Australia-China Development Cooperation Program

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Cooperation Program
China Health
Sector Strategy
Strategic framework
and Potential Program
of Assistance

        The Australian Government’s
        Overseas Aid Program
Australia – China Development Cooperation Program
            China Health Sector Strategy



                                                        TABLE OF CONTENTS

ABBREVIATIONS ......................................................................................................................................... III

EXECUTIVE SUMMARY................................................................................................................................2



SECTION 1 - BACKGROUND ........................................................................................................................5
    1.      A PICTURE OF HEALTH AND THE BURDEN OF DISEASE IN CHINA............................................................5
    2.      THE HEALTH SECTOR IN CHINA ..............................................................................................................7
    3.      GOVERNMENT POLICIES AND PRIORITIES IN CHINA ................................................................................9
    4.      DONOR PRESENCE IN CHINA’S HEALTH SECTOR ..................................................................................11
SECTION 2 - STRATEGIC FRAMEWORK ..............................................................................................17
    5.      AUSTRALIAN HEALTH POLICY IN CHINA ...............................................................................................17
    6.         KEY OUTCOMES FOR A HEALTH SECTOR STRATEGY IN CHINA ........................................................18
    7.      HEALTH SECTOR STRATEGY FRAMEWORK ...........................................................................................19
    8.      KEY OPERATIONAL PRINCIPLES FOR THE FRAMEWORK ........................................................................20
    9.      RISKS AND THEIR MANAGEMENT ..........................................................................................................26
SECTION 3 – PROGRAM OF ASSISTANCE .............................................................................................28
    10.          FROM FRAMEWORK TO PROGRAM ...................................................................................................28
    11.          PRIORITIES AREAS FOR ASSISTANCE .................................................................................................29
    12.          IMMEDIATE PROJECT POSSIBILITIES ..................................................................................................29
    13.          MEDIUM-TERM DEVELOPMENTS ......................................................................................................31
SECTION 4 – STRATEGY REVIEW PROCESS ........................................................................................32
    14.          MID-TERM REVIEW ..........................................................................................................................32

EXECUTIVE SUMMARY..............................................................................................................................34


SECTION 1 - MISSION METHODOLOGY ................................................................................................37
    1.      DESK REVIEW AND STRATEGIC FRAMEWORK ........................................................................................37
    2.      HEALTH SECTOR STRATEGY AND PROJECT IDENTIFICATION MISSION.....................................................38
SECTION 2 - RECOMMENDED PROGRAM OF PRIORITY ACTIVITIES .........................................40
    3.      MAJOR FINDINGS ..................................................................................................................................40
    4.      RECOMMENDED PROGRAM OF ASSISTANCE ..........................................................................................41
    5.      PROJECT SELECTION CRITERIA AND PROPOSED PROJECTS .....................................................................46
    6.      NOTIONAL TIMEFRAME FOR IMPLEMENTATION .....................................................................................48
    7.      IMPLEMENTATION ISSUES AND ARRANGEMENTS ...................................................................................49
    8.      RISKS AND THEIR MANAGEMENT ..........................................................................................................51
    9.      EVALUATION ........................................................................................................................................53

APPENDIX A ...................................................................................................................................................60
APPENDIX B ...................................................................................................................................................70

China Health Sector Strategy                                                                                                                                        i
    AUSTRALIAN LINKS WITH CHINA ....................................................................................................................70
APPENDIX C ...................................................................................................................................................72
    DISTRIBUTION OF MAJOR DONOR PROJECTS ACROSS CHINA...........................................................................72
APPENDIX D ...................................................................................................................................................74
    INDICATIVE LIST OF CHINESE NATIONAL EXPERTS ..........................................................................................74

China Health Sector Strategy                                                                                                                                       ii

AFAO                     Australian Federations of AIDS Organisations
AIDS                     Acquired Immune Deficiency Syndrome
AIHW                     Australian Institute of Health and Welfare
ARI                      Acute Respiratory Infections
AusAID                   Australian Agency for International Development
AUD                      Australian Dollar
BOH                      Bureau of Health
CAPM                     Chinese Academy of Preventive Medicine
CDD                      Control of Diarrhoeal Diseases
CHANGES                  China Australia NGO Scheme
CHSI                     Centre for Health Statistics and Information
CIDA                     Canadian International Development Agency
CMS                      Cooperative Medical System
CSW                      Commercial Sex Workers
DALYs                    Disability Adjusted Life Years
DFID                     Department for International Development
DOTS                     Directly Observed Treatment System
EPI                      Expanded Program on Immunisation
EPS                      Epidemic Prevention Station
EU                       European Union
FLO                      Foreign Loan Office
FP                       Family Planning
GDP                      Gross Domestic Product
GOA                      Government of Australia
GOPRC                    Government of the People’s Republic of China
HEI                      Health Education Institutes
HIC                      Health Insurance Commission
HIV                      Human Immunodeficiency Virus
IDD                      Iodine Deficiency Disorder
IDU                      Intravenous drug users
IMCI                     Integrated Management of Childhood Illnesses
IMR                      Infant Mortality Rate
JICA                     Japan International Cooperation Agency
MCH                      Maternal and Child Health
MMR                      Maternal Mortality Rate
MOFTEC                   Ministry of Foreign Trade and Economic Cooperation
MOH                      Ministry of Health
NCD                      Non-communicable Disease
NGO                      Non-government Organisation
NHEI                     National Health Education Institute
NNT                      Neonatal Tetanus
PHC                      Primary Health Care
PHERP                    Public Health Education and Research Program
PRC                      People’s Republic of China
RMB                      Renminbi
SAS                      Small Activities Scheme
SATCM                    State Administration for Traditional Chinese Medicine

China Health Sector Strategy                                                     iii
SDA                      State Drug Administration
SOE                      State Owned Enterprise
STD                      Sexually Transmitted Disease
TA                       Technical Assistance
TAG                      Technical Advisory Group
TAR                      Tibet Autonomous Region
TB                       Tuberculosis
TGA                      Therapeutic Goods Administration
TOR                      Terms of Reference
UNAIDS                   United Nations Joint Program on HIV/AIDS
UNDP                     United Nations Development Program
UNFPA                    United Nations Population Fund
UNICEF                   United Nations Children’s Fund
WB                       World Bank
WHO                      World Health Organisation

China Health Sector Strategy                                        iv
                                     PART 1

                               STRATEGIC FRAMEWORK

Part 1 : Strategic Framework                         1

The Australian government is committed to assist China’s efforts to achieve poverty
alleviation and sustainable development. The intention is to increase substantially the level
of assistance to the health sector in China, particularly for the poorer provinces of central
and western China. The Health Sector Strategy proposed in this report aims to build on
Australian contributions to date and to complement the Chinese national health policy, as
well as the efforts of other major donors, in order to achieve sustainable, effective, and
replicable projects.

The Strategy recognises that China has made impressive gains in raising people's health
status since 1949, as demonstrated by increased life expectancy and decreased maternal and
infant mortality rates. Major challenges remain, however, in terms of the preventable
burden of infectious diseases and maternal and infant ill-health amongst the rural poor and
in terms of newer problems of modern life, such as non-communicable diseases, HIV, and

The early health gains have been associated in part with the establishment of the three-tier
Chinese health system which has enabled equitable access to primary health care. However,
the economic reforms since the 1980s have inadvertently led to the collapse of rural
community financing of health services. Increasing numbers of the rural poor have become
impoverished through costs incurred by serious illness, while perverse incentives in the
health system have produced under-utilised services of questionable quality. At the same
time, competition in the medical marketplace has increased the concentration (and wastage)
of resources in the urban tertiary sector.

In the face of these challenges, the State Council held a National Health Conference in 1996
which signaled a concerted effort to redress the problems in the health system, in both rural
and urban China. This new policy climate offers a significant window of opportunity for
Australian engagement, at a time when the Government of Australia has also promulgated a
new policy framework for international development assistance.

The proposed Health Sector Strategy aims to contribute to improved health outcomes for the
Chinese people through support for integrated approaches to achieving effective and
sustainable health system performance. Critical dimensions of effective health system
performance include: effective interventions for priority health issues and populations;
equitable access to health services; sustainable infrastructure; improved health literacy; and
effective health leadership.

Consistent with the Country Program Strategy, the Health Sector Strategy proposes that:
• Australian assistance is provided at the local level to achieve improved health status for
   poor and vulnerable people as well as at the national level, through capacity-building
   and policy engagement;
• The focus for larger bilateral projects (and multilateral co-financing) should be in the
   poorer provinces of central and western China, such as Xinjiang, Ningxia, Shaanxi,
   Qinghai, and Sichuan;

Part 1 : Strategic Framework                                                            2
•   The program of assistance should consist of larger projects or programs of projects;
•   Project design and implementation should be flexible and responsive and incorporate
    increased use of short-term high-level Australian expertise as well as Chinese expertise;
•   Technical Advisory Groups (TAGs) should be established along programmatic lines to
    provide guidance as well as maximise project impact through the development of
    replicable models.

The Strategic Framework for Australian investment in the Chinese health sector is an
integrated health system development model. This involves simultaneous capacity-building
of the health infrastructure as well as selected priority interventions targeted at local needs
and in accord with national policy priorities. The application of the model in rural areas
translates into an emphasis on basic health services development (including the integration
of Maternal and Child Health [MCH] with primary health care), with particular attention
given to the needs of women and children and to prevention of infectious diseases. In urban
communities (ie. areas with dense population), the model translates into the development of
an integrated community health service system, inclusive of the Epidemic Prevention
Service, to enable a more contemporary and strategic response to the prevention of
HIV/STD, non-communicable diseases (NCDs), and injury.

The Strategic Framework is focused on investments to improve health and the performance
of the health sector. It is recognised, however, that the determinants of health often lie
outside the health sector and improved health is critical to the achievement of broader social
and economic objectives. Thus, in many instances, it may be more appropriate for a health
component to be integrated into projects addressing rural poverty alleviation, infrastructure
development, gender roles and participation, environmental protection, and reform of state-
owned enterprises. In some circumstances, such as places of extreme poverty, coordinated
multisectoral developments may be essential before any effective and sustainable health
interventions are possible.

The proposed approach not only is consistent with the Government of People’s Republic of
China (GOPRC) health policy priorities but also builds on Australia’s health expertise
profile in China and on Australia’s comparative advantage internationally. Australian
identity is further strengthened by the framework for implementation of technical
cooperation projects which foster links across academic institutions and non-government

The immediate priorities for assistance in the health sector should be developed along three
program streams:
• Basic health services in poor, rural areas;
• Community health services development; and
• New approaches to disease prevention, with an initial focus on HIV/AIDS.

There are sufficient project possibilities to develop a strong bilateral program of assistance
in these three streams. There are also opportunities for immediate multilateral co-financing
to help establish better foundations for these streams.

In the medium term, possible direction for further development include:

Part 1 : Strategic Framework                                                             3
•   Public health reforms (Epidemic Prevention Station [EPS] redevelopment);
•   NCD and injury prevention; and
•   Regional health planning and support for health sector reform.

These programs should be developed and monitored with the assistance of small Technical
Advisory Groups that can provide ongoing advice to AusAID about health policy directions
in China and the implementation of the Health Sector Strategy. There will need to be
coordination across project and program streams to ensure better coordination and mutual
learning, and to enhance Australia’s credibility in any health policy dialogue.

The Strategic Framework has been designed to be able to withstand predictable changes in
the health sector in China. A mid-term review is proposed for 2002, to allow for any
adjustment and adaptation to the changing economic and social conditions.

Part 1 : Strategic Framework                                                       4

Health is one of the key sectors supported by Australia’s overseas aid program. The
Australian government is seeking to increase substantially the level of assistance to the
health sector in China, at a time when China is itself undergoing profound structural,
economic and social changes. The Australian government is committed to developing a
strategy that complements the GOPRC national health policy, complements other donor
activities, and achieves sustainable, effective and replicable projects.

The China Health Sector Strategy is being developed in the context of policy directions for
the Australian aid program, as well as for the health sector in China. Australia is committed
to assisting China with the reform program to allow China to operate effectively within the
global economy. China has achieved considerable progress in improving the quality of life
for its people, but the broader economic reforms have also raised new challenges for the
health sector. The Strategy consists of two components: a Strategic Framework and a
Program of Assistance.

The Strategic Framework outlined in this section of the report is the first stage of a process
to develop a coherent program of assistance for the health sector in China for the 5-year
period (1999/2000 – 2003/2004). While the framework should be sufficiently robust to
withstand changes in the policy environment, a review, to be undertaken in its third year
(2002), is recommended to ensure appropriate adjustments are made in line with unforeseen
changes. After a desk review conducted in Australia in March 1999, a mission to China was
undertaken in April 1999 to refine the Strategic Framework and to recommend a possible
program of assistance (presented in Part 2). The terms of reference of the Health Sector
Strategy and Project Identification Mission can be found at Appendix A.


1.      A Picture of Health and the Burden of Disease in China

1.1     China has made impressive progress in raising the health status of its people between
        the 1950s and the 1970s. This progress is evidenced by reductions in infant, child
        and maternal mortality, and increased life expectancy. Accessible primary health
        care, improved nutrition, childhood immunisation, infectious disease control, family
        planning, water supply, sanitation, housing, and better education have all contributed
        to these gains. It is noteworthy that the gains have been greater than would have
        been predicted from the country’s economic progress over that period. Over the 15
        years from 1980 to 1995, however, despite accelerating growth in GDP and personal
        incomes, there is evidence that overall gain in health status has slowed relative to
        economic progress. The main contribution to this slowing of health status
        improvement has come from the poor, rural areas of China.

Part 1 : Strategic Framework                                                            5
1.2     The infant mortality rate (IMR) in China in 1997 was estimated to be 38.0 per 1000
        live births, a decline from 50.2 per 1000 live births in 1991. In 1995 the gap in
        health status between urban and rural areas could be seen in the difference between
        the urban IMR (14.2/1000 live births) and the rural IMR (41.6/1000 live births).
        Similar reductions over time, and disparities between urban and rural populations,
        were evident in the under-5 mortality rate. The principal causes of infant and child
        mortality remain acute respiratory tract infections (pneumonia), neonatal asphyxia,
        prematurity, diarrhoeal disease, and accidents.

1.3     In similar fashion, the maternal mortality rate (MMR) has shown a reduction from an
        estimated 94.7 deaths per 100,000 births in 1989 to 61.9 deaths per 100,000 births in
        1995, with large differences between urban MMR (39.2/100,000) and rural MMR
        (76/100,000). Major causes of maternal death are obstetric haemorrhage, pregnancy
        – induced hypertension, amniotic embolism, obstruction, and puerperal infection.

1.4     Life expectancy had reached 70 years in 1997 and the leading causes of death are
        now cardiovascular diseases and cancer, accounting for 29% and 16% of all deaths,
        respectively. Respiratory diseases (17%) and injuries (11%) follow as third and
        fourth leading causes of death. While there remains a substantial burden of
        infectious disease both amongst children and adults in China, particularly in poor,
        rural areas, and both tuberculosis and hepatitis continue to be prevalent, an
        epidemiological transition is in progress.

1.5     The considerable growth in non-communicable diseases (NCDs) such as
        cardiovascular disease, stroke, hypertension and cancer can be attributed in part to
        the increasing prevalence of risk factors such as smoking, dietary change, and
        obesity. Tobacco smoking is estimated to account for 3.9% of all disability-
        adjusted life years (DALYs) lost in 1990 and will reach 16% by 2020. The main
        causes of injury-related deaths are motor vehicles (for males), suicides (for females),
        drowning and falls.

1.6     With the change to an open market economy and unprecedented economic growth
        since 1978, an estimated 100 million people are on the move in China. With the
        increased mobility of people and changes in personal behaviour there has been a
        resurgence of sexually transmitted disease in China. As a consequence, there is now
        grave concern that the number of people with HIV infection in China, estimated to
        be 400,000 at the end of 1998, will grow rapidly. While most people with HIV
        infection in China currently have acquired the infection in the course of intravenous
        drug use, there is a growing proportion of infections associated with heterosexual
        transmission. The possibility of rapid spread via nosocomial infection is also of

1.7     Be it rural or urban china, the simultaneous existence of the traditional challenges of
        infectious diseases and infant and maternal mortality and the emerging challenges of
        NCDS and STD/HIV require continued vigilance and action in traditional arenas. In
        addition, the development of new approaches to new problems will be required.

Part 1 : Strategic Framework                                                             6
2.      The Health Sector in China

2.1     China’s early health gains were associated with improved basic living conditions for
        the rural masses and establishment of a three-tiered health system (extending from
        the village, to the township and then to the county level). This health system
        emphasised prevention (often through community action) and accessible primary
        health care provided by “barefoot” or rural doctors, who were supported by the
        collective work unit. The existence of the CMS (cooperative medical system)
        ensured that financial barriers to health care were minimised. China’s system of
        rural health care and achievements in improving health status has been
        internationally recognised.

        Declining public support of health programs and reduced community financing of
        health services have been the unintended consequences of the economic reforms,
        particularly the collapse of people’s communes that commenced at the end of the
        1970s. Between 1986 and 1993 the estimated share of government spending on
        health declined from 36% to 16%. In 1993 this represented about 3.8% of GDP,
        which is low in comparison with other countries.

2.2     Rural communities, in particular, lag far behind urban areas in their financial access
        to health care. The devolution of health administration in the 1980s to various levels
        of government was a policy designed to achieve greater contribution from the
        responsible level of government. The consequence has been accentuation of
        inequities between rural and urban areas, with resources increasing in urban centres
        and declining in rural communities.

        In 1993 it was estimated that the average per capita health spending (public and
        private) was 110 Renminbi (RMB) per annum, but the average for rural areas was 60
        RMB per capita compared to 235 RMB per capita for urban areas. As well, in rural
        areas the proportion of health expenditure from public funds is much less than in
        urban areas. Per capita health expenditure in the officially designated poverty
        counties (28% of all counties in China) is less than half the national average, but
        80% of this expenditure (twice the national average) is out of pocket. Rural services
        have experienced increasing problems of coverage and utilisation, quality, efficiency
        and financial viability. Services are provided and priced in an effort to maximise
        revenue for the survival of the individual health facilities, rather than to provide
        health benefits or meet community need.

2.3     Developed from fundamental biomedical principles, with no strong mechanisms for
        population–based, local area planning or for allocation of resources according to
        population health priorities, the health system in China has traditionally operated in a
        vertically organised and directed fashion. The bureaucratic arrangement has
        mitigated against horizontal integration and the new economic incentives for the
        health system further exacerbate the problem of institutional competition, with
        obstetric services as examples par excellence. The financing arrangements now
        encourage excessive and inappropriate services and diagnostic tests, and the over-
        prescribing of medicines. Those who cannot afford to pay these costs often do not
        seek healthcare. In more affluent areas there has been growth in private sector health

Part 1 : Strategic Framework                                                              7
        care which offers competitive prices and amenable services. In the public sector,
        health services are often under-utilised and over-staffed.

2.4     The system of health care financing used by China in the past ensured that healthcare
        was affordable. It kept costs low and provided risk-sharing mechanisms. Almost all
        urban residents had work-related health insurance and 85% of rural people were
        covered by the CMS. Structural economic changes such as the devolution of public
        sector finance to lower levels of government, decentralisation of administrative
        responsibilities to individual cost centres, and the insolvency and the reform of state-
        owned enterprises (SOEs) have meant that increasing numbers of people in China
        are uninsured. In an environment where the costs of medical services are rapidly
        escalating, many urban residents receive little insurance-paid care, although
        theoretically they remain covered by work–related health insurance. Most rural
        people are no longer covered by the CMS, with disproportionate impact on poor and
        disadvantaged communities. It has been reported that 30% of destitute people in
        China became impoverished through costs incurred by serious illness (Ministry of
        Health. Background Paper for Health Project VIII. 1994).

2.5     An additional challenge faced by the Chinese health system is the inadequate levels
        of training among rural healthcare staff, coupled with overemphasis on specialisation
        in the urban centres. In county–level hospitals, one third of titled doctors were
        qualified doctors with appropriate post-secondary school medical training. The
        remaining two thirds have either been promoted after serving the required number of
        years or had not received any formal pre-service medical training. The proportion of
        doctors with no post-secondary medical training is even higher in township
        hospitals. With the relaxation of allocation of jobs by the state, and as incomes came
        to rely on institution-generated revenues, more experienced and better trained staff
        have sought to work in county or urban hospitals.

2.6     Of course, the improvement of health does not depend solely on access to health
        care, but relies on contributions from many other sectors, including housing,
        environment, agriculture, industry, etc. Nonetheless, the health status of much of
        China’s population can be improved through improved access to better quality
        primary health care, as well as through stronger disease control efforts.
        Consequently, the health sector, as defined by the parameters of the Ministry of
        Health (MOH), will be the principal focus of this Strategy.

2.7     Within the health sector, there are also multiple spheres of practice which impact on
        health. Biomedical research and product development, coupled with clinical care,
        are important in alleviating individual ill-health and suffering. Primary health care
        and public health provide both first line management of illness and population
        interventions for prevention. Much of China’s achievements in the past (which have
        been lessons for other countries) have been the result of a strong network of primary
        health care and a capacity to mobilise communities for prevention. This strategy will
        focus on ways in which primary health care and public health interventions, as cost-
        effective strategies for achieving improved health outcomes, can be strengthened in

Part 1 : Strategic Framework                                                              8
3.      Government Policies and Priorities in China

3.1     Prevention of disease and rural health have long been the stated priorities for the
        Chinese health system. The Ninth Five Year Plan for China (1996-2000) identified
        the following targets for the health sector:
        • continue to strengthen rural health services
        • strengthen disease control and MCH work
        • reform medical insurance system for urban employees
        • promote the progress of health science and technology
        • strengthen health inspection and law enforcement

3.2     In 1996 a National Health Conference was convened by the State Council to discuss
        the emerging crisis in the health sector. The conference was attended by provincial
        governors, senior health sector managers, and representatives of relevant national
        ministries. The resulting policy document gave priority to the problems of rural
        areas and addressed both supply and demand-side issues. It advocated measures to
        improve service effectiveness and efficiency.           It also encouraged the re-
        establishment of the cooperative medical system (CMS), based on voluntary
        contributions by households with additional financial assistance from local
        government and village collective funds. It called on local governments to
        incorporate health into anti-poverty programs, and higher levels of government to
        provide financial support for health services in poor localities.

        With regard to the emerging problems of unbalanced resource allocation in urban
        areas, the policy document identified the need to strengthen community health
        services, as a form of comprehensive primary health care, and to limit the role of
        hospitals to the diagnosis and treatment of acute, serious and difficult diseases. It
        also recognised the need to strengthen health facility management. It proposed that
        local governments establish new mechanisms of health financing, combining
        individual accounts with risk-pooling.

        The new policy also called on provincial governments to develop regional health
        plans, improve supervision and regulation of health service providers, modify prices
        to reduce existing incentives towards costly kinds of care, and ensure that public
        health measures and preventive programs were more effective.

3.3     This National Health Conference represents a watershed in the history of Chinese
        health policy development. Its decisions, and subsequent State Council circulars and
        guidelines (such as that on the Cooperative Medical Service, issued in May 1997),
        signal a concerted effort to redress the problems the health system has experienced
        as a result of application of market-based reforms. Notably, there is a commitment
        that all levels of government needed to increase their investment in the health sector
        at a rate commensurate with the local rate of economic growth. Similar policy
        conferences have since cascaded down the various levels of government across

3.4     In 1998, as part of broader changes in the machinery of government, the Ministry of
        Health (MOH) underwent substantial downsizing and re-organisation. The resulting
        departments in the MOH are now:

Part 1 : Strategic Framework                                                            9
        •   Department of Planning and Finance
        •   Department of Basic Health Services and Maternal/Child Health
        •   Department of Disease Control
        •   Department of Medical Administration
        •   Department of Science and Technology
        •   Department of Personnel
        •   Department of Health Law and Inspection
        •   Department of International Cooperation

        As a consequence of this re-organisation the staff of MOH has been reduced from
        445 to 225. The new structure offers greater opportunity for coordination of service
        development, although a period of instability and discontinuity has been experienced
        in the short term. The elevation of basic health services to departmental level, and
        the insertion of MCH within it, is suggestive of a significant policy re-direction. This
        re-organisation will be extended to the provincial level in 1999.

3.5     Other key changes within the health portfolio include: the transfer of urban health
        insurance from MOH to the Ministry for Labor and Social Security (MOLSS); the
        placing of the work of the Patriotic Health Campaign Committee within MOH; and
        responsibility for the oversight of the National Health Education Institute being
        placed with the new Department of Basic Health Services and MCH.

3.6     The current policy priorities for the MOH, in the lead up to the Tenth Five-Year
        Plan, are:
        • Rural health reforms – basic health services and CMS development, including
           potential questions about ownership structures for health services;
        • Health sector reform, including regional health planning, hospital management
           reforms, sale and management of pharmaceuticals, and community health
           services development;
        • Reform of health inspection; and
        • New and re-emerging diseases, including HIV/STD, NCDs, TB.

3.7     The governance of the health sector in China is complex, although each tier of health
        administration is organised in the same manner. The MOH provides professional,
        technical and policy direction, while provincial, municipal/prefectural,
        district/county Bureaux of Health (BOHs) take responsibility for their respective
        health care institutions. While responsibility for the financial subsidy of the health
        sector is now divested to the appropriate level of government, MOH continues to
        play the leadership and national coordination role in policy and program
        development. This is achieved through a range of mechanisms, including national
        government policies, ministry regulations and guidelines, five-year plans, specific
        program funding, pilot projects for policy research, and annual high-level work
        program meetings. Thus, despite decentralisation, the engagement of MOH is
        critical if attempts to improve health sector performance are to have the desired
        broad impact and policy relevance.
3.8     The implementation of China’s health policies does not rely solely on the MOH and
        its counterparts at lower levels. There is a myriad of national institutes, universities,
        and NGOs who play major roles in policy advice, workforce development, and

Part 1 : Strategic Framework                                                               10
        program evaluation. Key national institutions amongst these are: Centre for Health
        Statistics and Information (CHSI), Chinese Academy of Preventive Medicine
        (CAPM), National Health Education Institute (NHEI), Institute for Health Policy
        (previous Health Economic Research Institute), Chinese Red Cross, Chinese
        Academy of Medical Sciences, All-China Women’s Federation. Major national
        universities which supply national experts include: Beijing Medical University,
        Shanghai Medical University, Tongji Medical University, Xian Medical University,
        West China Medical University, amongst others. The effective mobilisation of these
        experts is important for any sustainable human resources development strategy in

4.      Donor Presence in China’s Health Sector

4.1     Australian Presence

        Australia has been (and is currently) involved in a number of successful health
        projects in China. AusAID, Australia’s overseas development agency, has been the
        principal funding body for these Australian projects. The primary emphasis in
        bilateral assistance to the health sector has been on maternal/child health and family
        planning projects. Most notable of these has been the Family Planning Women’s
        and Children’s Health project in Ningxia, which has recently been funded for a
        further two years and which has provided a valuable service model.

        Another important, bilaterally funded health project has been the Tibet Primary
        Health Care and Water Supply Project, which has situated Australia as a major
        bilateral aid provider to this distant and most underdeveloped part of China.

        Australia has also supported more disease specific projects addressing iodine
        deficiency disorders (IDD) through UNICEF, neonatal tetanus (NNT) through
        WHO, as well as a capacity-building project in health promotion (through the World
        Bank Health VII Project.)

        Other projects have been developed between individual professionals or institutions
        in Australia, with counterparts in China, through such funding mechanisms as SAS,
        CHANGES and Institutional Links. Notable amongst these are the Yunnan HIV
        Peer Education Project being conducted by the Red Cross, the HIV Train the
        Trainers Program in Sichuan recently completed by the Australian Federation of
        AIDS Organisations (AFAO), and the LaTrobe University-Kunming Medical
        College health services management training centre.

        In addition to the official donor presence, Australia has had an enhanced profile in
        the health sector through its nationals working with or within international
        organisations (such as the World Bank and WHO) as well as technical cooperation
        within the context of sister state/province relations (such as Victoria-Jiangsu and
        NSW-Guangdong) and university linkages. The profile of Australian health
        expertise is broad-ranging and includes: prevention (eg HIV/AIDS, communicable
        diseases control, health promotion), community-based health services (eg MCH,
        community nursing, general practice), clinical quality management (eg

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        pharmaceuticals, clinical training), and health services planning and management (eg
        health statistics, regional planning, casemix budgeting).

        Appendix B provides a listing of recent and impending AusAID projects as well as a
        sample listing of other Australian presence in the Chinese health sector.

4.2     Other Governments

4.2.1 Department for International Development (DFID), UK

        DFID undertook a Health Sector Identification Mission to China in July 1998. While
        the final report is not yet released, there have been a number of follow-up missions
        to progress the anticipated project areas. These include:
        • improvement of Basic Health Services (through health sector reform) via the
            World Bank/MOH Health VIII project (with particular emphasis in Gansu and
        • support for national interventions to combat the spread of HIVAIDS and STD in
            Yunnan and Sichuan (probably through bilateral arrangements);
        • assistance in urban health reforms, including community health services
            development; and
        • establishment of a UK–national Health Sector Manager in China.

4.2.2 Japan International Cooperation Agency (JICA)

        The major Japanese health programs in China are:
        • elimination of polio (in Yunnan, Sichuan, Guizhou, Guangxi);
        • technical cooperation with hospitals (providing medical equipment);
        • quality control of pharmaceutical production (in Tianjin, and Beijing in 1999).

        In 1999 the polio elimination project is scheduled to end and an EPI program will
        commence in Inner Mongolia, Qinghai, Jilin, Gansu and Ningxia. A PHC Training
        Centre is planned for 1999. JICA has also agreed to fund equipment for the National
        HIV Reference Laboratory at CAPM (Chinese Academy of Preventive Medicine).

4.2.3 Canadian International Development Agency (CIDA)

        CIDA does not have a large involvement in the health sector. Its major initiatives
        • Yunnan Maternal and Child Health Project;
        • Integrated Rural Development Poverty Reduction Project (in Ningxia, Gansu,
            Shanxi and Guizhou provinces);
        • Micro-credit project in Xinjiang, with potential for development into a type of
            health insurance scheme.

        The Canada Fund supports small projects in Xinjiang, Tibet, Gansu, Qinghai,
        Ningxia, Shaanxi provinces with a focus on women and minorities.

4.2.4 Other countries

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        Other bilateral donors are involved in the HIV prevention and control effort.
        Amongst these include:
        • Luxembourg – harm reduction among intravenous drug users (IDU) in Xinjiang;
        • European Union – STD/HIV training via regional training centres.

4.3     Multilateral Agencies

4.3.1 World Health Organisation (WHO)

        WHO has had a presence in China since 1978. Its focus has been on rural PHC,
        urban healthcare, and health policy and management. WHO has been involved with
        the longstanding issues of Expanded Program on Immunisation (EPI), control of
        communicable diseases (such as malaria), polio eradication, and TB control. It has
        also provided technical assistance in regard to the newer problems of non-
        communicable diseases, STD prevention, HIV/AIDS education and control. WHO
        has also played a technical support role in pilot Rural Cooperative Medical Schemes
        and related healthcare financing studies.

        WHO has taken a lead role in promoting the Integrated Management of Childhood
        Illnesses (IMCI) program in China. While there have been concerns about its
        application at the lower levels, it is noteworthy that the Australian Tibet PHC project
        is making adaptations of the IMCI approach for the Tibet Autonomous Region.

        WHO plans to play a greater role in Tobacco Control in China.

4.3.2 World Bank

        The World Bank Group has played a major role in the health sector in China since
        the early 1980s. It has supported nine projects and completed two health sector
        studies (in 1984 and 1990), a health financing study (1997), and a poverty alleviation
        study (in 1992).

        The Bank’s projects have spanned diverse geography and topics, covering both
        health system development, as well as assisting with highly targeted health issues.
        Its health sector activities currently have a strong focus on the poor and vulnerable
        sections of the population.

        The completed Health III (Regional Health Planning) Project has led to adoption of a
        new health policy framework by the State Council at its National Health Conference
        in 1996. Health VI (comprehensive MCH) is mid-way through implementation and
        is innovative both in its focus on a comprehensive essential services package and in
        introducing poverty alleviation funds for women who are poor.

        The new Health VIII Project provides a comprehensive framework for rural health
        development and focuses specifically on improving health outcomes and enhancing
        Basic Health Services in poor, rural China through:
        • improved planning, management and health infrastructure;
        • improved health service quality and effectiveness;

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        •   increased affordability of health services.

        The project is targeting 71 poor counties in six provinces (Qinghai, Henan, Guizhou,
        Gansu, Anhui and Shanxi) and the municipality of Chongqing. It is an ambitious
        project in addressing both supply and demand side issues. Its significance also lies
        in its policy framework, which comprehensively addresses decisions arising from the
        1996 State Council National Health Conference.

        The Health IX Project, to commence in 1999, focuses on improving MCH services
        and HIV/AIDS and STD Control in China. The MCH component will build on
        Health VI but add a new element focussing on early childhood development. It will
        provide substantial support for training and poverty alleviation programs in five
        provinces (Xinjiang, Guizhou, Hainan, Jilin, Hunan). The HIV/AIDS component
        will be provided in four provinces (Xinjiang, Shanxi, Fujian, Guangxi) and will
        • policy development and institutional reform;
        • community intervention;
        • surveillance;
        • technical assistance especially for support and networking.

4.3.3 United Nations Children’s Fund (UNICEF)

        UNICEF has undertaken major national initiatives in China over the past decade,
        • EPI program and related polio eradication initiative;
        • comprehensive MCH services development;
        • Baby Friendly Hospital Initiative (BFHI);
        • iodine deficiency disorders elimination (IDD).

        Its current programs include: comprehensive MCH, breastfeeding promotion,
        epidemic prevention and disease control (EPI and management training), IDD
        elimination, health education, nutrition surveillance (policy and education), medical
        administration (hospital administration and PHC), and health financing and policy.

        The most recent initiative undertaken by UNICEF is the Integrated Development and
        Support of MCH Services and Community Nutrition Program in Poverty Areas of
        China. This project represents a departure by UNICEF from the more traditional
        vertical programs to a more comprehensive development strategy and has received
        financial support from AusAID.

      National disease elimination programs for polio, neonatal tetanus and IDD will
      continue to require central national support.
4.3.4 United Nations Development Program (UNDP)

        UNDP have activities in a number of health areas:
        • HIV/AIDS control in Fujian, Guangdong, and Hainan, which integrates STD
          prevention with HIV/AIDS control (Previously UNDP funded an HIV/AIDS
          control project in Yunnan, focussing on drug control);

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        •   Community Health Services provision - development of general practitioners in
            Jiangsu and Capital Medical University (Beijing);
        •   Development of a health insurance scheme;
        •   Nursing Development Project in Zhejiang and Sichuan provinces to develop
            improved nursing training curricula, with an emphasis on more holistic care.

4.3.5 United Nations Joint Program on HIV/AIDS (UNAIDS)

        Since 1996, UNAIDS have been involved in a wide ranging effort to coordinate the
        UN contribution in support of the Chinese Government’s AIDS response. In
        addition to supporting the MOH to develop the Chinese action plan for AIDS
        prevention and control, UNAIDS has facilitated a number of advocacy and study
        tours, sponsored high-level seminars, and disseminated best practice documents.

4.3.6 United Nations Population Fund (UNFPA)

        UNFPA has had a presence in China since 1980 and concentrates on promoting free
        choice in reproductive health and improving family planning. It has incorporated
        content about STD and HIV/AIDS in the baseline survey of its Reproductive
        Health/Family Planning Project in 32 counties.

4.4     Non Government Organisations in China

        The most significant international NGO presence in the health sector is the Ford
        Foundation. Its focus has been on community-based reproductive health programs
        in Yunnan. Under the reproductive health umbrella, issues of HIV are also
        addressed, including harm reduction and IDUs.

        Medicin Sans Frontiers has recently began to establish a presence in China in the
        health sector, although it has been implementing water supply programs in the Tibet
        Autonomous Region since 1993.

4.5     General trends for major donors

        Major multilateral agencies, such as the World Bank and WHO, have been exploring
        ways of shifting the emphasis of development assistance from vertical programs to
        broad sector approaches. This change in approach has been motivated by the need to
        secure, for the recipient country, more sustainable results from development projects
        as well as to assure greater coherence of policy and investment for donors.

        Some of the problems seen by donors in conventional development projects include:
        long preparation times, high administrative costs, implementation delays, local
        managerial passivity, and limited sustainability and impact. Some of the underlying
        causes include: lack of local ownership of projects, over-specification and lack of
        flexibility in prior planning, competing priorities of donor agencies, governments,
        and end beneficiaries, as well as limited capacity.

        Despite problems with conventional projects, most donors working in China would
        view the developmental achievements as considerable. Nevertheless, donors express

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        a growing interest in a more integrated approach to programming. The World Bank,
        UNICEF and WHO have all moved to a comprehensive framework for maternal and
        child health. The World Bank has adopted a sectoral approach to basic health
        services, building on its work in regional health planning. The AusAID Tibet PHC
        project also adopts an integrated approach to services development and delivery
        (although it concentrates mostly on the supply side).

        Of all donors, the World Bank and UNICEF have had the most significant presence,
        with sustained involvement in a large number of provinces. Their program activities,
        including approaches to project implementation, have defined expectations about the
        nature of donor projects. Among bilateral donors, DFID is likely to become
        influential in the health sector. Appendix C provides a summary of the distribution
        of key donor agencies across the provinces of China.

        As the Chinese economy and health system continue to evolve at a rapid pace, a
        flexible but systemic approach by donors will become increasingly important in
        order to respond to the changing needs and conditions.

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5.      Australian Health Policy in China

5.1     The objective of Australia’s aid program in China is:

        “To advance Australia’s national interest by assisting China’s efforts to achieve
        poverty alleviation and sustainable development”. Priority areas for the Australian
        aid program have been identified to be:
        • education
        • health
        • rural development/agriculture
        • governance
        In addition to focusing on specific sectors, gender and development, and
        environment, are issues that cut across all the priority areas.

5.2     The central aim of the Australian health in development policy is to see Australia
        working in partnership to improve the health of the poor in developing countries.
        Health aid priorities for government of Australia (GOA) include:
        • improving access to quality health care services for vulnerable groups;
        • targeting major causes of death and disability in women and children;
        • prevention and control of communicable and vector borne diseases, particularly
           tuberculosis, HIV/AIDS, malaria;
        • prevention of non-communicable diseases and injuries;
        • strengthening national policy development and health sector reform.

5.3     The Australian government has made a strategic decision to focus aid activities on
        projects which aim to alleviate poverty in the central and western provinces of
        China. These are areas where communities are likely to be poorer, and where
        Australia has a recognised presence in health service development. It is expected that
        activities will be focussed on a number of provinces to build on existing linkages
        and on experience from past activities.

5.4     Australia’s investment in the Chinese health sector is set to undergo a substantial
        expansion to approximately 25% of the bilateral aid program, reflecting the
        importance of the health sector to overall development, and to poverty alleviation in
        particular. Australia’s intention is to focus health aid on fewer but larger bilaterally
        funded projects, which are more able to influence health policy development and
        planning at both national and provincial levels. There is support for the further
        development of successful projects such as the Ningxia FP/WCH Project, to adapt
        and apply the lessons learnt and to utilise the core program elements developed for
        similar projects supported by larger donors, eg. World Bank and UNICEF.

5.5     The Australian government is committed to ensuring that the Health Sector Strategy
        for China will complement the national health policy of GOPRC. To this end,
        AusAID will work closely with relevant government departments of GOPRC (eg
        MOFTEC, MOH) to implement the recommendations of this strategy.

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5.6     The Australian government wishes to ensure that the Australian contribution through
        its aid program, as well as in the health projects, is identified and recognisable.

6.      Key Outcomes for a Health Sector Strategy in China

6.1     Improving the health status of poor people in China will require:
        • a healthy and safe environment (including water, housing, and sanitation);
        • effective interventions for priority health issues affecting poor people;
        • equitable access for poor people to health care;
        • sustainable health system infrastructure in poor communities;
        • improved health literacy in poorer communities;
        • effective health leadership at national, provincial, city, and county levels.

        The proposed Health Sector Strategy in China aims to contribute to improved health
        outcomes for the Chinese people through supporting integrated approaches to
        achieving effective and sustainable health system performance.

6.2     The key outcomes for the Strategy are:
        • Improved health status of poor and vulnerable population groups through
           effective targeting of priority health issues;
        • Enhanced performance of basic preventive and curative health services in
           meeting current and new challenges for population health;
        • Development of models for health services delivery that are sustainable and can
           be transferred to other communities.

        These key outcomes will be achieved through projects that address the health policy
        objectives of the Australian government (ref. 5.2) as well as of GOPRC (ref. 3.1,
        3.2) within an integrated framework of health system development.

6.3     Australia’s contribution to the achievement of improved health status for poor
        people in China, together with its strategic engagement in health system
        development in China, would also serve to enhance Australia’s profile and national
        interest. This engagement with national health policy development and planning is
        best achieved through the combination of effective local projects, in accord with
        national policy priorities, with capacity-building efforts at the national and
        provincial levels.

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7.      Health Sector Strategy Framework

7.1     A fundamental concern for the Strategy is how total available resources can best be
        utilised to achieve maximum health gain. Thus, a broader model for integrated
        health system development should guide consideration of investments. The model
        can be depicted as:


                                 Health strategies

                               Health infrastructure

7.2     The achievement of health gain depends on coherent and well-targeted health
        strategies/programs. However, these strategies/programs can achieve sustainable
        effect only if the health delivery infrastructure is functioning effectively and is
        secure. Conversely, any health delivery system, however strong, must have its
        priorities focused clearly on the health gain that is sought.

        Therefore, it is proposed that the Health Sector Strategy place emphasis on capacity-
        building within the service delivery system, including the senior managers and
        leaders, and within that overall framework, focus on priority interventions to address
        local health needs. These interventions should be sufficiently comprehensive to
        address a range of related health concerns.

7.3     It is further proposed that there be a three-step approach to the application of this
        Framework. Initially, in poor, rural China, priority should be given to improving
        basic health services in order to address the major burden of illness (such as
        infectious diseases and health of women and children). Thereafter, in rural and urban
        centres of hinterland provinces in western and central China, priority should be
        given to development of a more integrated community health service system
        providing effective health promotion as well as clinical services. Finally, assistance
        with institutional development and strengthening of the EPS (epidemic prevention
        station) system should be achieved, in the first instance, through a focus on the
        newer health issues (such as HIV/AIDS and NCDs) to facilitate the development of
        a more contemporary approach to the prevention and control of emerging health

7.4     A further implication of this Framework is more comprehensive engagement with
        key health sector development issues in the Chinese provinces that Australia chooses
        to focus upon. Issues of health sector governance and commitments to policy

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        implementation, therefore, become integral to the Strategy and need to be addressed
        if outcomes are to be achieved.

8.      Key Operational Principles for the Framework

8.1     The Framework identifies five principal domains for its operationalisation, which
        need to be considered in any assessment of investment priorities for health aid
        • the priority health issues to be addressed;
        • the rationale behind the particular project;
        • the location of the project;
        • the timing of the project;
        • the aspects of project implementation which favour the desired outcome.

8.2     Priority Health Issues (the “what”)

8.2.1 Based on assessment of current burden of illness, cost-effectiveness of interventions,
      and feasibility of implementation, priority intervention areas proposed under the
      Health Sector Strategy are:
      • comprehensive maternal and child health within a more integrated basic health
         services approach (encompassing health and nutrition education, antenatal and
         postnatal/newborn care, integrated management of childhood illness, iodine
         deficiency control, breastfeeding and weaning, EPI, hepatitis B immunisation,
         NTT, de-worming, early childhood development);
      • infectious and endemic diseases control (including tuberculosis, hepatitis,
         STD/HIV, micronutrient deficiency diseases);
      • integrated approach to prevention and management of NCDs and injuries in the
         context of community health services and EPS redevelopment (including tobacco
         control, diet modification, healthy aging, health promotion in schools and

8.2.2. All projects will need to ensure that there is adequate focus on development and
       support of service delivery infrastructure, with specific inputs to assist with such
       infrastructure development issues as workforce training, management improvement,
       and disease/risk factor surveillance. Thus, the capacity building focus and the health
       improvement focus of projects need to be placed within broader service
       development frameworks of basic health services (in rural areas) and community
       health services (in urban areas).

8.2.3. Health financing and rational drug policy are two critical challenges to ensuring
       equitable access and appropriate care. Governments at various levels are now
       beginning to act on the decisions arising from the 1996 State Council National
       Health Conference. In order to achieve health gain for poor and vulnerable
       populations, appropriate financing mechanisms to ensure access to primary health
       care, along with the use of an essential drug list, should be guaranteed in all projects.
       Key policy areas requiring commitment from China if projects are to be effective
       include: regional health planning (or, in rural areas, county health resource
       planning); health insurance development (including CMS and safety net for the very

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        poor and the urban poor); “closing the gate” on untrained personnel; full financing
        of prevention programs; enforcement of regulations pertaining to medical and
        pharmaceutical marketplace.

8.2.4. In terms of overall priorities from the perspective of returns on the investment in
       development assistance for health, it is important to ensure that these various
       elements – the specific health problems, the human resources and physical
       infrastructure, the financing and other policies – need to be considered as a whole.
       A well structured, appropriately oriented development assistance program for the
       health sector will achieve more, regardless of the total quantum of the program of
       assistance, than ad hoc projects on specific topics.

8.3     Rationale for Projects (the “why”)

8.3.1 The basis behind the development of health aid projects is largely determined by the
      policy settings of the Australian government and by the requirements of GOPRC, as
      identified in sections 3 and 5. Within the broad parameters set by these policies,
      there are some additional criteria that need to be considered. In order to facilitate
      better responses to a changing economic and social environment, projects should
      • opportunities for development of service models and for wider engagement in
          policy development;
      • issues and opportunities identified through better coordination between aid

8.3.2. Another important consideration is when a project should be focused on the health
       sector and when a health component should be part of a project in another sector.
       Experience across donor agencies suggests that, as the health sector is usually
       regarded as a lower priority compared to economic activities, preference should
       therefore be for more focussed health sector projects. This approach is more likely
       to secure the required attention of local government leaders.

        On the other hand, there are circumstances where a health component may be
        invaluable, if not critical, to the achievement of much broader social and economic
        objectives. Access to health care together with good nutrition, basic education, clean
        water and adequate sanitation are essential investments in reducing poverty and
        improving economic growth. Better nutrition and improved health increases the
        capacity of children to learn and of adults to work and earn an income. Thus, a
        health services component may be an important element of projects dealing with
        rural poverty alleviation or the reform of SOE. Health efforts may also be integrated
        into infrastructure projects, such as injury prevention being part of road construction,
        or health education being part of projects addressing air and water quality.

        In some circumstances, coordinated multisectoral developments may be essential
        before any effective health interventions are possible. In places of extreme poverty
        and low education levels, there may be neither sufficient financial resources nor
        health knowledge on the part of community residents to access health services.
        Education, economic and agricultural development, transportation, and
        environmental infrastructure may well be greater priorities than the health sector.

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8.3.3. It is equally important that in the development of health aid projects the issues of
       gender, environment and development are considered. The social disadvantage of
       women can potentiate the health risks for themselves and for their children and
       therefore may need to be explicitly addressed in a health program. Similarly,
       environmental factors can contribute strongly to health outcomes and need to be
       weighed carefully in the development of any aid program. It is also important to
       ensure that health aid projects serve to reduce poverty and enhance sustainable
       development, both in the health issues addressed and in the nature of the health
       interventions themselves. These considerations need to be integrated into the design
       of each health project.

8.4     Location of Projects (the “where”)

8.4.1 The Australian government has identified the poorer central and western provinces
      of China as the principal regional focus for Australia’s direct, poverty-related
      assistance, though support from the Capacity Building Program and the smaller grant
      funds, such as SAS, CHANGES, and Institutional Links, has been provided more
      widely across China. The presence of Australian health aid projects in Ningxia and
      Tibet Autonomous Region reinforces this regional commitment.

        This commitment to undertake health development projects mainly in central and
        western provinces of China is supported because:
        • it builds on existing linkages and experience to increase the impact of
           Australian health aid;
        • it concentrates Australian resources, expertise and efforts in health system
        • it addresses provinces and communities with significant need.

        In each province or autonomous region, there needs to be engagement with the
        Provincial Bureau of Health about the overall direction of health sector reform in
        that province or region. Any proposed projects should then be assessed against this
        Framework, with its emphasis on provision of improved health care, development of
        health infrastructure capacity and contribution to health policy development.
        Commitment by provincial and lower levels of governments to implement key
        government policies which assure financial accessibility to health care and quality of
        health services should be part of any aid agreement.

        Gansu is not recommended as a focus for major activities at this stage due to the
        substantial presence of other key donors, eg World Bank, UNICEF, CIDA, and
        DFID. Guizhou and Yunnan, in the southwest, are also not recommended for major
        activities, for similar reasons. (See Appendix C)

        In so far as Xian (in Shaanxi) and Chengdu (in Sichuan) are key cities in central and
        western China, and have tertiary educational institutions of national standing, they
        could act as regional foci for the developing network of Australian aid projects.

        Additional provinces in central China that should also be considered as priorities for
        aid in the health sector are: Hunan, Henan, Hubei, and Inner Mongolia (Neimong).

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        The first three have major pockets of rural poverty, particularly in the mountainous
        areas, and the provincial towns are a source of migrant labourers within China (and
        hence at major risk for HIV). Inner Mongolia, though to the north of the
        recommended priority areas, has conditions and service needs similar to the

8.4.2 In consideration of any need for alternative arrangements to better support Australian
      aid projects in distant provinces, as well as to assist the recruitment of suitable
      Australian technical advisers to work in those provinces, it is worth recognising that
      the anticipated expansion of development assistance from Australia for the Chinese
      health sector (both in size and in scope) is likely to place some strain on current
      approaches to project implementation and monitoring.

8.4.3 The recommended regional focus for major health aid projects should not be carried
      over to the activities of the smaller grant programs, such as SAS, CHANGES, and
      Institutional Links Program, as these programs provide the capacity for Australia to
      respond more flexibly to changing needs in China. However, more of the smaller
      activities that these programs fund should be expected to facilitate the larger
      technical cooperation projects through reinforcement of key participating
      organisations or institutions, in the specified provinces. Thus priority support could
      be provided to NGO’s, via CHANGES, for projects which reinforce the Australian
      presence in the proposed provinces.

8.4.4 With the influx of internal migrants into urban areas in China and the acknowledged
      need in China to modify the heavy dependency on expensive and highly technical
      hospital intervention for many illnesses in urban China, it is proposed that AusAID
      develop an engagement with MOH on the development of community health
      services, including the re-orientation of disease surveillance and control (the EPS
      system), in urban centres of these poorer central and western provinces of China.
      Australia could make a useful contribution in this field, given its level of experience
      with primary health care and health promotion for its urban population. Australia is
      seeking to improve the health of the rural poor and to reduce the health impacts of
      economic transformation. Given that sizeable numbers of the rural poor are
      migrating to cities for work and given that they are exposed there to additional health
      risks, such as HIV and TB, it would be more appropriate for the Australian health
      aid program to seek to assist those rural poor in these larger population centres of the
      central and western provinces, rather than await their return with diseases to their
      rural communities.

8.5     Aspects of Project Implementation (the “how”)

8.5.1 Good local projects provide local health benefits, enhance Australia’s credibility in
      the health sector and provide useful models that could be extended to other
      communities. They can also serve to reinforce national health policy priorities or
      indicate amendments to existing policies. The hallmarks of good local projects
      include: a comprehensive approach to health service development, community and
      counterpart participation, and the adoption of a primary health care approach to
      service delivery, with an emphasis on service development and service quality rather
      than on the provision of physical goods. The focus of health sector aid by Australia

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        on a limited number of larger projects, with an emphasis on provinces with need and
        on the extension of service models so developed, rather than the dispersal of effort
        (and resources) into many, smaller projects of local relevance only, is strongly

8.5.2 To maximise the benefits of local projects, it is important that all projects seek to
      contribute to health policy development and planning through the development of
      appropriate technical and political support at higher levels of the health sector (both
      provincial and national). The support should include the development by AusAID of
      technical advisory groups (TAGs) for health program streams, who could assist the
      development, implementation or extension of health sector projects and inform
      AusAID about policy directions affecting health and health care in China.

        On an annual basis, members of the TAGs could meet with Australian project team
        members (where appropriate), provincial health officials, and selected Australian
        experts to review progress, consider key lessons, and disseminate experiences. The
        development of a closer relationship between AusAID and key health policy makers
        in MOH would reinforce this support and ensure greater integration of Australian
        health projects into the national healthcare system.

8.5.3 Project outcomes are also likely to be improved if the capacity to identify emerging
      health issues, plan and implement health service responses, and evaluate the health
      outcomes achieved was either present or was developed in counterpart health
      systems. Australian health projects have endeavoured to identify or develop this
      capacity in the health system in China. Potential opportunities to support the
      development of such capacity in institutions in China should be explored for all
      projects. The link between the Ningxia FP/MCH Project and Shanghai Medical
      University is to be commended and could be extended as Project activities are
      widened. There is also the opportunity for Australian projects to access senior
      Chinese health experts who are listed on the database of the Consulting Branch of
      the Foreign Loan Office of MOH.

8.5.4 As the Australian program of health development assistance focuses more on larger
      projects and attempts to link local project implementation with service model
      development and health policy development, the nature of the Australian presence in
      China may also need to change. Greater emphasis may need to be placed on
      increased use of a wider range of short-term technical assistance of higher level, and
      on fewer long-term advisers. As the capacity of the health system to absorb inputs
      provided by projects may be an issue, it is important to ensure that the short-term
      technical assistance is provided by the same personnel on several different
      occasions. It may also become necessary to consider the location of Australian health
      expertise at provincial and national levels, in addition to (and in some instances,
      instead of) those engaged at the local level for individual health projects.

        It is important to recognise that there are distinct functions required of long-term
        advisers with health projects, including accountability for allocated funds and
        outcomes, skills transfer and policy engagement. These functions may require
        people with different skills.    There may well be the need to separate project
        administration functions from the expectations of policy engagement, which would

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        be better undertaken by more senior Australian experts who might provide strategic
        inputs with frequent visits of shorter duration.

8.5.5 At the national level and at the level of individual program streams, it is important to
      consider how to achieve more effective program coordination. To ensure more
      coordinated program development and mutual learning across projects, consideration
      needs to be given to the sharing of core service objectives and strategies between
      projects with similar goals, the building of coordination requirements into each
      project, the contracting for project development and implementation on a program
      basis, and the engagement of a local consultant to facilitate coordination.

8.5.6 Project outcomes may also depend on the presence of adequate health service
      infrastructure to enable full project implementation. There also needs to be an
      awareness of how the models tested can be extended elsewhere. Although capacity
      building within health services is one aspect of infrastructure development, the
      placement of additional physical resources, such as equipment or buildings may also
      be required. The forms of infrastructure investment envisaged, however, are the
      provision of smaller-scale basic health facilities and equipment, as required by
      individual projects, rather than the construction of elaborate institutes or advanced
      research facilities.

8.5.7 The issue of whether the health outcomes of projects and Australia’s interest would
      be best served by engagement in bilateral or multilateral projects merits more
      detailed consideration. While bilaterally-funded projects can make Australia’s
      contribution to the health sector more apparent, it is important to acknowledge the
      high level of health sector policy involvement in China achieved by some
      multilateral organisations and the greater potential for impact by them upon health
      sector reform in China.

        There are essentially three options for Australian engagement with multilaterals:
        pooled financing where a discrete Australian contribution can be made along with
        expeditious implementation; parallel financing where further developmental work is
        necessary for complementary activities; and adoption of multilateral project
        frameworks for the development of bilateral projects where appropriate.

        The requirement in the short-term is for some Australian aid funding to be directed
        to high quality multilateral health projects which help lay the foundation for a more
        systematic and programmatic presence for AusAID in China. This could be achieved
        by appointment of Australian short-term technical advisers, the addition of
        Australian aid presence into a community being assisted, or Australian assistance
        being used to fund a discrete component of a project. Agreement to the maintenance
        of Australian identity should be a key element of any negotiations concerning co-
        financing of projects. World Bank Health VII (health promotion) Project provides a
        useful model, but the identity of AusAID should be more prominent than the name
        of the contractor.

        To ensure that Australian-funded health development projects in China utilise the
        best possible frameworks and approaches which have been tested and proven,
        bilateral projects need to consider using more often the tested multilateral project

Part 1 : Strategic Framework                                                            25
        frameworks as their starting point and adapting them to the localities selected for
        Australian aid. This would be in preference to “re-inventing the wheel” with each
        individual health project design and implementation, which is costly in terms of time
        as well as the resources required. In practice, this approach could mean that
        Australia considers incorporating aspects of the WB and UNICEF comprehensive
        MCH/Nutrition program and World Bank Health VIII Project model for basic health
        services improvement in future Australian-funded health projects.

8.6     Timing of Projects

8.6.1 The timing of projects is largely determined by issues concerning project
      implementation, as well as by the availability of funding. Provision of some
      Australian aid funds to health projects supported by multilateral agencies would
      permit rapid engagement in a wider aspect of health development in China, while
      more extensive, bilaterally-funded health projects are being identified and

8.6.2 An additional area for ready implementation may be in support for institutional links
      and capacity building. Institutional capacity-building at the national level in China,
      with support from Australian entities, would contribute to China’s capacity to pursue
      health sector reform, as well as enhance Australian engagement with national health
      policy development. Possible linkages include: CHSI and AIHW; SDA and TGA;
      CAPM and public health authorities/PHERP institutions; NHEI and health
      promotion units/foundations/centres. The Health Insurance Commission (HIC) may
      also be well placed to assist with the introduction of new health insurance
      arrangements in China.

8.6.3 The development of more strategic service responses to the emerging health issues
      would require a sustained ongoing commitment by Australia. Issues to be considered
      in this category could include prevention of NCDs and injury, and development of
      community health services, both of which would contribute to improvements in the
      health of the rural poor who have migrated to find work in a city but who continue to
      support families in home villages. Broader health sector reform also needs to remain
      on the medium-term agenda.

9.      Risks and their management

9.1     An analysis of the possible risks related to the proposed strategy must take into
        account the broader context of the rapid pace of social and economic transformation
        in China, as well as the major economic changes across Asia.

9.2     With the Australian government decision to substantially expand aid funds allocated
        toward health sector development in China, to focus health sector aid on poverty
        alleviation in the poorer central and western provinces of China, and to engage to a
        greater degree with health policy development and health sector reform, a number of
        possible risks require consideration so that responses can be developed to ensure
        favourable outcomes are achieved.

Part 1 : Strategic Framework                                                           26
 Risks                                               Possible Responses
 Difficulty for Chinese health sector to             Adopt a programmatic approach with focus on fewer but
 accommodate and incorporate the growth in the       larger health sector projects and utilising a core
 number of health projects.                          framework for projects with similar objectives.
                                                     Develop more streamlined project development and
                                                     management systems and closer coordination with other
                                                     donor projects.
 Difficulty for Australian Embassy staff in          Explore different and more effective ways of managing
 supervising more and larger projects across         and supervising projects, such as establishing a regional
 central and western provinces of China.             centre in one of the provincial cities.
 Perceived lack of health expertise to engage in     Contract managing agents for the program streams.
 high-level policy dialogue.                         Contract high-level local consultants to provide advice.
 Difficulty for Australian managing agents in        Build into projects more short-term and higher-level
 recruiting suitably skilled Australian experts to   technical assistance.
 work on projects in the provinces.                  Explore mechanisms for further development of technical
                                                     advisory expertise in Australia.
 Successful Australian local projects have limited   Link projects more explicitly to service model and policy
 success in extension to other locations in China.   development processes, through linkages with Chinese
                                                     institutions, multilateral projects and Ministry of Health.

9.3     To ensure that Australia’s interest in the development of education, gender equity,
        environment, and governance is not overlooked in health projects, there needs to be
        explicit analysis of each priority area in the design of every local project.

9.4     A generic issue for all health development programs is that while strict adherence to
        traditional vertical programs will enhance recognition of Australia’s aid
        contribution, it will also diminish the likelihood of significant or sustainable
        development of capacity within the Chinese health system. On the other hand, a sole
        focus on capacity development is not as likely to produce an immediately
        identifiable outcome. The most appropriate response to this dilemma is much greater
        emphasis by Australian aid projects on integrated health system development.

9.5     Benefits from the proposed Strategic Framework and appropriate responses to the
        management of potential risks would include:
        • greater impact on the health of more people through successful projects;
        • impact on health issues which are just emerging in China;
        • development of a network of Chinese health experts who are favourably disposed
          towards Australia;
        • wider recognition of Australia’s contribution to health sector development in

Part 1 : Strategic Framework                                                                              27

10.       From Framework to Program

10.1      It is proposed that this Framework for integrated health system development (as
          outlined in section 7) be implemented through a two-prong approach, addressing
          both persistent issues contributing to health inequalities, which is largely a rural
          focus, and newly emerging issues, which is relatively more pressing in urban areas.
          This effectively translates into the following locality-based models for the poorer
          provinces of central and western China:

                Rural                                                     Urban

           Improved health                                           Improved health
             outcomes                                                   outcomes

      Women &       Infectious                                 STD
      children’s     Diseases                                           NCD       Injury

        Basic Health Service                                 Community Health Service

          In rural areas, a program of assistance should strengthen the management and
          delivery capacity (including quality) of basic health services, and target the health of
          women and children as well as selected infectious (and endemic) diseases. In the
          first instance, priority within this program stream should be given to development of
          more comprehensive MCH services, inclusive of reproductive health but within the
          context of a basic health services model. For infectious and endemic diseases,
          grouping of related conditions or interventions would be appropriate (eg.
          micronutrient deficiency diseases, water-borne diseases, etc).

          In urban areas, a program of assistance should assist with modernising EPS and
          developing new community health service models while targeting prevention and
          control of HIV/STD, NCDs, and injury. In the first instance, the priority for
          infrastructure development would be to define appropriate models for community
          health services, and the priority for disease prevention would be to address HIV/STD
          (including strategic planning of the response to HIV at various levels) and NCDs.

Part 1 : Strategic Framework                                                                28
10.2    National level mechanisms and appropriate technical monitoring are required in
        order to achieve a broader overview of the lessons to be learnt from the Australia
        investments in health sector development and to consider the implications of these
        lessons for health policy and health system development (as well as the potential for
        further Australian contribution to national capacity-building in health sector reform).
        The specific arrangements for the operation of the mechanisms and monitoring will
        be discussed between AusAID and MOFTEC.

11.     Priorities areas for assistance

        Three specific program streams are proposed as priorities for AusAID investment in
        the Chinese health sector:
        • Basic health services, using World Bank Health VIII as the conceptual and
            policy framework (incorporating comprehensive MCH, using World Bank
            Health VI and IX and the new UNICEF framework as starting points, as well as
            drawing lessons from the Ningxia FP/WCH project);
        • Health sector reform and community health services development, working
            closely with MOH to support new reforms, pilot service models, and assist with
            evaluation of the impact of these reforms on health and health care;
        • New approaches to disease prevention, with initial focus on HIV/STD
            prevention and control (which should be developed in close cooperation with
            UNAIDS) and leading to reframing of EPS to provide more contemporary
            approaches to disease prevention and health promotion.

        In addition, AusAID assistance at the national level for institutional strengthening
        would be beneficial in areas of health statistics, rational drug policy and control, and
        health promotion.

12.     Immediate project possibilities

12.1    Proposals on hand for bilateral assistance include:
        • Shaanxi MCH and basic health services. This proposal uses a combination of
           WB Health VIII and comprehensive MCH frameworks and is focused on several
           national poverty counties.
        • Xinjiang HIV prevention and control. This proposal is focused on education and
           outreach and attempts to cover one of the major centres of China’s HIV
           epidemic. It is complementary to World Bank Health IX.
        • MOH HIV prevention, care, and control. This proposal is comprehensive, if
           ambitious, and is multisectoral as well as multi-site. There is merit in a
           simplified and re-configured project.
        • Heilongjiang community health services. This is a new national policy priority
           area and service models are urgently required. Heilongjiang has had some
           experiences and is seen as having the capacity to develop innovative models as
           well as having population profile and socioeconomic development issues (eg.
           displaced workers from SOE reforms, and rural-urban migration) comparable to
           central China.

Part 1 : Strategic Framework                                                              29
        Subject to more detailed considerations, the first three projects can be included in the
        program streams of basic health services and new approaches to disease prevention,

        The Heilongjiang proposal is concerned with a particular form of service
        development within the broader context of health sector reform. As it will be
        important to test models in a number of localities, Heilongjiang should be paired
        with additional sites from central China to form a multi-site program stream.
        Invitations can be extended to Sichuan and Shaanxi to participate.

        Support under the Capacity Building Program may be appropriate as a precursor to
        the development of the stream on health sector reform and community health
        services. Insofar as Australia has implemented a number of major reforms in the
        health sector in recent years, there is an opportunity for providing assistance to MOH
        to enable the central level to develop a more substantial understanding of the
        implications of the transition to the market economy for the health sector in general,
        and for community health services in particular.

12.2    There are a number of bilateral projects that have been proposed for expansion,
        extension or have progressed to the pre-feasibility stage. These include:
        • Ningxia FP/WCH, which is expected to be completed in 2000;
        • Tibet Primary Health Care, which has another 18 months to run;
        • Pre-feasibility has been completed for the proposed Sichuan-Bazhong MCH

        Given the policy direction in China to integrate MCH within a basic health services
        model, Ningxia and Sichuan provincial health bureaux should be invited to redesign
        these projects as broader basic health services projects, following the same model as
        the revised Shaanxi proposal.

        The situation in Tibet is more complex, with difficulties on both the supply and
        demand sides. Insufficient technical expertise, access barriers, and cultural factors
        all contribute to underutilisation of health services. Low educational level and poor
        economic conditions may need to be addressed if health projects are to be effective
        and sustainable. A new multi-sectoral approach may be more appropriate for
        assistance to Tibet and lessons should be drawn from the collective experiences of
        bilateral and multilateral donors with projects in Tibet.

12.3    Given the number of possible projects on basic health services (assuming that
        projects in Sichuan - Bazhong, Shaanxi, and Ningxia all proceed in a similar
        direction), on disease prevention (in particular, HIV/STD), and potentially on
        community health services, three TAGs (on basic health services, HIV/STD, and
        community health services) should be established as soon as projects are in train.

12.4    Immediate opportunities for co-financing of multilateral projects should be
        considered where they can also contribute to the development of the proposed
        program streams. Australian identity can best be achieved through providing
        technical assistance training, and study tours for specific streams. Of particular
        relevance to the AusAID program is:

Part 1 : Strategic Framework                                                              30
        •   World Bank Health VIII (Basic Health Services). Technical assistance could be
            focused on: improving rural health promotion capacity (building on AusAID
            Health VII co-financing experience), health services management training for
            county-level managers (building on institutional links between Latrobe
            University and Kunming Medical College);
        •   World Bank Health IX (HIV). Technical assistance packages can be directed
            towards community-based interventions for vulnerable and high-risk populations
            and for blood supply management.

13.     Medium-term developments

13.1    There are a number of challenges in the Chinese health system for which some time
        will be required for models to evolve and for which Australia has relevant expertise.
        Injury is a major and increasing threat to health in China and projects could be
        developed which target particular causes of injury, particular population groups, and
        methods of prevention (and management). It may be appropriate to consider injury
        prevention as a component of broader projects, eg. road construction, gender equity,

13.2    In relation to other aspects of health system development, some of the opportunities
        • Reform of the EPS system to develop more contemporary means of surveillance,
            disease control, health promotion, and health regulatory measures;
        • Community health services development has three important dimensions: the
            development of community-based health services (including general practice),
            the functional integration of preventive services (including MCH and EPS) and
            primary medical care, and the improved system for prevention and management
            of NCDs;
        • Development of regional health plans in target provinces, taking the cue from the
            State Council National Health Conference and building on World Bank Health
            III (which had already built on Australian regional health planning models) to
            develop more comprehensive approaches to health resource allocation.

Part 1 : Strategic Framework                                                           31

14.     Mid-term review

14.1    Given current instabilities in economies across Asia (with the consequent adverse
        economic impacts on China), as well as the rapid pace of social transformation and
        economic and political reforms in China, it would be important to review the impact
        of health sector strategy at the mid-point of the five-year strategy period or at an
        appropriate time determined by both Governments.

14.2    The proposed Strategic Framework for health system development should be
        sufficiently robust to be able to withstand many of the predictable changes in health
        service provision and health service financing likely to occur in China, and continue
        to make a contribution to health improvement and strengthening of health services

14.3    Review of the Strategy may need to be undertaken earlier than the mid-term review
        if major variations to current assumptions or conditions occur. Such major
        variations would include substantial increases or decreases in Australian resources
        available for health sector development in China or major changes in GOPRC

14.4    Review of the Strategy should be undertaken jointly by AusAID, Ministry of Health,
        and MOFTEC. It would be extremely advantageous to include a representative of a
        major Chinese partner institution in the review team.

14.5    The review team would be expected to identify the degree to which recommended
        strategies had been implemented, identify reasons for significant variations, and
        assess the degree to which the stated outcomes of the Strategic Framework had been
        achieved. The review team would then provide the final report of the review,
        including recommendations for future actions, to AusAID and GOPRC.

14.6    Review of the Strategy would be facilitated by the production of brief annual
        assessment statements for the Desk, MOFTEC and MOH. These would build on
        current project monitoring reports but offer broader assessment of progress on the
        overall Strategy.

Part 1 : Strategic Framework                                                           32
                                           PART 2

                          POTENTIAL PROGRAM OF ASSISTANCE

Part 2 : Potential Program of Assistance                    33
Executive Summary

The Australian Government intends to increase the level of assistance to the health sector in
China, with a view to achieving health improvement at the local level as well as
contributing to national health policy development. In order to do so, AusAID has engaged
independent expert advice to develop a strategic framework and a program of assistance. A
draft strategic framework was prepared on the basis of a desk review conducted in Australia
in March 1999. A mission to China was undertaken in April 1999 to further develop the
strategy and identify a potential program of activities, in order to implement the proposed
strategic directions over a five-year period.

The Strategic Framework recommended that a health system development approach be
adopted, simultaneously addressing capacity building and infrastructure strengthening and
priority health issues. In the context of the epidemiological transition in China as well as
transition to the market economy, the operationalisation of the Strategic Framework implied
a commitment to three streams of activities:
• Basic Health Services in poor rural areas, with focus on Maternal and Child Health
    (MCH) and infectious diseases;
• Community Health Services in urban environments, with focus on non-communicable
    diseases (NCDs);
• New Approaches to Disease Prevention, with initial focus on HIV/AIDS.

Consistent with the Country Program Strategy, the Strategic Framework proposed that
assistance be provided at the local level as well as to national capacity-building; that
priorities be given to central and western provinces of China; that project design and
implementation processes be flexible and responsive; and that greater use be made of
Chinese expertise, as short-term consultants and on advisory groups for AusAID.

While in China, the Mission held wide-ranging discussions with Ministry of Health
(MOH) officials and members of the donor community, and visited potential project sites or
met with potential project proponents. Discussions at all levels confirmed that health sector
reform, with a focus on rational resource allocation, is the dominant policy agenda and
informs developments in all sub-sectors. Discussions also confirmed the importance of
much greater MOH involvement in guiding project development, implementation and
review, if AusAID wishes to contribute to policy development and achieve impact beyond
local project areas.

On the basis of these discussions, the Mission recommends that the overall thrust of the
Strategic Framework for AusAID assistance to the Chinese health sector be adopted. This
approach has received the endorsement of both MOH and the Ministry of Foreign Trade and
Economic Cooperation (MOFTEC). The Mission further recommends that the
implementation of the strategy proceed along three major programs, in line with the streams
of activities proposed in the Strategic Framework.

Based on assessment of proposals on hand and discussions held, the Mission is proposing a
substantial program of bilateral projects over the next five years. The program, if
implemented with appropriate timing, flexibility in AusAID processes, MOH participation,

Part 2 : Potential Program of Assistance                                               34
and suitable personnel arrangements, will achieve not only a full and significant program of
assistance to implement the sector strategy but also place Australia in a strong position of
policy engagement with the health sector in China. The recommended program streams and
their current status are outlined in the table below. (The notional timeframe for
development is found in the body of this document).

                              PROPOSED BILATERAL PROGRAM *

 PROGRAM STREAM **                      MAJOR ACTIVITIES ***                    NEXT STEPS
 Basic Health Services                  Multiple projects in rural              Subject to acceptable revised
                                        communities using core framework        proposals, Shaanxi and Sichuan
                                                                                to proceed to feasibility and
                                                                                design adopting the new
                                                                                framework; Ningxia (expansion)
                                                                                to proceed to feasibility and
                                                                                design adopting the new
                                                                                framework subject to AusAID
                                                                                consideration of pre-feasibility
                                        Pilot new service models in             Maintain dialogue with MOH to
                                        conjunction with MOH policy             develop pipeline projects
 Health Sector Reform and               National Capacity Building              MOH to provide proposal via
 Community Health Services              Program on health sector reform         MOFTEC
                                        Pilot Community Health Services         Heilongjiang to revise proposal in
                                        projects in multiple sites using core   consultation with MOH; Shaanxi
                                        framework                               and Sichuan be invited to submit
                                                                                proposals which may be
                                                                                incorporated as new urban
                                                                                component into the rural health
                                                                                projects (for effective
 New Approaches to Disease              Local intensive project                 Xinjiang to revise proposal and
 Prevention                                                                     proceed to design or
                                        Staged provincial and national          MOH to provide supplemental
                                        multi-site, multi-sector project        information for Phase I national
                                                                                capacity building; current
                                                                                proposal to be revised and
                                                                                simplified for Phase II
                                                                                implementation in poor provincial
                                                                                towns in Central China targeted at
                                                                                IDUs and CSWs

**     with Technical Advisory Group for each program
***    with appropriate MOH involvement in local projects

Highest priorities amongst these are: the design of Xinjiang HIV Prevention and Control
Project and Capacity Building Program support for Health Sector Reform, followed by
revision of proposals from Heilongjiang on Community Health Services Development and
from Shaanxi on Rural Basic Health Services Development.

As these projects are being progressed, there are opportunities immediately for co-financing
which would support the development of these program streams, build on previous

Part 2 : Potential Program of Assistance                                                                      35
Australian achievements in China, and raise Australian profile more broadly across
provinces. Subject to the agreement between Australia and the World Bank on the terms
and conditions of co-financing, these are:
•     For Basic Health Services: World Bank Health VIII – TA and training for health
      promotion in poor, rural areas; training in health services management at the county-
      level for poverty counties;
•     For New Approaches to Disease Prevention: World Bank Health IX – TA, training,
      and study tours for community-based HIV interventions; TA and training in blood
      supply management.
•     In order to provide timely input to meet the needs of the Chinese health sector, the
      implementation of the proposed bilateral program should commence with some
      urgency in relation to the Xinjiang HIV prevention and control project, provincial and
      national capacity building for HIV/AIDS interventions, national capacity building for
      health sector reform, and pilot community health services development.

In general, all project designs need to incorporate a certain degree of flexibility in order to
accommodate potentially significant changes in China, such as a change in the shape of the
HIV epidemic, new Constitutional amendments relating to role of private sector, and
uncertain impact of proposed taxation changes. In order to ensure policy relevance of
AusAID projects, and their contribution to future policy development, MOH representatives
should be invited to comment on project proposals, participate on design missions, and
assist with project reviews.

To ensure necessary access to Chinese national experts to assist with projects, the Mission
also recommends that AusAID consider a period contract type of arrangement with the
Consulting Branch of the MOH Foreign Loan Office. AusAID may also need to consider
deploying a range of mechanisms to ensure the new programmatic approach is implemented
in a timely and coordinated manner. These could vary from the engagement of a local
consultant to the contracting out of a program stream.

The Mission has received a high level of cooperation and support from Government of the
People’s Republic of China (GOPRC) and AusAID is now well positioned to become a
more significant contributor to the health sector in China.

Part 2 : Potential Program of Assistance                                                 36

This section provides an overview of the Mission methodology, undertaken to further
develop the strategy and identify a potential program of activities to implement the strategic
direction during the five-year period of 1999/2000 – 2003/2004. A programmatic approach
to implement the proposed Strategic Framework is recommended. The potential program of
assistance outlined in this section complements the Strategic Framework presented in Part 1.
The essential outline of the program and the key recommendations have been discussed
with, and received support from officials in MOFTEC and MOH.


1.       Desk review and strategic framework

1.1    The Desk Review undertaken by the Health Sector Strategy Team was based on
       briefings by AusAID and other Commonwealth officials in Canberra and utilised
       comprehensive background materials on health issues and the activities of donors in
       China prepared by the AusAID Post in Beijing. In addition, a number of key reports
       and articles from researchers and donors were reviewed. Team members also drew on
       their experiences in China – as health professionals visiting and advising various
       levels in the Chinese health system since the late 1970s.

1.2    The Desk Review recognised that China has made significant strides in achieving
       improved health for the population, but critical challenges lay ahead in both urban and
       rural China, in the provision of health services as well as the prevention of ill-health.
       These challenges – manifested as health inequalities and inequitable access to health
       care - relate to China’s transition to the market economy and to the epidemiological
       transition. To address these issues requires a systemic policy response.

1.3    The Desk Review further recognised that while Australia has undertaken a number of
       small but significant technical cooperation projects in the Chinese health sector, their
       impact has been relatively limited. A strategic approach was needed to ensure the
       benefits of the projects achieved broader reach and the projects had greater policy
       relevance in China.

1.4    As a consequence of these findings, the Strategic Framework recommended a health
       systems development approach be adopted, with projects placing emphasis on
       infrastructure strengthening and capacity-building, while retaining a focus on key
       health issues, particularly on prevention. The translation of the framework into the
       operational environment implied focusing activities into three program streams:
       •     Basic Health Services in poor rural areas, with focus on health of women and
             children and on infectious diseases;
       •     Community Health Services in urban (ie more densely populated) environments,
             with focus on NCDs;
       •     Strengthening Preventive Services, with initial focus on HIV/AIDS.

1.5    Consistent with the Country Program Strategy, the Health Sector Strategy proposed

Part 2 : Potential Program of Assistance                                                  37
       •     Assistance be provided at the local level to achieve improved health, as well as
             at the national level, through capacity-building and policy engagement;
       •     There should be fewer but larger activities with priority given to central and
             western provinces of China;
       •     Project design and implementation should be flexible and responsive and
             incorporate increased use of short-term, high-level Australian expertise, as well
             as Chinese expertise; and
       •     Technical Advisory Groups should be established along programmatic lines to
             provide technical guidance, as well as to maximise project impact through
             development of replicable models.

1.6    While recognising the pace of change in China, the Strategic Framework has been
       formulated to withstand predictable changes in the health sector. A mid-term review
       is proposed for 2002, to allow for adjustments and adaptation to changing economic
       and social conditions.

2.       Health sector strategy and project identification mission

2.1    The Mission visited China in order to finalise the draft strategy for Australian
       cooperation in the health sector in China, to develop a priority program of assistance
       for the next five years, and to operationalise the proposed strategy. During the
       mission’s time in China, wide-ranging discussions were held with officials from the
       MOH and associated institutes, and with other major donors in the health sector. A
       number of project proposals were submitted by MOFTEC and the AusAID Post for
       consideration and these were assessed either on the basis of field visits or meetings
       with project proponents.

2.2    During discussions with MOH, the Mission learned about Chinese priorities in
       workforce development, health system planning, rural health, urban health, HIV
       control, NCD control, endemic diseases control, MCH, and hospital management.
       The Mission also gained an overview of developments and priorities for the Centre for
       Health Statistics and Information, National Institute of Health Education, and the
       Chinese Academy of Preventive Medicine.

2.3    Discussions with major donors covered the following organisations and issues:
       •    World Bank – health sector reform, basic health services, HIV, MCH, and IDD
       •    UNAIDS – HIV
       •    UNICEF – MCH, basic health services, Expanded Program on Immunisation
       •    UNFPA – family planning
       •    DFID – urban health
       •    Ford Foundation – family planning, reproductive health, HIV, MCH

2.4    During field visits to Xinjiang (to consider project proposal for HIV prevention and
       control) and to Shaanxi (to consider project proposal for MCH/rural health),
       opportunities were also made available to examine broader issues in health system
       development, such as community health services and other policy priorities nominated

Part 2 : Potential Program of Assistance                                                38
       by the MOH.

2.5    Discussions at all levels confirmed that health sector reform, within the context of the
       transition to the market economy, is the dominant policy agenda. The principal
       concern of resource allocation, framed around the concept of regional health planning,
       informs the health services development agenda. New disease prevention priorities
       are informed by the epidemiological transition, featuring growth in NCDs, and newly
       emerging diseases, such as HIV/AIDS.

Part 2 : Potential Program of Assistance                                                 39
SECTION            2     -    RECOMMENDED             PROGRAM           OF      PRIORITY

3.       Major findings

3.1    Prevention and rural health have been long-standing priorities for GOPRC health
       policy. In the context of the transition to the market economy, both of these priorities
       have taken on new dimensions and challenges. Emerging from the economic reforms
       are three new priorities: reform of health legislation and inspection; community
       health services development, and reform of hospital management arrangements.

3.2    There are many challenges facing the Chinese health system. Key among them are the
       perverse financial incentives which undermine appropriate clinical quality, distort
       utilisation patterns, and possibly contribute to disease spread through unsafe clinical
       practice. There are many people, especially the poor, who cannot afford health care
       and delay seeking appropriate assistance. Those who do access health care may
       experience overservicing or inappropriate service. There is an overriding concern for
       service delivery units, be they preventive or curative services, to earn revenue.
       Effective means of illness prevention and ensuring access to care have not been key
       concerns for health providers.

3.3    Previous AusAID projects have achieved local impact and some profile but have not
       had the impact or profile at policy level. While these projects have addressed local
       priorities, they have not been linked into core policy concerns. As projects can take
       many years to develop and implement, it is critical that AusAID projects contribute to
       the development of services appropriate for the future rather than reinforce models of
       the past which may be superseded.

3.4    For AusAID projects to contribute to ongoing policy development, MOH must be
       involved as an active participant in project conception, design, implementation
       oversight, and evaluation. This technical role is complementary to the role MOFTEC
       plays in coordinating technical cooperation efforts generally with bilateral and
       multilateral agencies.

3.5    UNICEF and World Bank have been key donors for the health sector in China, in
       terms of the number and spread of projects that achieve local and policy impacts. As
       such, they have also established expectations within China about the nature of project
       work. Ford Foundation, although a small donor, stands out also with its presence in
       the non-government niche and its approach to gender and health issues. Although
       AusAID is an active member of the donor community, Australian profile in the
       Chinese health sector has been achieved more through the participation of individuals
       and institutions across different parts of the sector. Therefore, future Government of
       Australia (GOA) engagement with health policy development in China can build on a
       broad existing foundation and can complement the activities of other donors.

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3.6    Current areas of policy development in China parallel many of the reforms that
       Australia has grappled with in its own health system. Although not all activities and
       expertise in Australia are directly transferable, there is substantial opportunity for
       productive dialogue and technical cooperation. Furthermore, the Australian health
       system has a distinctive international profile in a number of fields, including
       prevention (eg. HIV/AIDS, health promotion), community health services (including
       MCH, general practice), clinical quality management (eg. pharmaceuticals, clinical
       training), and health services planning and management (eg. health statistics, casemix
       budgeting). The opportunity for technical cooperation to run in parallel with policy
       engagement is significant. An immediate opportunity is assistance with the
       development of China’s 10th Five-Year Plan.

3.7    China has a strong capability in national health expertise due in part to the assistance
       by donors over the past twenty years. The Consulting Branch of the Foreign Loan
       Office of MOH, for instance, has a database of over 90 senior experts, from
       government agencies, universities, and health service delivery institutions, who have
       successfully contributed to the myriad of donor projects. These experts can be drawn
       upon for technical assistance (TA) and training for projects, as well as to provide
       general advice to AusAID during the implementation of the Health Sector Strategy.

4.       Recommended program of assistance

4.1    Analysis of the discussions held during the Mission confirms that the overall thrust of
       the Strategic Framework for AusAID assistance to the Chinese health sector is
       appropriate. It is recommended that the operationalisation of the Strategic Framework
       proceed along three program lines:
       •    Basic Health Services;
       •    Health Sector Reform and Community Health Services;
       •    New Approaches to Disease Prevention.

4.2    The Basic Health Services program is concerned with developing integrated and
       effective essential health care (including the delivery of comprehensive health
       promotion and specific disease control programs) in poor, rural areas of central and
       western China. As the policy framework has been agreed at the national level,
       AusAID's efforts should be focused at provincial-level implementation of national
       policy. However, policy dialogue with MOH needs to be maintained, as there may
       well be medium-term revision of the policy framework, related to broader changes in
       taxation and Constitutional specification of private sector role. Pipeline projects could
       then be invited, with MOH involvement, in order to pilot new policy approaches.

       Because of the existence of systemic problems in the health sector, involvement in
       technical cooperation in this area must involve a number of policy commitments by
       provincial and lower level governments, in line with the 1996 State Council National
       Health Conference, if projects are going to be successful. Critical among them would
       •     the implementation of a regional health planning concept through a county
             health resource plan as a basis for role definition and capital investment in
             relation to population health needs;
       •     full government financing of prevention programs;

Part 2 : Potential Program of Assistance                                                  41
       •      “closing the gate” on non-qualified personnel;
       •      development of substantial Cooperative Medical System (CMS) coverage and
              ensuring affordability for the very poor;
       •      enforcement of policies and regulations concerning the medical and
              pharmaceutical marketplace.

       Projects within this program should address both supply and demand side issues. On
       the supply side, critical issues include:
       •     Integration, in line with new policy, of the traditionally separate MCH program
             while retaining and improving the existing, coherent service delivery and
             management network;
       •     Appropriate emphasis on township health centre level, including ensuring
             staffing by sufficiently qualified and suitably skilled clinicians to ensure local
             people use these centres and benefit from using them;
       •     Greater emphasis by the county level in ensuring quality of care at township and
             village levels and in ensuring that essential protocols, such as Acute Respiratory
             Infections (ARI), Control of Diarrhoeal Diseases (CDD) and Directly Observed
             Treatment System (DOTS), are practiced, through close supervision, ongoing
             education and audit of lower level services;
       •     Attention to particular problems in clinical quality, including inappropriate and
             excessive use of medication, clinical interventions, diagnostic and laboratory
             testing, and the risk of nosocomial infections (including unsafe injections);
       •     Focus on priority health issues and cost-effective interventions, including
             effective health promotion programs within communities, in clinical settings,
             and in schools for both communicable and non-communicable diseases;
       •     Management and system capacity to respond to key health issues and the
             determinants of health, either within the health sector (such as blood transfusion
             service for postpartum haemorrhage) or across sectors (such as water supply,
             tobacco control, and HIV prevention).

       Social analysis will be a critical part of project design processes to ensure community
       views and expectations of the service delivery system are understood and addressed.

       On the demand side, there is a need to ensure that physical and financial barriers to
       access are minimised. For CMS to be effective, the schemes need to have substantial
       population coverage, a sufficiently large amount of funds (ie. held at township level),
       provide attractive packages of services, link payment with clinical quality assurance
       measures, and be efficiently and transparently managed. Effective community
       consultation is a pre-requisite to ensure appropriate design of CMS, as well as
       community appreciation for appropriate health seeking behaviour. Additional
       arrangements may be required to ensure that services are affordable for the very poor.
       This may be achieved through separate funds, free services, or services at reduced
       prices or higher reimbursement levels. In addition to making specific financial
       arrangements, it is important that services have active outreach components and
       incorporate effective health education.

       For projects under current consideration, World Bank Health VIII provides a suitable
       conceptual and policy reference point for the core framework of projects under the

Part 2 : Potential Program of Assistance                                                 42
       Basic Health Services program.

4.3    The Health Sector Reform and Community Health Services Development
       program is concerned with strategic engagement by Australia with China to support
       development of further health sector reforms, to assist with dissemination and
       implementation of current health sector reforms, and to assist with evaluation of the
       impact of these reforms on health care and health status. Health sector reform in
       China is concerned with both adapting the health system to the market economy, as
       well as addressing the distortion of resource allocation and perverse financial
       incentives that arise from a medical marketplace. The waste of scarce resources (with
       overwhelming concentration of resources at the tertiary level and in the urban centres)
       has been recognised, and regional health planning was adopted by the State Council to
       address both urban-rural redistribution, as well as redistribution from tertiary to
       primary care. The development of community health services is thus a new policy
       direction aimed at ensuring health care resources are directed to those in need, at the
       appropriate level, and in a cost-effective manner.

       The program should commence with a focus on national-level capacity building,
       possibly via the AusAID Capacity Building Program. Specific topics which Australia
       is well-placed to assist with and which could be covered in a short-term, quick impact
       package of technical assistance, training, study tours and placements include:
       •     Purchaser/provider separation
       •     Planning and regulation of public and private sector providers
       •     Tools for achieving technical and allocative efficiency
       •     Purchasing and payment mechanisms
       •     Community service obligations for public health and preventive services
       •     Economic evaluation of public health and community health services
       •     Needs of special population groups
       •     Coordinated care, including service and financial linkages between hospital and
             community health services
       •     Urban and rural approaches to community health care.

       The second phase of the program should consist of a series of pilot projects in
       community health services. In particular, projects need to be aimed at developing
       appropriate service models at the community level to meet the needs of an ageing
       population and emerging population sub-groups (such as rural migrants and workers
       displaced by State Owned Enterprise [SOE] reforms). Given the growing mobility of
       poor rural populations with migration to work as casual labourers in urban centres,
       efforts to improve the health of the rural poor need to be addressed in a range of ways.

       These projects should include 2-3 sites, to permit the pooling of experience, sharing of
       lessons learnt, and to create a group of common interest. Projects should be
       undertaken primarily in central China, in localities of comparable levels of
       socioeconomic development. Projects should have a comparable core framework
       while allowing for piloting of specific innovations suitable to particular communities.
       A comprehensive range of health services should be planned according to community
       needs, with financial access to health care assured. Prevention and management of
       key health issues, including NCDs and STD/HIV, should be integrated into the

Part 2 : Potential Program of Assistance                                                 43
       community health service delivery system. Emphasis needs to be on a re-design of the
       local health service delivery system, rather than simply amalgamating provider units
       or shifting institutional services into community settings.

       As community health service is a new concept in China, there are varying
       interpretations of what it is, what it should do, who should be part of it, what training
       is required, and what financing arrangements are appropriate. Thus, key dimensions
       to be considered in project design include:

       •      Planning processes at the regional and district level, which involve community
              consultation, to define priority health needs of different population groups,
              assess the extent to which current resources are appropriately allocated to meet
              these needs, and identify measures to ensure health resources are directed in the
              most cost-effective manner possible;
       •      Ensuring the nature of community health practice and the roles of various
              healthcare providers are different from (and an improvement upon) current
              hospital-based ambulatory care;
       •      Specification of resources (human, physical, and financial) required for a
              defined population, including standards of practice, skills required, professional
              status and roles of various practitioners (eg. doctors, nurses), funding
              mechanisms and costs to patients, and the mix of clinical and preventive
       •      Service organisation and management arrangements with appropriate links to
              district level government and health bureau, local hospitals, and public health
              units (eg. MCH and Epidemic Prevention Station [EPS] services) and which
              include adequate accountability and transparency to the local community;
       •      Capacity for providing services to meet new needs, particularly effective health
              promotion and rehabilitation services;
       •      Appropriate financial incentives be in place for practitioners to shift into
              community health service delivery, to give emphasis to prevention, to ensure
              appropriate level and quality of care (including screening, medication), to assure
              access for poor (eg. floating population, displaced workers).

       Particular Australian expertise able to contribute to the pilot community health
       services projects includes the development of management, information, and
       regulatory mechanisms, community health service planning, training systems, practice
       standards and evaluative mechanisms, and the role of community health nursing,
       community-based rehabilitation, and health education/promotion.

       With the lead up to the 10th Five Year Plan, and because of the pace of reforms in this
       sub-sector generally, this program will need to proceed as quickly as possible if
       Australia is to have effective policy engagement with China and achieve policy impact
       beyond the local projects. A starting point for the core framework in the pilot projects
       is the core functions currently specified by the MOH for community health services.

4.4    The New Approaches to Disease Prevention program is concerned with a strategic
       engagement with the various levels of the system for disease prevention and control in
       China in order to assist with the development of contemporary approaches to disease

Part 2 : Potential Program of Assistance                                                  44
       prevention and health promotion that are able to address new and re-emerging health
       problems. China has considerable, internationally recognised, achievements in the
       control of a range of communicable and endemic diseases, but there remains a
       continuing need for vigilance with regard to these traditional priorities. However,
       China will also need to develop new approaches to meet the new challenges that arise
       from current processes of social and economic change. This program builds on the
       very successful experience of AusAID’s co-financing of World Bank Health VII
       (Health Promotion Component) and initially targets the rising epidemic of HIV/AIDS
       in China.

       Australia has earned an international reputation for its success with HIV/AIDS
       prevention and control, particularly in adopting a health promotion approach. Given
       that the HIV/AIDS epidemic is spreading rapidly in China, Australia can and should
       contribute to the Chinese effort. This contribution should occur at a number of levels
       and in various sectors – through comprehensive local projects which provide in-depth
       illustration of a contemporary public health approach as well as through capacity
       building at national and provincial levels, followed by selective demonstration of
       effective targeting of high-risk groups.

       HIV/AIDS prevention and control projects under this program should have the
       following elements:
       •     Mobilisation of government leaders across key sectors and of key non-
             government organisations;
       •     Appropriate legislative, financing, and other policy tools to support health
             programs and ensure a non-discriminatory environment;
       •     Effective systems for behavioural surveillance to enable the development of
             effective intervention programs aimed at prevention;
       •     Well designed community-based interventions that are culturally and gender
             appropriate, involve members of the affected community, and effectively target
             vulnerable and high-risk population groups;
       •     Improvement of health system capacity to treat and care for patients with AIDS
             and prevent iatrogenic transmission of HIV and related diseases in the health
             care setting (eg. unsafe injection, blood supply management, needle stick injury
             and safe syringe disposal);
       •     Inclusion of related health issues which are key determinants or consequential to
             HIV/AIDS, such as drug use, nutrition, mental health, hepatitis B and C, TB,
             and STDs.

       These projects should proceed as a matter of urgency, given the current state of the
       epidemic. Timing, location, and content of projects should be well coordinated with
       other donor efforts, particularly World Bank Health IX, given the size and spread of
       that project.

       Projects focused on HIV/AIDS prevention and control should achieve not only
       measurable impact on the spread of the epidemic, but strengthen capacity of EPS and
       health education institutes (HEI) staff, in particular, in applying contemporary public
       health frameworks and methods for disease prevention and health promotion. These
       new approaches build on good epidemiological surveillance and incorporate

Part 2 : Potential Program of Assistance                                                45
       behavioural change and community development methods. In addition, projects can
       also be expected to demonstrate effective use of health care services as a vehicle for

       In the medium term, opportunities exist for Australian contribution to other major
       health problems, such as injury prevention, and strengthening the capacity of EPS and
       HEI more generally. Continuing dialogue with MOH and relevant technical
       institutions will be important.

4.5    The implementation of the above program, with appropriate timing, sufficient
       flexibility to accommodate change, MOH participation, and suitable personnel
       arrangements, will achieve not only a full and significant program of assistance to
       implement the proposed health sector strategy but also place Australia in a strong
       position of policy engagement with the health sector in China.

5.       Project selection criteria and proposed projects

5.1    The three proposed program streams form a first level of criteria for project selection.
       It is suggested that the following criteria form an additional checklist against which all
       current and future project proposals should be assessed, in addition to any
       consideration of their merit.

       Policy Considerations
       •     Consistency with health policy in China: to what degree are the proposed project
             activities consistent with and support identified health policy directions, both
             current and foreshadowed?
       •     Support implementation of the Strategic Framework: to what degree do the
             proposed project activities assist in achieving the goals and priorities of the
             Strategic Framework?
       •     Developmental impact: who are the beneficiaries and will the project achieve
             impact beyond its locality?

       Project targeting considerations
       •    Project location: are the proposed project activities located in central and
            western China?
       •    Target population or health issue: will the proposed project activities improve
            the health of the poor and disadvantaged groups in China?
       •    Focus on key determinants: do proposed project activities seek to address
            known determinants of health, and intervene at the population and
            environmental level if effective strategies are known and possible?

       Project implementation considerations
       •    Sustainability: will the health gains achieved by the project activities be
            sustained after project funding ceases?
       •    Replicability: will the service models and policy implications be disseminated
            and incorporated into policy?
       •    Institutional and technical capacity: are the institutional arrangements for
            implementation adequate? Do the staff have the requisite technical capacity

Part 2 : Potential Program of Assistance                                                   46
              (skills, training and motivation) to manage and implement the project? Is there
              enough staff?
       •      Coordination with other projects and donors: have other relevant projects or
              donor activities been identified in order to minimise duplication, streamline
              administrative requirements, coordinate programming?
       •      Social and cultural acceptability: are the project activities sensitive to cultural
              and gender issues in the community? Will resettlement be involved?
       •      Environmental impact: will the project activities have positive or negative
              impact on the environment and are particular mitigation measures required?
       •      Australian identity: will the project draw on known areas of excellence in
              Australia and how will the contribution be recognised?

5.2    On the basis of the Strategic Framework, the proposed three program streams, and the
       above selection criteria, the proposals on hand were assessed and future proposal
       developments were considered. The following bilateral projects constitute a
       recommended program of assistance that is deemed to be achievable and appropriate
       for the implementation of the strategy. (Detailed comments on each project are found
       in Section 3).

       Basic Health Services:
       •     Revision of current Shaanxi proposal to become an integrated rural health
             development project (with possible incorporation of community health services
             in Xianyang as well);
       •     Bazhong (Sichuan) MCH to proceed to feasibility/design stage and be
             reformulated into an integrated rural health development project;
       •     Consideration to be given to Ningxia Expansion project to include integrated
             rural health development and proceed to feasibility and design.

       Health Sector Reform and Community Health Services:
       •    National Capacity Building Program on health sector reform to lay the
            groundwork for project development;
       •    Revision of Heilongjiang proposal (with MOH involvement) to become a pilot
       •    Invitation to Sichuan (possibly Mianyang) and Shaanxi (possibly Xianyang) to
            join Heilongjiang in a multi-site trial of community health services.
       New Approaches to Disease Prevention:
       •    Xinjiang HIV prevention and control project to proceed to design or
       •    MOH multisector/multisite AIDS prevention, care, and control proposal to
            proceed in two phases: (1) a national and provincial level capacity building
            phase for leaders in government, health and other relevant sectors and NGOs;
            and (2) simplification of current proposal to demonstrate effective targeting of
            high-risk population groups across several sites in poor provincial towns of
            central China.

5.3    Some current co-financing opportunities, which are both possible and desirable,
       would produce a solid foundation for two of these streams and offer a high profile for

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       Australia across China:
       •    World Bank Health VIII (Basic Health Services) – Australia can build on the
            very successful experience of Health VII (Health Promotion) and extend TA and
            training in health promotion to cover rural China; a separate TA and training
            effort can focus on health services management training for county-level
            personnel, preparing for further engagement in the bilateral Basic Health
            Services stream and building on the Institutional Links between LaTrobe
            University and Kunming Medical College.
       •    World Bank Health IX (HIV) – Australia can extend the Health VII experience
            to focus on TA and training for community interventions for vulnerable and
            high risk populations; Australia can also provide TA on blood supply
            management, building on a recognisable Australian expertise and laying the
            groundwork for addressing iatrogenically acquired HIV/AIDS.

5.4    By the mid-term of the Strategy period, additional work needs to have been
       undertaken to develop future pipeline projects. Key amongst this is:
       •    Active dialogue with MOH (Rural Health Division) to monitor changing policy
            environment and consider projects to test new policy and service models;
       •    Joint work with other donors in Tibet to analyse lessons from current assistance
            and consider more multisectoral poverty alleviation approaches for the future.

6.       Notional timeframe for implementation

6.1    A number of existing AusAID projects will be coming to conclusion over the next two
       years, along with the co-financed projects. The project proposals considered by the
       Mission provide a good starting point for new project development, but due to the
       need for revision of some project proposals, it is difficult to specify time lines and
       financial parameters. Nonetheless, the following table provides an overview of current
       projects, notional timelines for pipeline projects and their current status.

6.2    It should be stressed that the adherence to proposed timing is particularly important
       for the following projects:
       •     Xinjiang HIV – due to urgent nature of epidemic and need to achieve
             coordinated programming with World Bank Health IX, which will commence in
       •     Provincial level capacity building in HIV/AIDS interventions – both Phase I of
             MOH multi-sector/multi-site and co-financing of World Bank Health IX – due
             to the rapid spread of the epidemic across China and the timing of Health IX;
       •     National Capacity Building for Health Sector Reform – due to the timing for the
             10th Five Year Plan and the pace of reform in the community health services
       •     Community Health Services – At a minimum, the Heilongjiang project – in
             order to ensure that Australian engagement is sufficiently early in the reform
             process to provide meaningful contribution to policy dialogue.

       The highest priority would go to proposals that address issues of survival, which are
       of serious concern to China, and projects that can be undertaken immediately. The
       projects within this group include: Xinjiang HIV project, national and provincial

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       capacity building for HIV, assistance with blood supply management, Capacity
       Building Program support for health sector reform at national level, one of the Basic
       Health Services projects, and assistance with health promotion in rural China.

7.       Implementation issues and arrangements

7.1    Timing and flexible design process. As indicated above, there is a need for a
       number of project development activities to be progressed quickly. A more flexible
       approach for project design will be necessary to ensure current momentum and project
       ownership within China is supported. For instance, for the Xinjiang HIV prevention
       and control project, the proposal has been based on extensive work over the past year,
       and also complements the World Bank Health IX project which is due to commence
       soon. It is vitally important that the design phase for AusAID proceeds not only
       quickly but make only marginal adjustments to the present proposed design. AusAID
       could consider one of two options as a way of moving forward quickly with this
       proposal: (1) a small design team of two people comprising a project design
       document (PDD) specialist and a Chinese HIV interventions expert, or (2) move to
       design and implement as a package. This Mission recommends the first option be
       progressed as soon as possible.

       For the community health service pilots, it may be more appropriate to have all project
       sites participate in common design processes. This would allow for networking and
       comparable design elements, as well as more efficient processes on both GOA and
       GOPRC sides.

7.2    Flexibility in project design framework. With the rapid pace of social and
       economic change in China, it may not be realistic or reasonable to develop an
       especially detailed design which is then expected to remain relevant over 3-5 years.
       The changing character of the HIV epidemic also may require ongoing modifications
       to project design. Similarly, community health service is such a new development that
       actual project experience may provide the best guide to how the projects should
       evolve. Proposed new taxation arrangements and new Constitutional amendments
       regarding the role of the private sector may have significant impacts on CMS and on
       ownership of health services. Project designs for any Basic Health Services projects
       will need to accommodate these possibilities. Given such changeable circumstances,
       AusAID may wish to consider a project inception phase to allow for more detailed
       project planning during the first year, or using the annual project implementation
       review process to make adjustments as indicated.

7.3    MOH participation. The potential policy relevance and impact of projects will be
       enhanced if MOH is involved in project development and evaluation processes. To
       ensure that projects are contributing to policy processes. MOFTEC has further
       suggested that MOH be invited to participate in PCC meetings as well.

7.4    Technical Advisory Groups (TAGs) The Strategic Framework suggested that a
       systematic and coordinated approach to program monitoring and development is
       necessary in order to transform local projects into replicable models and engage with
       policy development in China. The Strategic Framework further proposed that
       Technical Advisory Groups be developed to provide expert technical advice for each

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       program stream.

       The Mission has confirmed this is the appropriate direction to proceed and
       recommends that AusAID begin discussions with MOH to establish and small TAGs
       (whose size can vary as the size of any program stream increases) for:
       •    Basic Health Services;
       •    Community Health Services;
       •    New Approaches to Disease Prevention.

       Appendix B provides an indicative list of names to illustrate the range of expertise
       available in China and to assist with the process of establishment of TAGs.

7.5    Program Coordination. Three program streams have been recommended in the
       China Health Sector Strategy and a number of possible projects have been described
       for each stream. Some of these offer engagement and intervention at different levels.
       For example, in the Disease Prevention (HIV/AIDS) stream, central level capacity
       building is proposed as a bilateral project of relatively short duration, while the
       proposal for Xinjiang is for a comprehensive project to complement the activities of
       the World Bank Health IX in nine prefectures in that province. The Basic Health
       Service stream could have projects in three provinces and draw on the experience of
       World Bank Health VI, VII, and VIII. The Health Sector Reform and Community
       Health Services stream, while requiring further development, will build national
       capacity, possibly through the Capacity Building Program, and implement a number
       of projects in poor urban communities. While responding to local needs, many of
       these projects will have features that are common.

       Projects will also come on line at different times, with some (eg. capacity building)
       necessarily preceding others. There will be an immediate need for: (i) communication
       between projects within streams so that common TA and training activities can be
       coordinated; (ii) ensuring that lessons learned can be shared across projects; (iii)
       coordination of activities of some projects with the activities of World Bank projects
       (occurring in other locations within the same province) so that resources can be shared
       and unnecessary duplication avoided, and (iv) maintaining an active dialogue with the
       MOH on policy developments and policy implications arising from the various
       AusAID projects.

       Consideration thus needs to be given to having strong program coordination
       mechanisms built into the projects to ensure maximum efficiency and impact of these
       activities. Various options are possible and they are not mutually exclusive. For
       instance, a program stream can be contracted to one Australian managing contractor to
       ensure the coherence of the program and better communication and coordination
       across projects. In addition, the requirement to coordinate (and funding to support
       such activities) can be built into each project. As well, a suitably senior local
       consultant could be engaged by the Post to facilitate coordination as needed.

7.6    Flexible staffing models. Given the programmatic approach, it may not be the most
       productive use of human resources to deploy a fixed model of an Australian team
       leader in each project locale. The diversity of issues and locations to be covered by
       projects may require people with different strengths and skills to work as a team

Part 2 : Potential Program of Assistance                                                50
           across locations. Greater use of short-term high-level TA may well be more suited to
           conditions in China, with fewer long-term advisers deployed. Greater use should and
           can be made of Chinese national experts as advisers.

7.7        Chinese Consultants. Within China, there is a growing number of experts in the
           health field. These people have achieved senior positions within government and
           universities. Many have had experience on various World Bank health projects and
           with other donors, and therefore have invaluable expertise to offer Australian projects.
           In addition, they are often more familiar than foreign consultants with the Chinese
           health situation, and with current policy and structural issues within the health sector.

           A Consulting Branch has been established within the Foreign Loan Office of the
           MOH since 1993. The Branch has a data bank of approximately ninety Chinese
           experts with previous experience in MOH, FLO, and World Bank projects. Recent
           assignments completed by these experts include such donors as DFID and Ford
           Foundation. The people listed on the data bank are mostly full time employees in
           various organisations across China, and therefore would be available primarily for
           short term consulting. They have been listed only by referral. The data bank is in
           Chinese, and lists the areas of expertise for each individual, and English capacity, as
           well as other information.

           Preliminary discussions with the General Manager, Dr Shi, who was formerly the
           Deputy Director, Foreign Loan Office (FLO), and Dr Annie An (Project Manager)
           indicated that there would be a willingness to engage with AusAID in more
           substantive discussions about how both organisations could work together to engage
           Chinese experts. This Mission recommends that the Post initiate further discussion
           with Dr Shi, with some haste, to explore the possibility of an arrangement whereby
           this could be achieved. There would be some benefit for the Post in having an
           abbreviated list of the consultants, together with their areas of expertise, as an initial
           reference point. There is the potential to contract an individual via this group to
           provide the HIV/AIDS Health Promotion expertise on the proposed design team for
           the Xinjiang project, for which there is considerable urgency, once the modified
           proposal has been resubmitted through MOFTEC.

      8.         Risks and their management

8.1        There are a number of risks associated with the implementation of the strategy, which
           reflect conditions in China generally. These are identified in the table below, together
           with suggestions for their management, and identifying those responsible for
           managing these. This Mission recommends that consideration be given to convening a
           risk management workshop to work through the risks associated with the strategy and
           their management. Participants in this workshop should include, at the least, project
           staff (where in place), Post, MOH, and MOFTEC. This exercise would contribute to a
           better understanding of risk management in the context of implementing the strategy,
           and enhance a joint commitment to successful implementation of the strategy.

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  Risk Management Plan

Risk                           Impact                                Management                   Responsibility
High Risk, High Impact
Start up of projects does      Significantly reduced ability to      Progress designs             Post/Desk
not occur in a timely         achieve policy impact beyond local     expeditiously
manner                        projects; lack of coordinated effort
                              with other related projects to
                              maximise impact; disillusionment
                              by the Chinese
Policy commitments             Reduced likelihood of the success     Agreement in MOU as          Post/Desk,
essential in the Basic         and sustainability of projects, and   counterpart obligation
Health Services program        impact on national policy
by provincial and lower        development; improved access for
levels of government do        the poor not achieved; utilisation
not occur                      of lower level services not
CMS fails to achieve           Unsustainable system of health        Identification of            Desk/Post, Team
widespread affordable          insurance, access to care denied      appropriate consultants,     Leaders
coverage                       for poorer segments of the            adequate community
                               population                            consultation and
Individual units do not        Fragmented service delivery,          Maximise involvement of      Post
commit to an integrated        inappropriate care                    relevant senior MOH
service delivery model                                               personnel at all stages of
                                                                     project development and
Medium Risk, Variable Impact
Project designs do not      Designs are no longer relevant           Maintain a watching          Post, TAGs
respond to changing                                                  brief on activities
economic & social                                                    particularly at the
environment                                                          national level
Lessons learned either in   Inappropriate activities                 Maximise coordination,       Post, TAGs
previous or current         undertaken, duplication of effort        interaction and
projects (Australian, other                                          dissemination of
donors, multilaterals) are                                           projects’ progress
not heeded                                                           through annual
MOH do not have                Chinese ownership at the highest      Post facilitates proposed    Post
appropriate active             level in health is not realised       actions,
engagement in the program
of Australian assistance
Inappropriate senior           Lessons learned from Australia        Appropriate discussion       Post
personnel are sent on study    are not applied in China              between Post and MOH
tours                                                                for identification
Low Risk, Variable Impact
National level capacity        Capacity at senior level and thus     Post assist MOH to           Post, Desk
building as a prerequisite     commitment to change is not           submit proposals as a
for the Health Sector          achieved, adversely affecting         matter of urgency; Desk
Reform and CHS                 subsequent projects in community      supports proposals
development program does       health services
not proceed as intended

  Part 2 : Potential Program of Assistance                                                                     52
8.2    Given the goodwill and agreements achieved by the Health Sector Strategy and
       Project Identification Mission, it is critical that risks within the AusAID system that
       may lead to slippage in timeframe are expeditiously managed jointly by Desk and

9.       Evaluation

9.1   It is essential that the strategy, the streams within it, and the projects that make up the
      streams be evaluated. The Mission makes the following recommendations:
      (i) Project designs include an evaluation framework (as opposed to the monitoring
             framework that will also be required), which clearly identifies the indicators to
             measure project effectiveness, appropriate data collection methodologies
             (qualitative, quantitative, routine data collection, surveys), timing of data
             collection, and who is responsible. It is recommended that a specialist with
             evaluation expertise be considered as part of project teams, to have short term
             input as appropriate and ensure this aspect of projects is of high quality.
      (ii) An evaluation plan is developed to measure the impact of the project streams.
             This should involve input by the respective TAGs, and will possibly require
             additional expertise for its development.

       (iii) A mid term review is undertaken that evaluates the strategy. This should be
             undertaken by a group of Australian and Chinese consultants independent of
             those involved in the implementation of the Strategy.

Part 2 : Potential Program of Assistance                                                   53

Abt Associates. Financing, Provision and Utilization of Reproductive Health Services
in China. 1997.

Bloom, Gerald; Lucas, Henry; Cao, Suhua; Gao, Jianmin; Yao, Jun; and Gu, Xingyuan.
Financing Health Services in Poor Rural Areas: Adapting to Economic and Institutional
Reform in China. IDS Research Report. 1995.

AusAID. Australia – China Development Cooperation Projects. 1998

AusAID. Country Program Strategy – China 1999 – 2001. 1998.

AusAID. Health in Australia’s Aid Program – A Policy Statement. 1998.

Dept for International Development, UK. Report of Health Sector Identification Mission
to China, 29 June –10 July 1998, 1998.

Gu Xingyuan, Gerald Bloom. A Strategy for Health Sector Reform in Poor Rural China.
IDS Bulletin, Vol 28, 1997.

Hsiao, William. “Economic Reform and Health – Lessons from China”, New England
Journal of Medicine. August 6, 1996.

IDS. Paying for Health: New Lessons from China. Policy Briefing Issue 4, July 1995.

Lawson, James; Lin, Vivian. “Health Status Differential in People’s Republic of
China”, American Journal of Public Health, May, 1994.

Lin, Vivian. Women’s Health Status Differential in China. Michigan State University
Women in Development Working Paper. 1996.

Ministry of Health (Division of Planning and Finance and Foreign Loan Office).
Background Paper for Health Project VIII. 1994.

Ministry of Health. Yearbook of Health in the People’s Republic of China. 1997.

Ministry of Health and UN Theme Group on HIV/AID in China. China Responds to
AIDS – HIV/AIDS Situation and Needs Assessment Report. 1997.

Quinley, John. Burden of Disease Analysis. Working Paper for World Bank Health
VIII Project. 1996.

Quinley, John. Cost-effective Analysis of Health Interventions. Working Paper for
World Bank Health VIII Project. 1996.

Tang, Sheng-lan; Bloom, Gerald; Feng, Xue-shan; Lucas, Henry; Gu, Xingyuan et al.

Part 2 : Potential Program of Assistance                                               54
Financing Health Services in China: Adapting to Economic Reform. IDS Research
Report. 1994.

UNAIDS. Country Profile: China. April 1999.

UNDP. China Human Development Report. 1997.

Wilks, Andreas; Hao, Yu; Bloom, Gerald; and Xingyuan Gu. Coping with the costs of
Severe Illness in Rural China. IDS Working Paper. July 1997.

World Bank. China: Long-term Issues and Options in the Health Transition. 1992.

World Bank. China: Issues and Options in Health Financing. 1996.

World Bank. Health Nutrition & Population - Sector Strategy. 1997.

World Bank. Investing in Health. World Development Report, 1993.

World Bank. Mid-term evaluation report on Comprehensive MCH project in China.

World Bank. Project Appraisal Document – Basic Health Services Project for People’s
Republic of China. (Report No. 17403 – CHA). 1998.

Yang, Pei-lin, Lin, Vivian, and Lawson, James. “Health Policy Reform in People’s
Republic of China”, International Journal of Health Services, 22, 3, 1991.

Zhao Hongwen. Health System Reform in China and its Comparison with Singapore.
Manuscript, 1999.

Part 2 : Potential Program of Assistance                                              55
Appendix A

Terms of Reference for the China Health Sector Strategy and Project Identification

February 1999

1.0     Background

        Over the past 45 years, China has made progress in improving the health of its
        population and has been effective in controlling a number of endemic and infectious
        diseases. China continues to face new challenges in the health sector brought about
        by the epidemiological transition - changes of disease pattern, rising population and
        aging population and emerging diseases such as HIV/AIDS. At the same time, with
        the weakening of the rural health system, there remain huge needs for basic health
        services such as Maternal and Child Care.

        Historically, the three-tier health network has been the backbone of the health system
        in China. The three tiers refer to the county, township and village levels at which
        health providers and beneficiaries interface. Due to a lack of financial and human
        resources, the three tier system is being gradually weakened in the poorest areas and
        has, in some cases collapsed, causing great concern in ensuring basic services
        especially at the grassroots level. As a result of the focus on short term economic
        development, less emphasis is being given to health and limited resources are
        available. The vertical nature of the health system leads to a duplication of services
        with emphasis on curative rather than preventive care, and therefore, reaching health
        goals, especially in the poorest areas, continues to be a challenging task.

        In principle, the Ministry of Health Policy gives priority to the prevention of disease.
        In reality however, public health programs remain under-funded in some areas at the
        grass-roots level, which is compounded by the fact that public health workers are
        easily diverted to activities for which they can charge fees. In many cases health
        care at the village level is heavily weighted to expensive curative care rather than
        preventive care as village health workers must try to secure 40% of their salaries
        themselves. With only 15% of the rural population compared to 50% of the urban
        population insured, approximately 700 million rural Chinese are paying out-of-
        pocket for services.

        In effect, government support for the public health and preventive health services
        has declined to a largely “user pays” system that represents a major barrier to access
        for the lower income groups and those living in poverty to health care providers and
        services. An increasing number of health units must resort to earning a proportion of
        their revenue by charging fees, usually for medications and medical services. This
        practice leads to greater disparities in access to health services, and other problems
        such as the over-prescribing of drugs.

1.1     Health Profile

China Health Sector Strategy                                                              60
        In the 1980s, infant and child mortality rates declined rapidly and in the big cities
        and coastal areas could be compared to rates of developed countries. The IMR in
        1996 was estimated at 36.4 per 1,000 live births, marking a decline from 50.2 in
        1991. However, the widening gap between urban and rural areas is evidenced by the
        urban IMR of 14.2/1000 and rural IMR of 41.6/1000 in 1995. The under-five
        mortality was 61 per 1000 live births in 1990 and it declined to 44.5 per 1000 in
        1996. Similar disparities are seen in urban and rural areas as indicated by the urban
        U5MR of 16.4/1000 and rural U5MR of 51.1/1000 in 1995. Acute respiratory
        infections (pneumonia) are the primary causes of infant and child mortality, followed
        by neonatal asphyxia, prematurity and diarrhoeal disease.

        The maternal mortality rate estimated at 94.7 deaths per 100,000 births in 1989
        dropped to 61.9 per 100,000 in 1995. However, urban and rural differences are
        apparent from the values of 39.2/100,000 and 76/100,000 respectively. The major
        causes of maternal death are obstetric haemorrhage, pregnancy induced
        hypertension, amniotic embolism, cardiac disease, liver disease and puerperal

        Remarkable achievements in immunisation coverage of over 95% were seen in
        1997. However, immunisation rates are still very low in some poor and remote areas
        as well as among the migrant population. Neonatal tetanus remains a challenge as
        TT coverage is still low, and unclean delivery and poor cord care practices still the
        norm in poor and remote areas.

        Of all deaths, 89.5% are preventable and of those preventable, 80.1% were directly
        related to obstetrics. It is also notable that of the preventable deaths 49.7% were
        related to inefficiencies in the health care system particularly at village level and
        44.5% were related to a lack of understanding and knowledge on the part of the
        beneficiaries. Other factors influencing maternal mortality are the age, number of
        deliveries, literacy, economic status, area of residence and accessibility to services.

        With increasing life expectancy (70 years in 1997), an overall decline in the rate of
        death due to infectious diseases and a rapidly growing economy there is also an
        epidemiological transition under way. In the more developed areas, there is an
        increase in non-communicable diseases, of which the most important causes of death
        are heart diseases, stroke, lung diseases and cancer. Smoking, hypertension, poor
        diet, and obesity are among the most important risk factors. In addition, the
        population’s increased mobility, economic freedom and changing behaviour have
        attributed to a resurgence of STDs and an increase of HIV.

        However, in the rural areas in particular, infectious diseases among children such as
        respiratory tract infections, diarrhoeal disease continue to predominate. Among
        adults infectious diseases such as tuberculosis and hepatitis are also prevalent.
        HIV/AIDS is a relatively new area, of growing concern in China. The Chinese are
        very committed to halting the epidemic, which is currently in it’s very early phases
        and has the potential to rapidly grow into an enormous public health problem.
        Presently, 300,000 people are estimated to be infected with HIV in China. Based on
        the fact that the testing and reporting system for HIV/AIDS is very poorly
        established in China, some experts estimate that these numbers are in fact much

China Health Sector Strategy                                                             61
        higher and growing. The largest cumulative numbers of reported infections are
        found in Yunnan province, followed by Xinjiang, Henan and Guangxi. HIV
        infections in ethnic minorities account for 36.3% of all infections. While infections
        in intravenous drug users account for 66.9% of the total numbers, the proportion
        attributable to sexual transmission is rising annually.

2.0     Rationale for the Study

2.1     Australia’s Overseas Aid Program - China Country Program

        Health is one of the key sectors supported by Australia’s overseas aid program to
        achieve its objective to advance Australia’s national interest by assisting developing
        countries to reduce poverty and achieve sustainable development. This approach is
        in line with international thinking on the close relationship between improvements in
        health and poverty alleviation.

        It is in Australia’s interest to support China in its efforts to achieve lasting poverty
        reduction through health improvement of the population and is therefore seeking to
        increase the level of assistance to the health sector. This can be accomplished
        through more specifically defining a program of assistance for the health sector in
        China. In line with the general AusAID strategy, projects that are supported should
        focus on larger, bilateral projects. However, there is still much to be gained by
        continuing to work through multilateral agencies in certain instances. AusAID is
        committed to developing an appropriate health strategy that will complement the
        GOPRC national health policy, complement other donor activity, be in line with
        AusAID health sector development cooperation activities and ensure well targeted,
        sustainable, effective and where appropriate, replicable projects.

2.2     Australia’s Overseas Aid Program - Health Policy

        AusAID is in the process of receiving final endorsement for a new health policy
        designed to ensure that health assistance is an essential part of development
        assistance. The policy promotes practical approaches to health assistance,
        implemented in cooperation with partner governments. Health sector support is seen
        as integral to the development package and is therefore targeted at:
        i. Specific challenges such as new and re-emerging diseases, major causes of death
            and disability in women and children, and health promotion, and
        ii. Assisting developing partner governments to strengthen the health sector through
            national health policy development.

        In preparation for the study mission, the AusAID Program Officer based in Beijing
        will prepare an overview of the current disease patterns, including major causes of
        death and disability. A review of donor activities will also be included to further
        identify priority health issues and geographic focus, as well as lessons learned from
        past and present AusAID and other donor health projects.

3.0     Objectives of the Study

China Health Sector Strategy                                                              62
        The objectives of the Health Sector Strategy and Project Identification Mission, in
        consultation with counterpart staff, are to:
        i. Develop a health sector strategy
        ii. Review and assess activities/projects to be included in the program, including
             preparation of Terms of Reference to allow prefeasability/feasibility studies to be
             readily commissioned and undertaken for the specific priority activities identified
             within the program.
        iii. Seek agreement from the GOPRC on the mission and its recommendations.

4.0     General Principles

        In conducting the study mission, the team will take note of the following general
        • The proposed program of assistance must be well focussed on clearly identified
            priority health issues, concentrating on fewer larger projects with the potential to
            influence the national and provincial health agendas and future policy
        • Poverty reduction should be an overarching objective of the program of
            assistance with health issues being addressed within a broad health systems
        • The program of assistance should reinforce Australia’s development interests in
            China. It should be developed in such a way that Australian assistance would
            have the potential to be amplified by the greater resources available to large
            donors such as the World Bank, Asian Development Bank and JICA;
        • While Australia has broad ranging capabilities and expertise in the public health
            and health systems management area, the program should concentrate on areas
            where this expertise and capacity is best suited to the priority health needs of
        • The assistance program should consider the use of a range of delivery
            mechanisms including Government assistance, co-financing and twinning
            arrangements with Australian health institutes;
        • While AusAID desires larger bilateral projects as opposed to a number of smaller
            multilateral projects, the comparative advantage and feasibility of working with
            large donors such as the World Bank, WHO, UNICEF, UNDP etc. must be
            assessed; and
        • The program of assistance must incorporate lessons learned from past and
            present AusAID and other donor health projects in China.

5.0     Methodology and Preparation

        In undertaking the mission objectives, the Australia based team of two independent
        consultants will:

5.1     In Australia

China Health Sector Strategy                                                              63
        •   Attend a one-day briefing session with responsible AusAID Officers from the
            China Desk, the AusAID Health Adviser and other relevant officials from other
            departments and organisations. The purpose of the briefing is to provide insight
            into the background and context of the study mission and other perceptions of
            health issues in China;
        •   review all available documentation provided by the China Desk and Post,
            including the demographic health profile of China; project reports from other
            donors; ministerial documents; AusAID Health Policy, plus any other relevant
        •   Review in detail and become expressly familiar with the following documents,
            or portions thereof (provided by the Post) in order to gain an understanding of
            health priorities and issues in China:
                − 1997 Year Book of Health in the PRC (See Chapter1- Health Policies;
                    Chapter 2 Health Supervision and Inspection; Chapter 3 – Disease
                    Control; Chapter Endemic Disease Control; Chapter 6 – Maternal and
                    Child Health Care; and Chapter 12 - Health Planning and Finance).
                − World Bank: China 2020 (pp 54-57). Contains useful information on
                    various health indicators as well as WB views on the health priorities for
                − World Bank: China 2020: Issues and Options for China .Financing
                    Health Care.
                − Background Material from WB Health VIII (Health Services in Poor
                    Counties in China: Opportunities for Donor Support).
                − China Development Briefing – April 1997.
                − China: Human Development Report 1997, UNDP – Chapters 2 & 3 in
                − IDS Bulletin – Health in Transition: Reforming China’s Rural Health
        •   Supplementary reference list for additional information also to be provided.
        •   Following the desk review of materials provided, the team may need to consult
            with AusAID Post and Desk re further issues requiring clarification;
        •   Develop a draft framework for the Country Health Sector Strategy (CHSS)
            document and identify key issues to be explored in country.

        Over one day
        • The consultants will debrief on the CHSS, presenting a summary of their review
           of the above documents, and present a draft outline of the CHSS document, for
           comment by the Desk and Post.

5.2     In Beijing, prior to in-country visit

        A package of desk review documents will be compiled for use by the consultants in
        Australia prior to the in-country visit in preparation for the mission. Consultants
        should become expressly familiar with the documents provided. The package will
        include a review of China’s health needs, AusAID’s experience with health
        programs in China, donor assistance to the health sector in China, and some
        direction for AusAID’s emerging China Health Sector Strategy.

China Health Sector Strategy                                                            64
        •   The Post will prepare the package of materials by gathering relevant national and
            provincial epidemiological and demographic data on population health status in
            the country; incorporating examples of past and present health projects; national
            GOPRC policy and health planning documents.
        •   Post will also meet with other donors to assess current strategies and key health
            issues, geographic areas of focus and future strategy direction.
        •   The material prepared is to be used as key reference material to enable the
            consultants to come to China with a well developed knowledge base of the
            overall health structure in China and the current health issues that require our
        •   The Post will help to facilitate the development of a program of meetings with
            AusAID Post Officers, MOFTEC, relevant senior personnel from Ministries of
            Health, Finance and Planning; key health personnel and administrators;
            intersectoral groups, donors, and international NGOs as required.
        •   The Post will present a comprehensive document outlining donor activity in the
            health sector and post officer will be able to answer related questions.
        •   It is anticipated that a preliminary round of meetings with bilateral donors will
            not need to be held due to the extensive meetings already conducted. Post will
            endeavour to arrange meetings with donor representatives most familiar with
            health activities in China. Meetings will be particularly desirable with British
            health missions that may be scheduled at the same time.

5.3     In China the full Team should

        •   Meet immediately with the health program officer based in Beijing, who will
            provide a briefing;
        •   Meet with the National consultant locally engaged by the post, who will
            accompany the team for the duration of the mission, providing relevant Chinese
            health expertise, helping to facilitate meetings and assisting with translation;
        •   Meet with counterparts from MOFTEC to review the proposed program of
            consultative visits and meetings;
        •   Visit two or three provinces, as determined by proposals received through
            MOFTEC, over a period of ten to fifteen days. Meet with key counterparts in
            local DOFTECs, community leaders, staff of district health facilities, members
            of village health committees, and clients/users of services;
        •   Return to Beijing to finalise the Aide Memoire, present and discuss
            findings/observations with key stakeholders (MOFTEC), and possibly give a
            presentation to other interested donors.

6.0     Scope of Services

        In order to develop an effective health strategy for China, the study team will be very
        familiar with the background materials prepared by the post prior to undertaking the
        study in China. In undertaking the study, the Team will conduct an in-depth desk
        review of materials provided, in order to:

        •   Consider activities and strategies of key donors (World Bank, UNICEF, WHO,
            JICA, CIDA, UNDP, etc.) as they relate to preparation of AusAID’s Health

China Health Sector Strategy                                                             65
            Strategy, based on desk review materials prepared and further clarification by
        •   Identify and investigate possible options for maximising the impact of AusAID’s
            support for health improvement in China through development cooperation (to
            be done through field visits to proposed project sites; discussions with local
            DOFTEC and MOFTEC counterparts).
        •   Identify areas in the health sector where Australia has a comparative advantage,
            by testing out the theories outlined in background materials.
        •   Consider links between improvement of health status and poverty reduction in
            the context of identifying future health projects for AusAID in China.
        •   Examine the status of the Essential Drugs List.
        •   Undertake an assessment of the Health Proposals (to be attached) provided by
            MOFTEC. Should these proposals (in whole or part) be found suitable for
            AusAID’s bilateral program, recommend options for implementation and prepare
            TOR for next steps.
        •   Briefly assess any other proposals and opportunities for activities in the health
            sector that could lead to the development of a long-term bilateral program in the
            health sector.
        •   Set out as projects/program concepts proposals or opportunities that have been
            identified and have a positive preliminary assessment. Prepare TOR for the next
            steps for these project concepts (ie. Prefeasibility study) that would enable
            AusAID to progress with the development of an integrated major long-term
            bilateral program in the sector.
        •   Identify any local consultants with relevant experience in the health sector who
            would be available to undertake AusAID consultancies, and present in a short list
            to appear in the mission report.
        •   Prepare a brief mission report which summarises the findings of activities
            undertaken during the mission. Give consideration to aspects of sustainability
            and feasibility, and where possible identify risks and suggest actions that would
            be necessary to minimise those risks.
        •   Prepare the documents outlined below.

7.0     Outputs

        At the conclusion of this work, the Team will have:

        •   Prepared a China Health Sector Strategy Document for Australian assistance to
            China that clearly identifies and recommends priority health areas for action, the
            objective and rationale for Australia’s involvement in particular issues areas, and
            a clear focus to guide Australian assistance;
        •   Prepared a Potential Program of Assistance Document that clearly defines the
            objective, rationale, approach (including sectors, delivery and management
            mechanisms), expected outcomes (including performance indicators),
            geographical focus, timing and scope, risks to sustainability, and approximate
            project costings;
        •   Prepared Terms of Reference to allow project designs or further prefeasibility
            studies to be readily commissioned and undertaken for the specific priority
            activities identified within the program;

China Health Sector Strategy                                                             66
        •   Discussed the proposed Health Sector Strategy and identified priority areas with
            the responsible Ministry officials, AusAID Post Officer, provincial leaders, other
            donors and NGOs.

8.0     Reporting

        The Study Team will:

        •   Provide a draft Aide Memoire to AusAID on return to Beijing for debriefing;
        •   Provide six copies of the draft Health Sector Strategy and proposed program of
            assistance to AusAID within two weeks of completion of field work,
        •   Present the recommendation of their report to AusAID North Asia Section at a
            date to be agreed,
        •   Finalise all documentation (ten bound copies) within two weeks of comments
            being received from AusAID and the GOPRC.

        Acceptance of the report by AusAID will be subject to agreement that the
        documentation meets the requirements of these TORs. The documentation shall be
        submitted in Microsoft Word Version 6 and will be presented in disk and hard copy

9.0     Composition of the Team

        The Team, including the Team Leader, will consist of two Australian based
        independent consultants and a locally engaged national consultant, recruited by
        AusAID Beijing. The locally engaged consultant will bring relevant Chinese health
        expertise to the team, help facilitate meetings and assist with translation. The team
        will also be supported by the program officer for health based in Beijing.
        Counterpart officials will be invited to work as part of the team. Every effort should
        be made to provide an appropriate gender mix. MOFTEC/DOFTEC is to provide
        translators for the team and logistical support (making necessary appointments and
        arrangements required for the mission and then to accompany the team to the field as

9.1     The collective qualifications and experience of the team should include:
             − basic qualification of a Master in Public Health
             − basic qualification of a Health Economist, including experience with health
                 care reforms/health financing and epidemiological transition environments,
             − experience in both planning and implementing maternal and child health
                 programs (particularly in developing countries and epidemiological
                 transition environments),
             − specific knowledge and experience of infectious diseases, specifically
                 HIV/AIDS, including project planning and implementation experience
             − experience in the management and oversight of a diverse portfolio of
                 health programs, international experience/experience in developing
                 countries is essential
             − previous experience as consultant on health missions (ie. UNICEF, WHO,
                 World Bank in Health sector),

China Health Sector Strategy                                                            67
               − previous experience working in health programs in China will be a distinct
               − experience in the preparation of design documents,
               − General knowledge of the following are required:
                      − epidemiology and demography and associated data analysis
                      − health sector planning
                      − project design/implementation/monitoring
                      − public health/primary health care
                      − financial analysis and administration experience
                      − experience in program monitoring and evaluation

9.2     Each Team member should also have:
              − report writing skills and the ability to meet deadlines,
              − good oral and written communication skills,
              − strong interpersonal skills,
              − word processing and spreadsheet skills,
              − access to their own computer,
              − familiarity with AusAID’s principles, guidelines and requirements,
              − an understanding of gender issues, and
              − experience in development projects in Asia, preferably in China

        The Team Leader (to be nominated) will in addition:
              − be responsible for the overall management and direction of the team’s
              − be responsible for organising transport for the team in country,
              − represent the AusAID team and, in close collaboration with the AusAID
                 Post Officer, lead consultations with government officials, NGOs and
                 other donor agencies particularly relating to intersectoral issues,
              − liaise with team leaders and members of other relevant project teams,
              − be responsible for the writing and presentation of the final draft
                 document, and
              − take responsibility for the delivery of the report and presentation to the
                 responsible AusAID officer for China in Canberra on the agreed date.

China Health Sector Strategy                                                          68
10.0     Timing and Duration

        Subject to approval by the GOPRC it is anticipated that the Study Team will spend
        approximately three weeks in country as per the following timetable:

Task                                                   Location               Proposed Dates
Pre-briefing of Australian based Team Members          Canberra               1 day
                                                                              9 March 1999
                                                                              Dr Lin
                                                                              Dr Nossar
Team to receive Desk Review Package, prepared          Prepared in Beijing,   Dr Lin 10 – 11 Mar 1999
by post – Expected to reach initial assumptions        Received by team in    Dr Nossar 11 Mar 1999
and recommendations.                                   Canberra               (Canberra)

Continuation of review exercise                        Melbourne              Dr Lin 16 – 18 March 1999
                                                                              Dr Nossar 15 – 18 Mar 1999
Team debrief & presentation of draft framework         Canberra               Dr Lin & Dr Nossar 23/3/99
to NAS desk                                                                   (Canberra)
Allow gap between Canberra/Melbourne based
work and in country visit to allow Desk and Post
to comment
Travel to China                                        In transit             Drs Lin and Nossar 17/4/99
Briefing of team and review of proposed program        Beijing                19 April 1999
of visits and meetings. Meeting with MOFTEC
counterparts to discuss visit details.
Travel to one or two provinces to meet with local      Provinces    to   be   To be determined
leaders/administrators with regards to proposals       determined
being considered. Also an opportunity to test out                             Dr Heywood to accompany
theories from desk review and consult on                                      team 21 – 30 April 1999
appropriate implementation strategies.

Return to Beijing for further discussions with Post,   Beijing                (1 day)
MOFTEC etc. as necessary
Present and discuss proposed strategy, with            Beijing                (30 April 1999)
identified priority areas, with Key Stakeholders
Finalise Aide Memoire, TORs for Health                 Beijing                (1-2 May 1999)
Proposals, Potential Program of Assistance
Return to Australia, finalise and submit full report   Australia              ATL only: 4 days
to Canberra.
Present draft reports and findings at final de-        Canberra               21 May 1999

China Health Sector Strategy                                                                     69
Appendix B

Australian links with China

1. Current and recent AusAID funded projects

        •   Hepatitis Diagnosis Improvement Project (Beijing)
        •   Tibet Primary Health Care and Water Supply Project
        •   Ningxia Family Planning/Women’s and Children’s Health Project
        •   Disease Prevention and Health Promotion Project (via WB, national – 7 cities)
        •   IDD (via UNICEF)
        •   Integrated MCH/Nutrition (40 Counties) (via UNICEF)
        •   Neonatal Tetanus Immunisation (via WHO)
        •   ARI Control (via WHO)
        •   CDD (via WHO)
        •   China Female Reproductive Health and Billings Ovulation Method Project
        •   UNFPA Women, Population and Development project
        •   SAS – Improving Health Conditions in Huanan County, Heilongjiang
        •   CHANGES – Xinjiang MCH project
        •   CHANGES – PHC in Chuangkou Township, Qinghai
        •   REGIONAL – Billings Ovulation Method Project
        •   ANCP – Yunnan Red Cross HIV/AIDS Peer Education Project
        •   CHANGES – Sichuan HIV/AIDS Train the trainers
        •   CHANGES – Tibet HIV/AIDS Response Project

2. AusAID institutional links in the health sector

        •   POW Hospital, Sydney – Zhejiang College of Traditional Chinese Medicine
            (drug development for blood diseases)
        •   Macquarie University/Australian Hearing Services – Tongren Hospital/Capital
            University of Medical Sciences (audiology training)
        •   Ludwig Institute for Cancer Research – Beijing Medical University (vaccine for
            immunotherapy of hepatoma)
        •   ACITHN – CAPM (genetic variability of human helminthic diseases)
        •   Latrobe University – Kunming Medical College (hospital management and
            health policy research and training)
        •   Lions Eye Institute – Shanghai Medical University (bio-engineered microfistula
            for glaucoma therapy)

3. Other links in the health sector

        •   RMIT - Nanjing Traditional Chinese Medicine College
        •   UNSW – Guangdong (Health services management)
        •   Bridget Hsu-Hage (Monash University) – CAPM and Tianjin Health Bureau
        •   Ian Brand – Jiangsu Health Bureau (Health service management)
        •   Victorian public hospitals – Jiangsu hospitals (10 sister hospitals)

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        •   NSW Health – Guangdong Health Bureau (Epidemiology)
        •   South Western Area Health Service/UNSW – Guangdong (MCH)
        •   South Western Area Health Service/UNSW – MOH (MCH)
        •   David David – Shanghai Medical University
        •   Yean Lim (Box Hill Hospital) – Xiamen Medical College (cardiology)
        •   MBC – HIV (MOH, Shanghai, UNAIDS, UNDP)
        •   Julian Gold – MOH (STD/HIV)
        •   Don Nutbeam – MOH (health promotion)
        •   Victorian Health Promotion Foundation – health promotion (MOH, Jiangsu,
            Shanghai, Tianjin)
        •   Rhonda Galbally – Health Promotion (MOH, Shanghai, Tianjin, Jiangsu)
        •   Sophie Dwyer – Shanghai Health Education Institute
        •   Cordia Chu (Griffith University) – Health promotion and women’s health
            (Shanghai, Women’s Federation)
        •   TGA – SATCM
        •   T Chiang Lin – SATCM
        •   Stephen Locarnini/VIDRL (Virology and laboratory)
        •   Paul Zimmet – MOH (diabetes)
        •   Cres Eastman – MOH (IDD)
        •   Vivian Lin – MOH (health policy and planning, health promotion)
        •   Carol Beaver – Tongji Medical University (health economics)
        •   John Krister – MOH (health planning, medical education and administration,
            health education)
        •   Fred Hollows Foundation – Disabled People’s Association
        •   Leon Pitterman – Nanjing University (GP training)
        •   Joan Ozanne-Smith - Nanjing University, Injury surveillance and prevention

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Appendix C

Distribution of Major donor projects across China

Province              WORLD BANK*                    UNICEF**   DFID                AUSAID
Xinjiang              TB, EPI, MCH (9), HIV          MCH (40)
Gansu                 MCH (6&9), EPI, Basic          MCH (40)   Basic Health
                      Health Services, TB                       Services
Ningxia               TB, Qinba                      MCH (40)                       FP/MCH
Shaanxi               Regional Health Planning,      MCH
                      MCH, EPI, Qinba
Qinghai               MCH, Basic Health Services     MCH (40)
Chongqing             MCH, Basic Health Servies,     MCH        Basic Health        Poverty
                      TB                                        Services
Sichuan               MCH, TB, HP, Schisto,          MCH        HIV, urban health
Tibet                                                MCH                            PHC
Yunnan                HIV, EPI, HP, MCH,             MCH        HIV
                      Schisto, Poverty
Guangxi               MCH, EPI, HP, HIV,             MCH
Guizhou               MCH, EPI, Basic Health         MCH (40)
                      Services, Rural Health
                      Workers, Poverty
Henan                 EPI, HP, Basic Health          MCH
                      Services, Rural Health
Hunan                 TB, Schisto, MCH (9)           MCH
Hebei                 EPI, TB, Rural Health          MCH
Hubei                 TB, Schisto                    MCH
Shanxi                EPI, Basic Health Services,    MCH
                      HIV, Rural Health Workers
Anhui                 Basic Health Services,         MCH
                      Schisto, Rural Health
Jiangxi               Regional Health Planning,      MCH
                      MCH, Schisto
Zhejiang              Regional Health Planning,      MCH
Jiangsu               Schisto                        MCH
Fujian                HIV, Rural Health Workers      MCH
Guangdong             TB                             MCH
Hainan                TB, MCH (9)                    MCH
Inner Mongolia        MCH                            MCH
Heilongjiang          TB                             MCH
Jilin                 MCH (9)                        MCH        urban health
Liaoning              TB                             MCH
Shandong              TB, HP                         MCH

* (6) denotes Health VI while (9) denotes Health IX.
** (40) denotes involvement in the new 40-counties project

Note: The World Bank Regional Health Planning Project has been completed; the Rural
Health Workers and the TB and Schistosomiasis projects are nearing completion, and the

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mid-term review has just been completed for the MCH (Health VI) project.

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Appendix D

Indicative list of Chinese national experts

Cai Renhua, Head of Institute for Health Policy, formerly Head of Dept of Policy and Law,

Cao Zeyi, Deputy President of Chinese Medical Association, former Minister

Dai Zhicheng, Head of National AIDS Association, formerly Head of Disease Control Dept,

Gao Yuan, Program Director of Australia-China Joint Centre for HIV/STD/Safe Sex
Education, Beijing Medical University

Gu Xinyuan, Professor of Social Medicine and Health Management, Shanghai Medical

He Jiesheng, president, China Life Insurance Co, former Vice Minister of Health

Hu Shanlian, Professor of Epidemiology, Shanghai Medical University

Liu Gucong, Head of Foreign Loan Office, Zhejiang Provincial Health Bureau, and member
of expert group on regional health planning, State Council

Liu Xiaojun, health report, China Central Television

Liu Xinzhu, Professor of Health Economics and Management, Shandong Medical

Rao Keqing, Deputy Director, Centre for Health Statistics and Information

Sun Gang, UNAIDS

Wang Fenglan, Director, Women’s and Children’s Health Promotion Committee, formerly
head of Dept MCH, MPH

Wang Hong, Professor of Health Economics, Beijing Medical University

Wang Ke An, President, Chinese Academy of Preventive Medicine

Wang Rutao, Professor of Public Health, Union School of Public Health, and Technical
Director, World Bank Health VII (Health Promotion)

Wang Yan, Professor of MCH, Beijing Medical University (qualitative research)

Wei Yin, head of Health Economics Institute, formerly Head of Dept of Planning and
Finance, MOH

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Ye Yide, Professor of Health Management, Anhui Medical University and advisor on CMS
for World Bank Health VIII

Zhang Gonglai, Professor of Social Medicine, Peking Union Medical College (specialist in
HIV social research)

Zhang Kaining, Institute for Public Health, Kunming Medical College (specialist in PRA
and reproductive health)

Zhang Zhengzhong, Deputy Director, Health Economics Institute and advisor on medical
financial assistance for the very poor for World Bank Health VIII

Zhu Xi Ying, Professor of Public Health, Beijing Medical University (specialist in youth
health and health education)

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