The health sector in China Policy and institutional review

The Health Sector in China Policy and Institutional Review Final draft, August, 2004 This paper was prepared by Xingzhu Liu and Yunni Yi as a background paper for the World Bank China Rural Health Study. The findings, interpretations and conclusions expressed in this paper are entirely those of the authors, and do not necessarily represent the views of the World Bank, its Executive Directors, or the countries they represent.  1.1 Introductory Overview of the Country People's Republic of China (China) is located in East Asia on the western shore of the Pacific Ocean and contains more than one-fifth of the world's population. China has 23 provinces, 5 autonomous regions, 4 municipalities and two special administrative regions, which include Hong Kong and Macau. Taiwan is considered to be China's 23 rd province. Since 1978, China has made a gradual transition from a planned to a more open market economy, which has led to a significant period of economic growth. 1.1.1 Geography China has a land area of approximately 9.6 million sq km., and is the third-largest country in the world. China has land borders 22,800 km long with 15 contiguous countries; Korea to the east; the People's Republic of Mongolia to the north; Russia to the northeast; Kazakhstan, Kirghizstan and Tajikistan to the northwest; Afghanistan, Pakistan, India, Nepal and Bhutan to the west and southwest; and Vietnam, Laos and Myanmar to the south (see Figure1. 1). Figure 1.1. The Map of People's Republic of China The Chinese mainland is flanked to the east and south by the Bohai, Yellow, East China and South China seas, with a total maritime area of 4.73 million sq km. The Bohai Sea is China's continental sea, while the Yellow, East China and South China seas are marginal 2  seas of the Pacific Ocean. There are approximately 5,400 islands around China's territorial waters. 1.1.2 Population China is the most populous country in the world, with over 1.3 billion people based on the 2000 census, comprising approximately 22% of the world's total. Compared with a total population of 1,133.68 million as reported in the 1990 census, China has seen its population grow 11.4% over the past 10 years. The average annual growth rate was 1.07%. Males comprised 51.5% of the population, while women comprised 48.5%. Over 70% of the total population of mainland China lived in rural areas. China is a united multi-ethnic nation of 56 ethnic groups. According to the 2000 census, the Han people made up 91.59% of the country's total population, while 55 ethnic groups comprised the remaining 8.41%. As the majority of the population is of the Han ethnic group, China's ethnic groups are customarily referred to as the national minorities. 1.1.3. Economy The Gross Domestic Product (GDP) of the country was 10.75 trillion yuan ($1.3 trillion, and $6.4 trillion in PPP) in 2003. The annual growth rate of the economy has been around 8-10% in the last decade. The growth resulted from strong exports, increasing foreign direct investment and a strong domestic demand. Industry, including construction was a primary contributor, growing 9.9% in 2002 from 8.8% in 2001. Electronic equipment, transportation equipment and chemical products increased as well. The Government signed an accord to become part of the World Trade Organization in 2001. The inflows of foreign direct investment and large fixed scale investment, which continued in recent years contributed to its fast rates of economic expansion in the last decade. However, China still has many challenges that include slow growth in rural income, the need to create jobs and an enabling environment for the private sector and a growing disparity between the coastal and interior provinces. The living standard of urban and rural populations continued to improve. The annual per capital disposable income of urban households was 7,703 yuan ($931) in 2002. The per capita net income of rural households was 2,476 yuan ($300). The population in poverty living in rural areas was 28.2 million at the end of 2002, 1.07 million less than in 2001. 1.1.4 Government Communist party is the monopolistic ruling party of the country. The legislative branch is National People's Congress which comprises 2,985 members elected by municipal, regional and provincial People's Congresses. The judicial branch is People's Supreme Court. The executive branch consists of the President, Vice President and State Council. The president and vice president are elected by the National People's Congress. The Premier and Vice Premiers are nominated by the President and confirmed by the National 3  People's Congress. State Councilors are also appointed by the National People's Congress. Figure 2 provides an overview of the country's governmental structure. Figure 2.2. Structure of state government of People's Republic of China People's Congress President/Vice President People's Supreme Court State Council Ministry of Foreign Ministry of Defense National Development and Affairs Reform Commission Ministry of Science & Ministry of Finance Ministry of State Technology Security Ministry of Education Commission of Science, Ministry of Public Technology and Industry of Security National Defense State of Ethnic Affairs Ministry of Civil Ministry of Justice Commission Affairs Ministry of Ministry of Personnel Ministry of Labour Supervision and Social Security Ministry of Land and Ministry of Ministry of Railways Resources Construction Ministry of Ministry of Ministry of Water Communication Information Industry Resources Ministry of Ministry of Commerce Ministry of Culture Agriculture Ministry of Health National Population People's Bank of and family Planning China Commission National Audit Office 4  1.1.5 Health In 2004, the estimated life expectancy at birth in China is 70.4 years old for males and 73.72 years old for female; and infant morality was 25.28 per thousand live births. The leading causes of diseases are shown in Table 1. It is estimated that as of 1998 there were 161.7 physicians, 98.6 nurses and 3.9 midwives for every 100,000 Chinese. Total expenditures on health as a percentage of GDP in 2000 was 5.3% according to the WHO, while general government expenditures on health as a percentage of total general government expenditures in 2000 was11%. Table 1.1. Top five causes of mortality (% of total deaths) Cause of death % Rural Areas Cardiovascular disease 29.3 Respiratory disease 23.4 Cancer 17.1 Accidents and poisoning 11.7 Digestive disease 4.4 Urban Areas Cardiovascular disease 39.4 Cancer 22.7 Respiratory disease 14.1 Accidents and poisoning 6.2 Gastro intestinal disease 3.1 Source: Yearbook of Public Health in the People's Republic of China 1998 1.2 Historical Development of the Health Care System The development history of People's Republic of China (PRC) can be divided into two eras. The first era covers the period from the foundation of PRC (1949) to the initiation of the market-oriented reform. This era is characterized by a centrally planned economy, a rapid development of publicly-owned health care delivery system, and established health financing schemes covering most population, and outstanding achievement in health. The second era covers the period from the start of the economic reform (1980) to present. This era is characterized by a rapid grow in economy, stagnated development in health, and health system transition, including both intended and untended changes and both reactive and proactive reforms. 1.2.1 Health care system in planned economy (1949-1979) During the first 40 years after the establishment of People's Republic of China (PRC) in 1949, PRC followed Soviet model of socialist planned economy. This economy model 5  has two major characteristics: (1) Public ownership