The SARS crisis

In more than two decades, China has forged the world's fastest growing economy by embracing the market.

But in the race to create wealth, the nation's health has been neglected, as the world found out when China's crumbling public health system was brutally exposed during the SARS crisis in 2003.

At the time of the crisis, China was criticised for trying to cover up the severity of the disease.

Nearly 350 of the 900 people who died from SARS were from China, and some hospitals were so poorly equipped that they became breeding grounds for the virus.

The government admitted the health system had been badly prepared and failed in its response to the epidemic, and two senior officials lost their jobs as a result of the fallout.

China has made great strides in responding to public health emergencies since SARS, especially in terms of accountability and sharing information.

But despite the central government's best efforts, many problems could still affect the country's ability to deal with another epidemic.

And as the World Health Organisation's China representative, Henk Bekedam, points out, an unprepared China could have an effect on the whole world.

'We need to support each other - SARS, avian influenza are very good examples of this,' Mr Bekedam says.

'If one country has it all sorted out very well in its own country, that's not good enough, because diseases, they don't respect borders.'

Lessons from the past

China's SARS crisis may have exposed a health system in disarray, but it wasn't always this way.

From the 1950s to the 1980s, China's health system was held up as a model for the developing world.

Much of the success was due to a government-owned funded and operated system that made public health a priority. It stressed preventive medicine and provided primary care in the countryside through an army of so-called 'barefoot doctors'.

Costs were borne by the government, by work units, rural collectives and social insurance.

The problems began with a push to privatise the health system in the 1980s.

Government funding to hospitals and health service providers were slashed across the board. Hospitals were told to support themselves through fees, barefoot doctors were turned into private practitioners. As a result, providers began to concentrate on money-making services to ensure their own financial survival.

Public health programs such as maternal and child health, immunisations and disease prevention all suffered as a result.

China's failed experiment

Today China is almost at the bottom of the 191 member countries of the World Health Organization, in terms of how fairly health resources are allocated.

More than two-thirds of all the money spent on health in China comes from the pockets of individuals. The government pays about 17 per cent of the country's health costs and there is little health insurance.

In 2005, an unusually frank report released by the government's top research body concluded that the marketising of health care had failed.

Professor William Hsiao from the Harvard School of Public Health has done extensive research on the Chinese health system. He says the system creates a great disparity in China.

'Those who have the money can get some of the best healthcare you'll find, even in the US,' Professor Hsiao says.

'But the vast majority cannot afford healthcare, so they forego the necessary health care they need,' he says.

The role of rural health

More than 80 per cent of the country's health resources are concentrated in the cities and in big hospitals, the situation is far worse in the countryside.

Unfortunately, it is China's rural areas that pose the biggest threat to the country's ability to contain bird flu.

The health minister, Gao Qiang, conceded this recently when addressing reporters about his country's preparedness for bird flu.

'What I'm afraid about is the low level of competency and technologies at the grassroots level, hospitals, clinics and those medical personnel,' Mr Gao says.

'I'm afraid that those people will not be equipped to early identify and diagnose and treat the epidemic, because bird flu outbreaks are mostly in rural areas, and some even in remote mountainous areas where the local health conditions are very poor and local health staff are not very competent.'

Bird flu preparations

There is little doubt that the SARS crisis has forced the Chinese government to address the ailing health system.

An official in the Ministry of Health's Policy Research Division, Gong Xiangguang, says the crisis 'allowed China to directly face up to those public health problems - it triggered an examination of the whole system'.

The Health Ministry says many steps have been taken in the past three years to better prepare China for a health epidemic.

These include a $US1.3 billion investment in disease prevention and control; and a $US2 billion investment in emergency medical care and aid services, mainly to help poor central and western regions to improve basic public health conditions.

However, experts all agree that much more needs to be done, particularly in the areas of hospital infection control, laboratory safety, surveillance and identification and diagnosis of infectious diseases.

A 'unique laboratory'

Harvard University's Chinese health systems expert, William Hsiao, describes the Chinese health system as a unique laboratory the world cannot afford to ignore.

Already, he says, China's mistakes in the past two decades have taught the world a lesson: that healthcare can't be left to the market alone and that when it comes to health, the market actually leads to inflated prices.

Beijing has yet to formulate a fully comprehensive and credible plan to correct the system's problems but awareness is growing.

'China, and the world, has at least begun to realise that public health is important for the whole world and we neglect it at our peril,' Professor Hsiao says.

This story takes excerpts from ABC Radio National's Background Briefing program.