Overall, health outcomes in China have improved tremendously over the past three decades, especially thanks to the reduction in some traditional infectious diseases. However, death rates from chronic diseases have been on the rise, not least owing to changes in life styles and deteriorating environmental conditions. Supply of health care is overwhelmingly provided publicly and hospitals have been absorbing a growing share of the resources. The number of doctors has increased fast but the level of qualification of incumbent doctors is often modest. Demand for care has risen rapidly, in line with incomes, and the relative price of care soared through the early 2000s. Hospital budgets and their doctors’ pay are partly based on the pharmaceuticals they prescribe and sell, whose prices are regulated and involve considerable cross-subsidisation. Faced with these problems, the government has launched a number of reforms. New insurance schemes have been rolled out both in rural and urban areas. As a result, coverage and use of medical facilities has increased a lot, except for migrants. In practice, however, catastrophic but also chronic illnesses continue to push people into poverty, especially in the poorer regions, given limited risk pooling at the national level. A new set of reforms was announced in 2009, aiming at universal, safe, affordable and effective basic health care by 2020. They involve investment in medical infrastructure, generalising coverage, more focus on prevention, a new essential drugs system and far-reaching reorganisation, including hospital reform. It will be important to make sure that primary care plays a greater role and that hospitals are managed more efficiently with less of a hierarchical structure. Progress will also require changes in the relative prices of treatments and higher doctors’ wages and tobacco prices.