP that is reasonable to expect for China, it is more than likely that, in the future, the country will converge to the pathos of richest western countries, even considering a world trend of gradual increase in life expectancy at world level (Fig. 1.4).

Fig. 1.4

A comparison of the Preston curve, year 1960 vs year 2015. (Source: Bloom et al. 2018, p. 2, using World Bank data. © Oxford University Press USA, 2019. Reproduced with permission of Oxford University Press through PLSclear)

The nature of the relationship between health and economic growth is quite ambiguous, however, given that bidirectional causality is a very reasonable hypothesis. This hypothesis seems to hold also for the Chinese case. On the one hand, it is clear that improvements in people’s health have contributed to the acceleration of economic growth, similar to what has also happened in many other national experiences (Pritchett and Summers 1996; Bloom and Canning 2000; Bloom et al. 2003, 2014). On the other hand, it is indisputable that economic growth has determined a general increase in people’s health status, as it has been again demonstrated to have happened in the experience of many other countries (Cutler et al. 2006; Hall and Jones 2007; WHO 2002; Lange and Vollmer 2017).

Disentangling this causal relationship is very complex. Intuitive considerations might be strong enough to suggest the validity of the bidirectional causality hypothesis for China in the so-called “post-reform years”. However, it is possible to shed more light on this causality by discussing some specific features connected to China’s history of political, social and economic structural change. This discussion might benefit from two specific groups on analyses. On the one hand, it is possible to find specific contributions focusing on the relatively high level of people’s health status at the beginning of Deng Xiaoping’s reform era (Rifkin 1972, 1973; Wilenski 1976, 1977; Maru 1977; Blendon 1979; Sidel and Sidel 1982). On the other hand, there are additional studies providing important details about the nature of the relation between the successful economic growth of the last post-reform decades and its impact on people’s health (Yang et al. 1991; Smith 1993; Henderson et al. 1994; Bumgarner 1992; Chen and Zhang 1996).

As regards the impact of health enhancements on growth, after 1949, the health of the Chinese people has improved very rapidly over the past three decades. This impressive trend has also been acknowledged by international observers: the World Bank called it “the first Chinese Health Care revolution” (Jamison 1984). Life expectancy rose from 35 years old in the early 1950s to almost 70 years at the very beginning of the Deng Xiaoping era. Between 1950 and 1980, the infant mortality also fell dramatically, from 250 to 50 (per 1000 live births). This was the during the era of the great fights against the epidemic diseases (smallpox, cholera, venereal diseases) and the parasitic diseases (schistosomiasis, malaria), which were still a serious issue in the China of the 1950s. In these decades, China also went through an overall healthcare reorganization, which assigned to community doctors and prevention a very important role.

Of course, these evident successes in managing health challenges were not only the result of the “healthcare revolution”, but they were also clearly connected to other general improvements and changes in Chinese society: better education, nutrition and food availability and distribution, water supply and sanitation (Jamison 1984). Thus, in this general scenario it might be properly argued that the growth experienced at the beginning of the Deng Xiaoping era might have also benefited in its initial stages from an evident improvement in people’s health status, which had been promoted in the previous decades.

To study the second relation, i.e. the impact of growth on health, we can instead focus on the post-reforms/opening-up years, at the beginning of the period of China’s impressive economic and social structural changes (see Chap. 2). In these years, the gap between China and more advanced countries has been almost entirely filled not only in terms of infant mortality (Fig. 1.5), but also according to other health status indicators.

Fig. 1.5

Infant mortality rates (per 1,000 live births). (Source: Authors’ elaboration on World Bank data)

For example, the improvements in the Chinese healthcare system and the effectiveness of the supply of healthcare services appear clearly considering the “Tuberculosis effective treatment coverage”. This indicator combines two more common indicators—treatment coverage and the treatment success rate—to estimate the proportion of tuberculosis (TB) cases t...

Table of contents

• Cover
• Front Matter
• 1. On Health Production and Demand: And Why an Effective Health Industry is Vital for China (and the Rest of the World)
• 2. The Rise of China as a Global Player in the Healthcare Industry
• 3. Government Planning and Policy for the Health Industry
• 4. The Globalization of the Industry: Chinese Inward and Outward FDIs
• 5. Innovation and Research Excellence: China in the International Scientific Scenario
• 6. Challenges for the Future and the Role of Industrial Policy
• Back Matter