Cablegate: Traditional Chinese Medicine: A Major Economic, Social, And

DE RUEHGZ #0105/01 0510522
R 200522Z FEB 08





E.O. 12958: N/A
SUBJECT: Traditional Chinese Medicine: A Major Economic, Social, and
Cultural Influence in Guangdong

1. (U) Summary: Traditional Chinese Medicine (TCM) has a strong
economic, social, and cultural foothold in south China, with
Guangdong leading the way in total TCM revenue and product output.
"Guangdong Liang Cha", for example, an herbal tea, is becoming a
national phenomenon and chasing Coca Cola in sales revenue in China.
The largest TCM hospitals are in Guangdong and the provincial
government, with assistance from the center, is investing millions
to strengthen and revitalize TCM health care infrastructure, both
for the treatment of illness and the use of preventative medical
practices. This effort is a part of a national campaign aimed at
cultural preservation; as importantly, it is a move to provide
affordable medical solutions to many of those who are underserved by
mainstream Western medicine. End summary.

TCM History: Past and Present

2. (U) Recent archaeological findings suggest that TCM was being
used over ten thousand years ago. Practitioners have compiled
compendiums of herbs for the past 2000 years, including the
"Compendium of Materia Medica" of the Ming dynasty's LI Shizhen, the
most complete and comprehensive collection available. Still, with
the advent of western medical practices, there has been a widespread
debate about whether TCM is a legitimate healthcare practice, with
some arguing that it is not science-based.

3. (U) Chairman Mao was a major proponent of TCM, sending millions
of grass-root practitioners, known as the "barefoot doctors", into
rural areas lacking standard hospitals and medical practitioners.
With the advent of economic reform and opening, support for this
alternative healthcare service declined dramatically. In 2002, the
Chinese government took another look at the utility of TCM and by
2007, the Ministry of Science and Technology (MOST) and the State
Development and Reform Commission (SDRC) proposed a TCM
modernization program as one of the major tasks in their eleventh
5-year development plans. The goal: to use science and technology
to build an effective TCM medical healthcare infrastructure.

TCM Regulations: A Unique Approach

4. (U) The Chinese State Administration of TCM (SATCM) is the
central governing agency, under the Ministry of Health, regulating
the TCM medical healthcare system. Since its establishment in 1986,
SATCM has certified TCM medical practices, standardized TCM
nomenclatures and established procedures for enforcing TCM
regulations. It also directs and supports TCM research and
technique development. The exception to the preceding: TCM-based
pharmaceutical products are regulated by the State Food and Drug
Administration (SFDA). At the provincial level, the Guangdong
Bureaus of TCM and FDA oversee the regulation of TCM medical
practice and TCM pharmaceutical products, respectively.

TCM Industry: an Important Economic Engine in Guangdong
------------ -----------------------------------------

5. (U) Guangdong produces the most TCM revenue and output.
According to government statistics, there are over 110 TCM
manufacturers in Guangdong. In 2006, the total sales revenue for
Guangdong's TCM products amounted to 9.55 billion RMB (1.36 billion
USD), i.e., 7% of the national total and up 18% compared to 2005.
For TCM pharmaceutical products alone, Guangdong's output was
119,000 tons, or 13% of the national total.

6. (U) Guangzhou Pharmaceutical Holdings Limited (GPC) is the
provinces TCM industry leader as well as top Chinese TCM
pharmaceutical company as measured by sale revenue. GPC has a
400-year history - the longest in China - of manufacturing
"formulated" TCM products. GPC's herbal tea beverage, "Guangdong
Liang Cha", has become a national phenomenon in the past year and
one analyst estimates that its sales volume will top that of Coca
Cola in 2008. As a point of reference, Coca Cola China had sales
revenue of 2.8 billion Yuan (400 million USD) in 2005, was ranked at
the top in carbonated beverage sales in China with growth of 20
percent or so annually.

Guangzhou TCM Hospital: the Front Runner in China
---------------------- -------------------------

7. (U) Guangzhou TCM Hospital was founded in 1933, and is one the
oldest TCM hospitals in Chinese modern history. Size-wise, it is
the top TCM hospital in China. It is a comprehensive network, with
five modern class A hospitals in Guangzhou and four mid-size
outpatient clinics out of the city. It has over 3000 inpatient bed
units. In 2006, total outpatient visits amounted to 4 million, the

GUANGZHOU 00000105 002 OF 002

highest in China for a TCM hospital. The hospital has invested a
significant amount (500 million RMB or 80 million USD) on instrument
upgrades, the largest such investment by a TCM hospital in China.

8. (U) Guangzhou TCM Hospital has an impressive list of nationally
and internationally acclaimed TCM doctors. The hospital recruits
TCM experts from around the country and has a mentoring system to
train young practitioners. It offers over 100 TCM specialists for
specific diseases. The hospital recently created a new specialty
called preventative TCM. A whole-body scan system and individual
health consultation, including TCM remedies, are prescribed for
those who come for physical checkups. The hospital specialists
also frequently publish a TCM "soup recipe" in local newspapers.
Cantonese have a long tradition of taking TCM through food for
health purposes.

9. (U) Guangzhou TCM Hospital couples TCM therapies with advanced
clinical diagnostics. The hospital has invested a significant
amount of capital (500 million RMB) to upgrade its diagnostics
capability to improve treatment. The diagnostic division is ISO
17025-certified and offers a range of standard tests that are
normally seen in Western medicine hospitals.

10. (U) Guangzhou TCM Hospital is also one of the few TCM clinics in
China capable of conducting clinical research in compliance with
international standards. In the past few years, the hospital was
commissioned by MOST under Project 863 to develop standards and
procedures for conducting and evaluating TCM clinical trials. The
hospital conducts about 30 phase 1 - phase 3 clinical trials per

11. (U) In the last year, the hospital has formed a TCM research
institute to increase TCM basic and clinical research. The
institute is also funded by MOST, which awards 10 million RMB (1.43
million USD) a year under Project 863 and 973. The hospital has
formed multiple research collaborations with overseas researchers in
many disease areas, including immune function, digestive disease,
skin rejuvenation, rheumatoid arthritis, and breast cancer.

12. (U) New TCM product development is also a key hospital activity.
Most notably, the hospital has an active program for the
development of a new prophylactic anti-malaria drug which contains
artimisinine. Clinical trials are slated to begin in 2008 in Africa
(Ghana and Nigeria).

Guangdong's roadmap to build a better TCM healthcare system
---------------------------- ------------------------------

13. (U) In accordance with the national strategy for TCM
modernization and development, the Guangdong provincial government
has devised a 3-year (2006-2008) plan, budgeted at 300 million RMB
(42.8 million USD) to build a better TCM healthcare system. 35 TCM
hospitals at the municipal and district levels will receive 2-3
million RMB each for facility improvement; 200 TCM disease
specialties are established throughout the province; and 500,000 TCM
practitioners will receive one-time cash awards as part of the
compensation package. The goal is to make available simple and
affordable healthcare to the largely low-income population,
especially those from the rural area.


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