Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 138

Capitalising on China’s healthcare trends

China has proved a powerful partner in supporting the growth of Australian businesses, aided by our geographic proximity, political stability and governance-led business practices. We have a long and reliable history of high quality, reasonable cost goods and services manufacture which has led us to be ‘first-hand receivers’ of China’s attention when it comes to meeting the demands of its growing population.

Australian business sectors that have to date benefited from China’s attention have included the mining and resources sector, the tourism sector and most recently, those involved with the manufacture of health supplements and vitamins.

Changing Chinese demographics

Like many countries, China has an ageing population. According to an article, ‘How can China Care for its Ageing Population?’ distributed by the World Economic Forum, its population aged 65+ is forecast to grow to 167 million by 2020, accounting for 11.5% of the population or nearly double what it was in 1995. In addition, studies undertaken by the Wharton Business School state that China is now also facing an epidemic of chronic diseases and lifestyle issues (such as hypertension, stroke, diabetes and heart disease) that were typically associated with the ‘West’, mostly due to economic changes such as a growing middle class, rising GDP per capita and rising disposable income.

The cost of China’s evolving health and demographic trends has been enormous. It has been estimated that the country’s annual expenditure on health will grow at an average rate of 11.8% a year from 2014-2018, reaching a total spend of $892 billion by 2018. Yet according to a recent research paper issued by Deloitte, China’s healthcare spending, estimated at 5.4% of GDP in 2013, is still lower than other OECD countries, as shown in the chart below.

Growth and competition in healthcare

In response to the rising cost and need for healthcare services, the Chinese government recently announced several initiatives aimed at promoting growth and development in the health sector. According to research by Deloitte, ‘Projects that meet strict operational guidelines are expected to receive full government support, especially around land transfer, preferential financial and tax policies and related subsidies’. The research states that private and wholly owned foreign hospitals account for almost half of China’s total number of health care facilities and growth from this sector in China will bring the benefit of ‘leading medical technologies, advanced management, clinical practices and service models’. Additional service providers are considered good for competition, potentially leading to better pricing and satisfaction levels for patients. It may also help with raising the profile and use of private health insurance in the country, as commercial insurers develop plans to help consumers meet the rising cost of hospital care.

Of course, growth in the service and provision of healthcare services in the hospital and insurance areas in China will also promote growth in the supply chain such as in aged care, medical tourism and medical devices.

Australia’s recently agreed Free Trade Agreement (FTA) with China promises unprecedented access for our healthcare providers to expand their services into China. The benefits of the FTA to the sector were summarised in a recent article published in Business Spectator titled ‘The China FTA is just the tonic for Australia’s healthcare operators’, by Kim O’Connell and Suzy Madar.

The article outlined the key benefits as:

  • For hospital providers, China now offers Australian businesses the opportunity to establish wholly foreign owned hospitals.
  • Medical and dental service suppliers can also establish Australian majority-owned joint venture hospitals and clinics with Chinese partners, provided the majority of medical professionals are Chinese.
  • In the aged care space, Australian providers may now establish wholly foreign-owned aged care facilities with tax incentives and fee waivers.
  • For R&D service providers, Australian companies looking to conduct R&D in China will be permitted both to carry out and offer R&D services through Australian-owned subsidiaries based in China.

Those ASX listed companies set to benefit from the growth and development of the healthcare service sector in China and the introduction of the FTA include Cochlear Limited (COH), CSL Limited (CSL) and Ramsay Healthcare Limited (RHC).

 

Sebastian Evans is Chief Investment Officer and Managing Director of NAOS Asset Management. This information is general only and does not take into consideration the investment objectives, financial situation or particular needs of any reader. Readers should consider consulting a financial adviser before making any investment decision.

 


 

Leave a Comment:

RELATED ARTICLES

Concerns about China's rise to power seem overblown

Aged care star ratings are a ‘fail’

China is primed for a comeback

banner

Most viewed in recent weeks

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Are franking credits hurting Australia’s economy?

Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

The rubbery numbers behind super tax concessions

In selling the super tax, Labor has repeated Treasury claims of there being $50 billion in super tax concessions annually, mostly flowing to high-income earners. This figure is vastly overstated.

Latest Updates

Investment strategies

Trump's US dollar assault is fuelling CBA's rise

Australian-based investors have been perplexed by the steep rise in CBA's share price But it's becoming clear that US funds are buying into our largest bank as a hedge against potential QE and further falls in the US dollar.

Investment strategies

With markets near record highs, here's what you should do with your portfolio

Markets have weathered geopolitical turmoil, hitting near record highs. Investors face tough decisions on valuations, asset concentration, and strategic portfolio rebalancing for risk control and future returns.

Property

Soaring house prices may be locking people into marriages

Soaring house prices are deepening Australia's cost of living crisis - and possibly distorting marriage decisions. New research links unexpected price changes to whether couples separate or silently struggle together.

Investment strategies

Google is facing 'the innovator's dilemma'

Artificial intelligence is forcing Google to rethink search - and its future. As usage shifts and rivals close in, will it adapt in time, or become a cautionary tale of disrupted disruptors?

Investment strategies

Study supports what many suspected about passive investing

The surge in passive investing doesn’t just mirror the market—it shapes it, often amplifying the rise of the largest firms and creating new risks and opportunities. For investors, understanding these effects is essential.

Property

Should we dump stamp duties for land taxes?

Economists have long flagged the idea of swapping property taxes for land taxes for fairness and equity reasons. This looks at why what seems fairer may not deliver the outcomes that we expect.

Investing

Being human means being a bad investor

Many of the behaviours that have made humans such a successful species also make it difficult for us to be good, long-term investors. The key to better decision making is to understand what makes us human and adapt.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.