China Unleashes Trillion-Yuan Fiscal-Subsidized Loans to Drive Medical Equipment Upgrades, Sparking Massive Market Opportunities
At the State Council executive meeting held on September 7, it was decided to implement temporary fiscal interest subsidies for loans supporting equipment upgrades and renovations in selected sectors, and to strengthen credit support for the social service industry, thereby promoting consumption as the primary driver of economic growth. The meeting also pointed out that insufficient demand is a prominent current challenge, emphasizing the need to boost demand through consumption and investment, stimulate social investment, and drive consumption via investment. Subsequently, on September 13, the State Council executive meeting confirmed the coordinated support of special re-lending facilities and fiscal interest subsidies for equipment upgrades and renovations in specific fields, aiming to expand market demand and enhance long-term development momentum.
In response to the decision made by the State Council’s executive meeting, the National Health Commission recently issued a notice proposing the use of fiscal interest-subsidized loans to upgrade and renovate medical equipment.
Based on current information, the Department of Planning and Information Technology of the National Health Commission, along with other relevant departments, is negotiating the specific details of the policy. The policy is expected to cover both public and private medical institutions, with each hospital eligible for loans of no less than RMB 20 million. The loans may be used to purchase various types of medical equipment for diagnosis and treatment, clinical laboratory testing, critical care, rehabilitation, and scientific research translation. According to reports from Zhejiang, Jiangsu, and Anhui provinces, approximately RMB 18 billion in equipment procurement demands have been submitted. By extrapolation, nationwide demand for medical equipment procurement is projected to reach hundreds of billions of yuan.
Through “interest subsidies on policy-backed loans and special re-lending facilities,” the State Council’s intent to support manufacturing enterprises in upgrading and retrofitting their equipment is quite evident.
According to the fiscal interest subsidy plan formulated by the State Council Executive Meeting, a total loan amount of RMB 1.7 trillion is involved, with participation from 18 nationwide commercial banks including Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of China. The central government will provide a 2.5% interest subsidy for a term of two years. The loan interest rate shall not exceed 3.2%, resulting in an effective interest rate of no more than 0.7% after the subsidy.
From the perspective of key sectors involved, equipment procurement and upgrades in nine major areas—including universities, vocational colleges, hospitals, and small, medium, and micro enterprises—are all included in the plan, with the overall work scheduled to be completed by the end of this year.
In response, Pan Helin, Co-Director of the Research Center for Digital Economy and Financial Innovation at the International Joint Business School of Zhejiang University, stated that these measures will, on one hand, benefit the development of China’s equipment manufacturing industry by accelerating the iteration of facilities and equipment and making full use of production capacity in the sector. On the other hand, they will support the broader advancement of China’s manufacturing industry by encouraging enterprises to expand production scale, enhance production capabilities, and improve efficiency. Objectively, these measures also reduce investment costs associated with capacity expansion and optimization, thereby alleviating corporate burdens. As such, they play a significant role in promoting effective investment in the manufacturing sector.
The issuance of this notice by the National Health Commission has further positioned domestic medical institutions at the forefront of equipment renewal and upgrading.
According to signals from the National Health Commission, the Department of Planning and Information is currently organizing policy research, with supporting policies expected to be issued in the near future to further clarify the implementation of fiscal interest-subsidized loans for the renewal and upgrading of medical equipment at hospitals.
“Current policy trends favor opening access to all medical institutions. The designated uses for loan funds include the procurement of medical equipment for diagnosis and treatment, clinical laboratory testing, critical care, rehabilitation, and research translation. The National Health Commission will, in principle, not intervene in project applications, adopting an ‘approve upon submission’ approach, with hospitals and designated banks negotiating loan terms independently,” said a researcher close to the policy development.
It is further understood that the Department of Planning and Information of the National Health Commission, along with other relevant departments, is currently coordinating the detailed policies for implementation within the healthcare system. The policy clarifies that fiscal interest-subsidized loans will, in principle, be fully accessible to all public and private medical institutions, with the requirement that each hospital secure a loan amount of no less than RMB 20 million.
In fact, health commissions in many regions across China have already begun implementing surveys to assess the demand for updating and upgrading medical equipment using fiscal interest-subsidized loans. These surveys target general hospitals, specialized hospitals, traditional Chinese medicine hospitals, infectious disease hospitals, primary healthcare institutions, and private hospitals at all levels that comply with regional health planning requirements, aiming to identify their needs for purchasing medical equipment and compile the data into requirement summary forms.
Among these, some provinces have specifically proposed that, in conducting demand surveys for public hospitals, priority should be given to county-level public hospitals. In accordance with the principle of filling gaps and meeting basic requirements, loan funds should be primarily used for the upgrading and replacement of medical equipment to meet the equipment configuration standards for Grade II, Class A hospitals. In principle, a funding scale of RMB 100 million per county-level hospital may be considered.
“Provinces are expected to finalize their lists of loan projects before the National Day holiday, sign loan agreements by year-end, and disburse the initial tranches of loans for equipment purchases.” According to the source, based on submissions from Zhejiang, Jiangsu, and Anhui provinces, approximately RMB 18 billion in equipment procurement needs have been reported so far. By extrapolation, the nationwide demand for medical equipment upgrades and renovations is projected to reach hundreds of billions of yuan.
In fact, this is not the first time in recent years that China has promoted the construction of new medical infrastructure.
Since the domestic COVID-19 epidemic was brought under control in 2020, healthcare infrastructure gaps and new infrastructure development have gradually gained prominence across China. The National Development and Reform Commission (NDRC) and the National Health Commission (NHC) successively issued the Plan for Strengthening Public Health Prevention, Control, and Treatment Capabilities and the Notice on Improving Fever Clinics and Infection Prevention and Control in Medical Institutions. These documents outlined key construction tasks, including advancing the modernization of the disease prevention and control system, comprehensively enhancing the treatment capabilities of county-level hospitals, establishing a robust urban infectious disease treatment network, upgrading major epidemic response bases, and promoting the dual-use (peacetime and emergency) retrofitting of public facilities.
On July 1, 2021, the National Development and Reform Commission, the National Health Commission, the National Administration of Traditional Chinese Medicine, and the National Disease Control and Prevention Administration jointly formulated and released the “Implementation Plan for the Construction of a High-Quality and Efficient Medical and Health Service System during the 14th Five-Year Plan Period.” This plan fully implements the “Outline of the 14th Five-Year Plan (2021–2025) and Long-Range Objectives Through the Year 2035,” aiming to accelerate the establishment of a robust public health system, promote the expansion and regionally balanced distribution of high-quality medical resources, and enhance comprehensive, full-lifecycle health services and protection capabilities. The Implementation Plan outlines construction projects across four major categories and fifteen subcategories, specifying relatively concrete development goals and tasks. Preliminary estimates based on the construction plan indicate that central budgetary investments alone in medical and health service infrastructure will exceed RMB 130 billion during the 14th Five-Year Plan period, indicating substantial growth potential.
In addition to comprehensively enhancing the construction of the healthcare service system, the 14th Five-Year Plan period will prioritize improving the service capabilities of primary healthcare institutions. On November 3, 2021, the National Health Commission issued the "Plan for Enhancing the Comprehensive Capabilities of County Hospitals under the 'Thousand Counties Project' (2021–2025)," explicitly promoting the decentralization of high-quality provincial and municipal medical resources to county-level areas and gradually achieving the integration and sharing of medical resources within counties. The plan proposes that by 2025, at least 1,000 county hospitals nationwide will reach the service standards of tertiary hospitals, thereby fulfilling their role as county-level medical centers and laying the foundation for realizing the goal of "managing common illnesses at the city and county levels."
The national and local fiscal authorities have also provided substantial support for new healthcare infrastructure development.
In terms of national investment, the central government allocated RMB 65.39 billion in subsidies for basic public health services in 2021, showing a year-on-year upward trend. In 2022, the central government had already pre-allocated RMB 58.85 billion in subsidies for basic public health services. Based on the proportion of pre-allocated funds to the total annual allocation in the previous two years, the total allocation for 2022 is estimated at RMB 70.7 billion, representing an 8.08% year-on-year increase and maintaining a rapid growth momentum.
From the perspective of local investment, since 2020, local governments have successively issued special bonds for healthcare to invest in new medical infrastructure. Since early 2022, provinces and municipalities such as Guangdong, Henan, Hebei, and Shandong have sequentially released high-value special bonds to support the construction of related healthcare projects. Furthermore, the fiscal interest-subsidized loan program proposed by the State Council Executive Meeting and the National Health Commission will continue to provide robust momentum for the development of new medical infrastructure in China.
The wave of new healthcare infrastructure development has also delivered significant performance growth for domestic medical equipment manufacturers. Industry leaders such as Mindray Medical (medical devices), Jianhui Information (automated pharmacy systems), Huakang Medical (cleanroom engineering), and Sonoscape Medical (ultrasound endoscopy) have all benefited from this policy-driven momentum.
“New healthcare infrastructure development is driving robust demand for medical devices and equipment, while the import substitution of critical bottleneck technologies is facilitating the scale-up of domestically produced high-end medical devices,” Founder Securities also stated in its research report.
It is foreseeable that, against the backdrop of China’s efforts to strengthen its healthcare system, leading domestic medical device companies such as Mindray will continue to reap significant benefits.