This is true but I don't see why it should take on that debt to fund social expenditures, or why you think that would be good for growth. The federal government has taken on collosal debt over the past 30 years to fund social security and Medicaid as progressive taxation has been effectively eliminated, and yet the economy has not grown nearly fast enough to pay even a small portion of that off.
Here is the estimate of the economic multiplier effect for different types of US government spending.
Overall +1.61
Healthcare +4.3
Military -9.8
Now, these figures aren't directly translatable to China.
But you can see that Chinese healthcare spending should have one of the highest economic multipliers, which makes sense if most of it goes into additional jobs and wages which are mostly spent straightaway.
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My guestimate is that China could usefully spend 4% of today's GDP ($800 Bn) on additional
productive healthcare spending, which would have long-term economic, health and productivity benefits. Call it an upgrade of China's human capital stock in economic terms. I previously outlined some ideas below.
And this would not be entirely funded by the government, as there should be a standard (but affordable) charge for every service, to reduce waste and increase accountability.
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I think China could significantly increase healthcare spending on publicly funded General Practitioners for example.
At the moment, it's still very hospital-led, which is not ideal.
There's like 2 million doctors in China (17 per 10K population).
So if China adds 1 million general practitioners, roughly one-third will be GPs, which looks about right compared to any developed country (excluding the crappy US system of course)
Since GPs spend most of their time on preventative medicine or dealing with minor issues so they don't become major ones, such an upfront investment really pays off in the long-run.
It would mean overall rate of doctors in China would increase 25 per 10K population, which is not excessive compared to developed world countries.
And if each GP costs $100K per year, that is an extra $100Bn, which is 0.5% of GDP.
Plus you've got the upfront costs of building such a system and some years to train the staff, which is the real bottleneck.
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Another thing is myopia (short-sightedness)
My guess is that at any time, you could easily have 100 million children in China who would benefit from overnight contact lenses or special glasses which reduce or eliminate myopia progression (which mostly happens in childhood when the eyes are still growing)
If this was adopted en-masse as a public programme, my guess is that this would cost say $100 each per year, which is a bargain compared to elsewhere. That is still only another $10 Bn.
But I think such a programme would be worth it, as it has long-term benefits which should outweigh the costs.
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Looking at the dentist density in China - they could increase from 245K to 1.2 Mn dentists to reach European levels.
Call it another 1 Mn dentists. Maybe that's another $100K each per year?
So $100Bn (0.5% of GDP)
Again, there will be long-term benefits in terms of preventing serious (and expensive) dental issues arising in the future.
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China's nursing density also looks pretty very low.
So they could aim to double the number of nurses, which means 5 million more.
At $50K each, that would work out as $250 Bn, or 1.25% of GDP.
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The same applies to the physiotherapist density.
To reach European levels would have to increase from 0.140 Mn to 1.9 Mn
At $50K each, that would be $88 Bn, or 0.44% of GDP.
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So you could reasonably embark on a programme to build more local polyclinics (combining a GP, Dentist, Opticians, Physios) within walking distance in every district.
And because Chinese cities are generally very densely populated, you can build many larger and more efficient polyclinics, which both compete and cooperate with each other.
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So if you total all this up and maybe add some other programmes, that might hit 4% of today's GDP in terms of annual spending. But this doesn't include upfront investment costs and it will take time to train all the staff.
Plus before making such a big expansion, you really want the national health code identification system to be ready, so that all the different healthcare providers can actually communicate with each other.
And the key point is that all these items listed above will result in a healthier population which is also more productive. And that the government sets a reasonable "standard" price for services, but doesn't stop people from choosing to go private and pay more if they wish to, or from opting into a private health insurance plan.
In any case, the return on this sort of government spending should be a large net positive (even in terms of tax revenue alone) in the long term.
