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World Bank warns of economic slowdown if China fails to tackle chronic diseases

July 29, 2011

27 Jul 2011 03:35
Source: reuters // Reuters

By Sui-Lee Wee
BEIJING, July 26 (Reuters) - The World Bank on Tuesday urged China to step up efforts to fight chronic diseases, the main cause of death in the country, warning of rising health expenditure and an economic slowdown if rapid action is not taken.
Chronic non-communicable diseases (NCDs) -- such as lung cancer, stroke, heart disease and diabetes -- account for over 80 percent of all deaths in the world's most populous nation, the World Bank said in a report on non-communicable diseases in China.
The report warned that "a reduced ratio of healthy workers to sicker, older dependents will certainly increase the odds of a future economic slowdown and pose a significant social challenge" in the world's second-largest economy.
"The issue that should concern all of us is with the growing epidemic of non-communicable diseases, that will imply more people using expensive and costly hospital care for long periods of time," said Patricio Marquez, a World Bank lead health specialist and co-author of the report at a news conference in Beijing.
"The key issue facing society as a whole is how to control the escalation of healthcare costs," he said. "One could say that if unchecked, this would make the current reforms unsustainable."
China launched a $125 billion healthcare reform plan in 2009 to try and extend health insurance and basic health care to all of its people.
Out-of-pocket payments, which represent 37 percent of total health expenditure, will continue to rise, said Shiyong Wang, a World Bank senior health specialist and co-author of the report.
Richard Yeh, a healthcare analyst with Citigroup in Hong Kong, said the rising healthcare costs will have broader implications for the Chinese government, which is aiming to reduce the economy's dependence on export earnings.
"Part of the reason that people don't want to spend is because the healthcare system is not taking care of the entire healthcare bill for the people," he said.
"If there's no strong national healthcare supporting system, people will continue to have a high savings rate. That will definitely ... hold up national consumption."
The World Bank report said China's "healthcare system is not responding effectively" to tackle non-communicable diseases, which is why the country's deaths from those diseases are higher than other leading G20 countries.
For example, China's mortality rate for strokes is four to six times higher than that in Japan and the United States.
A rapidly ageing population and more sedentary lifestyles, with bad diets and lack of exercise, were also factors contributing to the increasing rates of the diseases, the report said.
The World Bank report said that the economic benefit of reducing cardiovascular diseases by one percent per year from 2010-2040 could generate more than $10.7 trillion, equivalent to 68 percent of China's real GDP in 2010.
The World Bank estimates that without action, China will lose $550 billion in national income between 2005 and 2015 due to heart disease, stroke and diabetes.
Fifty percent of the risk factors of non-communicable diseases can be prevented by the adoption of certain measures, which would cost the Chinese government $220 per capita per year, Marquez said.
One way was to increase taxes on tobacco to create "an economic disincentive for people to smoke", he said.
Excise taxes on cigarettes in China are less than 30 percent, far lower than Australia, the United Kingdom and the United States, where they hover around 65-80 percent, he said.
China has the world's largest number of smokers, with more than 300 million smokers. It is also the world's largest cigarette producer and has embarked on years of half-hearted campaigns to stub out the habit in some cities.
China's health ministry said it will ban smoking at all indoor public venues from May. .
Restricting access to alcohol, introducing taxes on unhealthy food and cutting salt in food would also prevent non-communicable diseases, the report said. (Reporting by Sui-Lee Wee; Editing by Sugita Katyal)

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