China’s Emerging Role in Social Innovation for Global Good

Source: Stanford Social Innovation Review on May 9, 2017 | Steve Davis

Remember when China was viewed in many parts of the world with alarm and suspicion?

Back then, China—ruthless, relentless, rapacious—was a trade bully, currency manipulator, and a threat to international security through its belligerent posture in the South China Sea. In Africa, it was looting poor countries of their natural resources under the guise of development assistance. At home, China was a danger to its own people through its violation of human rights and unchecked assault on its own environment.

Ah, but that view of China is so 2016!

This year, China finds itself cast in the role of defender of globalization, champion of free trade, best hope for preserving existing agreements aimed at curbing global warming, and calm voice in the escalating tension between the United States and North Korea. Following widely hailed speeches at the World Economic Forum and the United Nations in Geneva in January, in which Chinese President Xi Jinping quoted Charles Dickens and Thucydides, and entreated world leaders to “ensure that different countries, different social strata, and different groups of people all share in the benefits of economic globalization,” the Economist called China “the global grown-up.”

Clearly, neither version is entirely right. Or entirely wrong. As China has emerged as a 21st-century global superpower, it’s safe to say it hasn’t always been an exemplary partner abroad, or a paragon of civil liberties and environmental stewardship at home. But the view of China as an evil super villain contains more than a whiff of the Yellow Peril narrative that has shaped Western understanding for so long. And the current counter-narrative—that China is the emerging leader of constructive international engagement and a sustainable global economy—has as much to do with the Trump administration’s “America first” stance and unpredictability as it does with China’s actual record on free trade, global peacemaking, and environmental protection.

Both narratives may make for good newspaper copy, but they are far too simplistic to serve as a useful guide for productive engagement with China, particularly for those of us working in social innovation, and global health and development. For if one thing is clear in this period of shifting geopolitical and economic realities, it is that China’s engagement in global health and economic development is undergoing rapid and dramatic change—change that could make China an exciting and productive partner in a range of multilateral global health initiatives, and a leader in the development of innovations well suited to the needs of people in low-income countries and poor communities around the world.

For example, President Xi’s triumphant speechmaking tour to Switzerland in January included the first-ever visit to the headquarters of the World Health Organization (WHO) by a president of China. There, he and WHO Director-General Dr. Margaret Chan signed a preliminary agreement to collaborate on a health care project based on China’s “One Belt, One Road” initiative, which focuses on trade and infrastructure collaboration between countries along the former Silk Road. According to China Daily, this made WHO “the first global organization to have agreed to such a project with China.” The agreement comes just four months after China announced a $2 billion commitment to development assistance for poor countries as part of a $12 billion increase in China’s support for United Nations efforts to eliminate extreme poverty by 2030. It’s safe to assume it will make many more announcements related to international health and development in the near future.

These steps are a significant change for a nation that, historically, has been a reluctant participant in multilateral global health initiatives, has lacked a designated government agency for coordinating international development efforts, and has been criticized for not doing more to help address global poverty. And these steps come on the heels of the strengthening of China’s institutional capabilities, the expansion of its commercial engagement, and the deepening of its commitment to international development—particularly across Africa. All of this is cause for optimism about China’s emerging role and engagement model in global health. And it raises new questions about where the best opportunities lie for working with the Chinese government and Chinese companies. Getting the answers right will have significant impact on global efforts to continue to improve health in poor communities around the world, and to address the growing risks from global pandemics, the increasing impact of noncommunicable diseases like diabetes and cancer, and more.

China’s rise from poverty and its complicated role in global health and development

On one level, the idea that China hasn’t played a big enough role in improving global health is a little hard to understand. We are in a period of unprecedented progress in human health and well-being. Over the past three decades, global poverty has been cut in half, life expectancy has increased dramatically, and childhood mortality has been reduced by 50 percent. Changes in China account for a significant portion of that improvement. As China has transformed itself from a poor nation to a middle-income one, hundreds of million people have risen out of poverty, which is overwhelmingly why the extreme poverty rate in East Asia dropped from 61 percent in 1990 to 4 percent in 2015. And a child born in China today has a life expectancy that is 30 years longer than it was for someone who was born 50 years ago.

For most Westerners who spent time in China prior to the reforms that made this transformation possible, the changes still inspire something like awe. I lived there in the early 1980s as a student at Beijing University and have returned dozens of times since. So much has been written on the subject of China’s material progress that it would be cliché for me to compare living in an unheated dorm, eating a steady diet of cabbage and rice, in a city with millions of bicycles, to the car-choked cities of China today, with their edgy architecture, expensive restaurants, and intense commercial energy. But it will always seem at least a little miraculous.

This obvious prosperity raises questions in the West about why China—now the world’s second largest economy—doesn’t contribute more to global efforts to reduce poverty, and improve health in poor nations and poor communities. A policy paper released by the Chinese government’s State Council late last year reported that China has contributed $58 billion in development aid to 166 countries and international organizations since the founding of the People’s Republic of China in 1949. This is significantly less than the $72 billion spent on foreign aid in 2015 alone by member states of the European Union. (Of course, the notion that China doesn’t contribute in proportion to its economic strength overlooks the fact that while China may have an extremely large economy overall, it ranks just 84th in gross domestic product per capita, and remains, in many respects, a relatively poor country with significant health and development challenges to overcome.)

The nature of China’s engagement with developing nations, particularly in Africa—the recipient of most Chinese aid and investment—has generated criticism and suspicion as well. China’s involvement in Africa dates back to 1963, when the country sent a medical team to Algeria. Over the years, China’s involvement has expanded beyond medical teams to include hospital construction, training programs for health workers, and malaria control projects. As the State Council paper noted, China has trained more than 12 million people from developing nations over the past six decades and sent more than 600,000 abroad to work on development projects. But the long-term benefits of some of these projects are questionable. Stories abound of hospitals and malaria centers that, never fully utilized, have fallen into disrepair or been abandoned.

Even more controversial is the complex and opaque link between development aid and resource extraction. China has invested billions in Africa over the last 15 years in massive infrastructure projects, in return for access to raw materials. One example: a $9 billion investment in the Democratic Republic of Congo announced in 2009 that included roads, hospitals, and health centers in return for tens of millions of tons of copper and cobalt.

Some of these projects have foundered in the face of the reality of conditions in Africa and the inexperience of Chinese companies involved in realizing the work. And allegations that some projects benefit China more than local communities are common. But it’s clear that many projects have delivered improvements in infrastructure, expanded industrial and agricultural development, and improved health care systems. In fact, research from The Brookings Institution found that most Chinese investments in Africa are in projects tied to services or manufacturing rather than resource extraction.

China’s involvement in African development is slated to grow significantly. In December, at the annual Forum on China-Africa Cooperation, China promised to invest $60 billion in Africa over the next few years: $5 billion in grants and interest-free loans, and most of the rest in loans and export credits. All of this is based on China’s longstanding bilateral approach to what is often called South-South Cooperation, in which China responds to requests for project support from government leaders of African nations within a framework of mutual economic development. This is in contrast to the traditional model of direct aid from wealthy nations and multilateral organizations, and reflects China’s preference not to be viewed as a rich, donor country determined to dictate to other countries how they should manage their economies.

Rather than looking at China’s engagement in Africa first and foremost as cause for suspicion, it would be far more productive to see it as a starting point for deeper engagement with Chinese partners that can bring greater benefits to poor communities in African and other low- and middle-income nations. Greater collaboration on the ground in Africa between Chinese enterprises and global nongovernmental organizations (NGOs) with complementary capabilities—from technical expertise to infrastructure development, manufacturing, distribution, and commercialization—can strengthen the impact of a broad range of health and development projects. Successful partnerships can serve as models for work in poor communities everywhere. A better understanding of what China did to increase its own smallholder farmers’ agricultural output and improve its rural health systems, for example, can inform rural development strategies in other countries. And discussions and commitments at recent international gatherings provide strong reasons to be optimistic about the prospects for greater Chinese-international collaboration in the coming decade, in Africa and elsewhere.

One example—the Every Woman Every Child China Partnership Network—brings together leading academic institutions, think tanks, NGOs, and private-sector leaders in China to improve the health of women and children. The network is part of China’s $290 million, five-year commitment to support the United Nations’ Global Strategy for Women’s, Children’s and Adolescents’ Health.

A growing focus on research and innovation

In focusing on China’s involvement in Africa and its participation—or lack thereof—as a funder of international health and development efforts, many people overlook China’s expanding role as a center for exciting research and development (R&D). Taken together, China’s huge internal market for vaccines, drugs, diagnostics, and medical equipment; its low manufacturing costs relative to the United States and Europe; its emergence as a center for world-class research; and its expansive commitment to African economic development create the conditions in which China’s contributions to improving health outcomes around the world can and should increase significantly.

Today, China is the world’s leading producer and exporter of active pharmaceutical ingredients, and Chinese pharmaceutical companies control about 30 percent of the global market for generic drugs. However, it still has a long way to go to catch up with the United States, the United Kingdom, Japan, Germany, South Korea, and even India when it comes to the discovery of new drugs. According to a recent study by the McKinsey Global Institute, China generates just 1 percent of global sales for branded pharmaceuticals, and in 2012, it accounted for just 2 percent of new drugs launched, compared with 53 percent for the United States, 10 percent for Japan, and 5 percent for India.

Increasing China’s innovation potential is a clear priority in health care—and in general. Moving from “made in China” to “developed in China” has been central to Chinese government policy as reflected in the last two Five-Year Plans—the central government’s blueprint for the country’s long-term social and economic policies. The results can be seen in the expansion of spending on R&D in China, which has grown nearly seven-fold over the past decade to reach $200 billion, putting China in second place behind the United States in total R&D investment. Spending on R&D by Chinese drug companies grew from just $162 million in 2000 to more than $3 billion in 2011. Meanwhile, a number of the world’s largest drug companies have established facilities and laboratories in China, both as a way to take advantage of the research talent there and to gain a foothold in China’s large internal market.

Further evidence of China’s focus on expanding health innovation is the increasing pace of acquisition of foreign drug, biotechnology, and health care firms. According to Bloomberg, in 2016, the Chinese health care industry was expected to invest 10 times more in overseas acquisitions than it did in 2012.

But simply importing drugs and devices developed and manufactured in China into Africa doesn’t guarantee these products will contribute to improved health outcomes. Additional efforts and partnerships will be needed to ensure that promising health innovations are affordable and accessible, meet international standards for safety, and have passed through stringent regulatory approval processes. But if China has yet to achieve the level of leadership in global health innovation to which it aspires, its role in the development of a vaccine for Japanese encephalitis (JE) shows how important its impact could be in the future.

Japanese encephalitis is a mosquito-borne virus related to dengue fever that afflicts tens of thousands of people every year in Southeast Asia and the Western Pacific. Typically, about one-third of those who contract the disease die, and up to one-half suffer permanent brain injuries. While there has long been a vaccine available to international travelers who visit the region, the vaccine’s high cost puts it out of reach for those living in the poor communities most vulnerable to JE.

After a 2005 outbreak killed 2,000 in India and Nepal, mostly children, PATH (the organization I lead) conducted a field survey to search for a better vaccine. We found that China had already developed a safe and effective JE vaccine known as SA 14-14-2. Because it was unknown and untested outside of China, PATH coordinated a series of clinical studies in cooperation with WHO, ministries of health in countries where the vaccine would be used, and the Chengdu Institute of Biological Products (CDIBP), the vaccine manufacturer.

In addition, we worked with CDIPB to establish a special public-sector price to ensure that the vaccine would be affordable for use in low-income countries. Importantly, we also supported CDIPB’s efforts to receive WHO prequalification—a critical stamp of approval for expanding access by making the vaccine eligible for purchase by United Nations agencies. This process included rigorous testing for quality and safety to meet international standards, and the construction of a new state-of-the-art manufacturing facility to ensure a stable supply.

In 2013, SA 14-14-2 became the first Chinese vaccine prequalified for use in children, and in 2014, more than 200 million people were vaccinated in six countries outside of China. At an average price of 42 cents per dose, SA 14-14-2 costs 95 percent less than JE vaccines manufactured in the West. By the end of this year, the vaccine is expected to reach more than 300 million people, marking a significant turning point in the fight against the disease.

This combination—a novel compound and low-cost, high-quality manufacturing—is a model that could have a transformative impact on efforts to address a wide range of the most challenging global health issues. As Dr. Chan said recently, “We’re seeing huge potential for China to supply the global public vaccine market via WHO prequalification, including for emergency outbreaks such as yellow fever and Ebola.” Today, PATH is working with vaccine manufacturers to increase production of an affordable polio vaccine and to develop an oral vaccine against rotavirus, a leading cause of early childhood death. We’re also supporting efforts of a Chinese manufacturer to achieve WHO prequalification for a vaccine against human papillomavirus, the primary cause of cervical cancer.

PATH has been working in China since 1979, when we launched a project with the Chinese government to modernize the country’s contraceptive factories. Today, our engagement with partners in China extends beyond vaccines and contraceptives to include drugs, diagnostics, and devices. One of the most exciting efforts involves a consortium of government, nonprofit, and private-sector partners that are seeking US Food and Drug Administration approval of tribendimidine, a drug used in China to treat parasitic worms, which afflict nearly 900 million children around the world, causing malnutrition, anemia, and other problems that can lead to long-term developmental deficits.

Read more here