China's central government on Friday declared new policies to encourage private funds, including overseas capital, to be channeled to the medical sector to meet the country's increasingly diversified demands on health care.

The new policies, dubbed "guideline to encourage and lead social capital to sponsor health-care institutions" were posted on the central government's official website www.gov.cn.

It clearly stipulated that social capital should enjoy preferential treatment when China is adjusting or increasing medical resources and social funds will be encouraged to participate in governmental restructuring of hospitals.

Overseas investments are now welcomed to sponsor hospitals, while the procedures will be further simplified, according to the guideline.

The general office of the State Council, or cabinet, required local governments to amend their documents accordingly and get rid of any policies that impede the development of non-governmental medical institutions.

Also, the new policies encourage social funds to take part in governmental hospital reforms and convert some government-backed hospitals into non-governmental institutions to reduce the ratio of public hospitals, said an official with the medical and health care system reform office under the State Council.

China will deepen the opening-up of medical institutions and turn the overseas-invested medical sector from the "limited (towards foreign investment)" category into a category that allows foreign investment, the official said.

China will gradually cancel limits on the caps of shares for foreign investors in the jointly invested medical organizations, and solely foreign invested medical units will first be piloted and then gradually expanded, the official said.

To achieve this, China will simplify the approval processes in opening hospitals: the provincial governments, instead of state authorities, will be able to approve joint-venture hospitals, but the opening of solely foreign-owned hospitals will still be approved by the Ministry of Health and the Ministry of Commerce, the official said.

These policies are part of China's new round of medical reforms launched last year and the moves were expected to raise efficiency for investors in medical institutions, said Liu Guo'en, a professor with the Guanghua Management College under the Beijing University.

"After five to ten years, China can settle its problems in medical service burdens and provide sufficient health care services to the public," Liu said.

Liu called the new policies "unprecedented" in boosting private and overseas funding to sponsor health care organizations.

(Xinhua News Agency December 4, 2010)