China’s healthcare sector will be the next to come under the country’s increased regulatory scrutiny, the analysts caution, according to CNBC.
This week, Chinese President Xi Jinping reiterated the need to back moderate wealth for all – or the notion of “common prosperity,” – a concept he has been promoting for months.
″Common prosperity’ remains an idea that is still in search of an implementation strategy,” CNBC quoted Rory Green, China economist at TS Lombard, as saying.
“For now, it is much easier to regulate industry and capital markets than it is to institute structural reform.”
The Healthcare industry is grouped among China’s “three big mountains” that refer to soaring costs in education, real estate, and health.
It is the only one that has so far escaped regulatory scrutiny and is “particularly vulnerable,” Green argued in a note on Aug. 31.
“Public housing and healthcare is likely to be expanded while private medical providers and real estate developers could soon face greater constraints on their ability to set prices and pursue profits,” noted Julian Evans-Pritchard, senior China economist at Capital Economics.
In mid-August, U.S.-listed Chinese Biotech companies such as BeiGene, I-Mab, and Legend Biotech sank amid fears that regulatory crackdown on the country’s education sector could spread to other areas in the economy, such as pharma.
Author: Dulan Lokuwithana, Seeking Alpha