CHINA is attracting an increasing amount of foreign investment in its health-care industry after lifting a ban on overseas capital.

Among the latest entrants, Singapore-based Parkway Group Healthcare, a leading private high-end hospital and health-care services company in Asia, will invest US$10 million to set up its first medical center in Shanghai in mid-2006.

The company, which operates the Mount Elizabeth and Gleneagles groups of hospitals worldwide, rented the entire fourth floor of the Shanghai JW Marriott Hotel for its operation after signing a cooperative agreement with Shanghai Huashan Hospital.

"Shanghai is estimated to be the second-largest market for medical services within five to 10 years, taking advantage of a large population and growing awareness on personal health care," said Dr Jonathan Sean, president of Parkway China group.

The Singapore-listed group will invest several million US dollars in cooperation with domestic hospitals over the next three to five years in big Chinese cities including Beijing and Guangzhou.

China has gradually loosened restrictions on its medical sector to foreign firms since 2001 to comply with World Trade Organization rules.

Overseas investors are allowed to acquire as much as a 70 percent stake in joint-venture hospitals and medical clinics while wholly foreign-owned hospitals are still not allowed.

Parkway is far from alone among foreign health-care organizations that are optimistic about China's fledging market.

SK Group from South Korea built its first private hospital in Beijing at the end of 2003. It plans to open 20 more across the country by the end of 2010.

About 200 foreign-funded private hospitals and health-care centers such as US-based Chindex International Inc had entered the market by the end of 2004.

China's investment in medical institutions accounts for about 3.6 percent of its gross domestic product, far below the average 14 percent worldwide.

More than 80 percent of the hospitals in China are state-owned facilities and have limited capital to buy advanced equipment.