China’s AI Healthcare Market (Part I): Growth Trends, Drivers, and APAC Comparison 

China’s AI healthcare market is expanding rapidly, driven by a combination of state-backed policies, vast centralized data, and dual urban–rural demand. Its scale, speed, and supportive ecosystem make China the most compelling destination in APAC for foreign investors seeking high-growth AI healthcare opportunities.

The integration of artificial intelligence (AI) into healthcare has emerged as one of the fastest growing and most transformative trends worldwide. Globally, AI applications in medical diagnostics, drug discovery, hospital operations, and patient monitoring have attracted billions in venture capital and spurred partnerships between technology giants and healthcare providers.

North America and Western Europe remain leaders in characterized AI algorithms for radiology and genomics. However, China has rapidly distinguished itself through an unparalleled combination of centralized health data, strong government-driven mandates, and an underserved patient population in need of more efficient care delivery systems.

Find Business Support

Protect your business investments in Asia with our comprehensive cybersecurity solutions.

In 2023, the value of China’s AI healthcare market reached approximately US$1.59 billion, reflecting the cumulative impact of accelerated AI adoption across hospitals, telemedicine platforms, and digital health startups. Recent analyses project that this market will expand to US$7.33 billion by 2028, an intermediate milestone signaling a compound annual growth rate (CAGR) of roughly 42.5 percent from 2023, and ultimately soar to US$18.88 billion by 2030.

This trajectory underscores not only the sheer speed of expansion but also China’s unique advantages in scaling AI-driven solutions at national scale (for example, unified electronic medical record systems, permissive regulatory sandboxes, and large volumes of real-world clinical data).

Taken together, these dynamics create a fertile environment in which China can outpace many developed markets in both the speed of AI tool deployment and the scale of real-world validation.

Defining AI healthcare in China

In the Chinese context, ‘AI healthcare’ encompasses the application of AI technologies across various facets of the healthcare ecosystem. Particularly, while AI medical devices typically refer to software or embedded systems used in diagnostics, AI healthcare in China encompasses a far broader ecosystem. It includes not only diagnostics and medical devices, but also drug development, hospital management, digital platforms, and public health surveillance tools powered by AI. More specifically, a few notable applications of this include:

• Medical imaging and diagnostics: AI algorithms assist in interpreting radiological images, aiding in the early detection of diseases such as cancer.
• Telemedicine and digital health platforms: AI powers virtual consultations and remote patient monitoring, expanding access to healthcare services, especially in rural areas
• AI-assisted drug discovery: AI accelerates the process of drug development by predicting molecular interactions and potential therapeutic effects, thereby reducing time and costs associated with bringing new drugs to market.
• Smart hospital Infrastructure: AI optimizes hospital operations through intelligent scheduling, resource allocation, and patient flow management, enhancing overall efficiency.

Distinctive characteristics of the China’s AI healthcare ecosystem

China’s AI healthcare ecosystem operates under a distinct set of structural and policy dynamics that differentiate it from other global markets. The following features are especially important for foreign investors and stakeholders to understand, as they shape both the opportunities and constraints in this space:

• State-driven integration: China’s AI healthcare sector is not market-driven alone—it is embedded in state-led industrial and public health strategies like Healthy China 2030 and the New Generation AI Development Plan. As a result, AI initiatives—ranging from early disease screening to hospital workflow optimization—are closely aligned with government targets, and developers often rely on subsidized R&D grants, expedited device approvals, and pilot-zone incentives.
• Data availability and centralization: China’s tiered hospital system funnels extensive clinical and imaging data into centralized platforms. Nationwide efforts to standardize electronic medical records (EMRs) have broken down many traditional silos, enabling AI developers to train and validate models on diverse, high-quality datasets. While this data abundance accelerates innovation, it also demands strict compliance with domestic privacy regulations and local data-localization mandates.
• Bridging urban and rural needs: A pronounced urban–rural digital divide creates dual imperatives for AI, enhancing sophisticated care in leading metropolitan hospitals, and expanding basic access in under-resourced regions. In tier-1 and tier-2 centers, investments flow into advanced AI diagnostics (such as, radiology, pathology). Meanwhile, telemedicine platforms, often powered by AI triage and mobile-enabled diagnostics, address acute physician shortages in rural areas, aligning equity goals with national modernization efforts.
• Vibrant innovation ecosystems: Technology conglomerates (such as, Alibaba Health, Baidu Health) have established dedicated AI health divisions, channeling capital and talent into both in-house projects and startup partnerships. Coexisting with these corporate initiatives are numerous incubators and accelerators, such as Shanghai AI Innovation Park and Beijing AI Innovation Zone, that provide infrastructure, mentorship, and testbeds, including specialized free-trade zones for accelerated device registration and real-world data studies.
• Robust investment momentum: China has already rapidly emerged as one of the top destinations for healthcare AI funding. In the decade ending 2023, investors committed over US$60 billion to AI’s healthcare worldwide, with a sizeable—and growing—share allocated to Chinese companies. Domestic venture funds and government-backed capital have further amplified this trend, ensuring that China remains at the forefront of financing new AI diagnostics, digital therapeutics, and telehealth innovations.

China’s AI healthcare market size and growth trends

China’s AI healthcare market is experiencing rapid expansion driven by strong market demand, technological innovation, and supportive national policies.

This growth reflects the country’s urgent need to address demographic challenges such as an aging population and healthcare workforce shortages, which have intensified pressure on the medical system to improve efficiency, accuracy, and accessibility through AI solutions.

Find Business Support

Our Information Systems team can help you deploy ERP or localize your global system to ensure compliance with China's data laws.

China’s AI healthcare market is on a steep upward trajectory, propelled by urgent clinical demands, rapid technology adoption, and strong policy backing. To illustrate this dynamic progression, we examine the 2023 baseline, intermediate forecasts (2028), and longer-term projections (2030), then explore the demographic forces—aging populations and workforce constraints—that are both driving and shaping this expansion.

Market size and trajectory

2023 baseline

As introduced earlier, in 2023, China’s AI healthcare market was valued at US$1.59 billion, accounting for roughly 7 percent of global AI healthcare revenue that year. This figure reflects substantial uptake across foundational use cases—particularly AI-driven medical imaging and telehealth platforms—spurred by hospitals’ need to improve diagnostic throughput and extend care remotely.

2028 intermediate forecast

By 2028, leading market research projects China’s AI healthcare market will reach RMB 115.7 billion (approximately US$16.02 billion). This represents a more than 10-fold expansion over five years—an annualized growth rate vastly outpacing most other healthcare segments. Such a dramatic increase is driven by:

• Widening AI adoption in Tier-1 and Tier-2 hospitals: As major hospital groups invest in AI solutions for imaging, pathology, and workflow optimization, procurement budgets for AI tools are expanding exponentially.
• Scaling telemedicine and virtual care: With mobile usage pervasive across urban China, telemedicine platforms incorporating AI-powered triage and remote monitoring are capturing a growing share of outpatient visits.
• Policy incentives mid-cycle: Mid-decade health reforms and data-sharing pilots (for instance, the Shanghai AI Health Data Platform) provide both subsidies and real-world validation channels.

Long-term projection

Looking further ahead, most forecasts converge on a US$19 billion market by 2030, implying a compound annual growth rate (CAGR) of approximately 42.5 percent between 2023 and 2030.

This trajectory positions China as the fastest-growing AI healthcare market worldwide and underscores the rapid maturity of underlying infrastructure—namely, standardized EMR systems, pervasive 5G networks, and a proliferation of real-world data for AI model training.

Key areas of growth

Medical imaging

Among AI healthcare segments, medical imaging is the most mature and widely adopted. Medical imaging’s compatibility with AI techniques, such as deep learning for image recognition and analysis, has made it a core driver of the sector. Applications focus on detecting and diagnosing conditions such as cancer, lung nodules, cardiovascular diseases, stroke, and fractures.

According to data from DeepWise and Shukun Technology—leading local AI medical imaging companies—as of mid-2024, China’s National Medical Products Administration (NMPA) has approved 92 AI-powered Class III medical devices, reflecting regulatory support for accelerating AI integration into clinical practice.

Frost & Sullivan and Lead Leo Research Institute forecast annual growth rates exceeding 60 percent in key diagnostic categories such as cancer, pneumonia, coronary heart disease, and fracture detection by 2025. The cancer detection market alone is valued at around RMB 300 million (US$41.55 million), with lung nodule detection close behind at RMB 250 million (US$34.71 million). AI applications in cancer extend across radiology, endoscopy, pathology, and dermatological imaging.

Neurological disorder detection and therapy

Beyond imaging, AI technologies are advancing neurological disorder detection and therapy. Neuro-Weave, a pioneering Chinese company, has developed AI-powered diagnostic models for early detection of Alzheimer’s disease through “eye movement” technology, combining hardware and software via deep learning. This solution is currently undergoing clinical validation and regulatory approval.

Similarly, AI-based eye tracking is emerging as an effective tool for early ADHD diagnosis, offering a portable, affordable screening method, particularly valuable in underserved areas.

Hospital management and telemedicine

In hospital management and telemedicine, AI is transforming operational efficiency and patient care. AI hospitals equipped with intelligent agents assist with patient triage, treatment planning, and administrative tasks such as billing and insurance claims, as demonstrated by Ping An Smart Healthcare.

Telemedicine platforms including Ali Health, JD Health, and PinEg An Good Doctor utilize AI technologies like natural language processing and machine learning to provide virtual health assistants, support patient self-diagnosis, and facilitate remote follow-ups. These innovations help address healthcare access challenges for the elderly and rural populations.

Global context: China VS. other APAC markets

China stands out as the largest, fastest-growing, and most strategically supported AI healthcare market in the Asia-Pacific (APAC) region. With over 38,000 hospitals, a population of 1.4 billion, and strong government backing, China presents an unmatched combination of scale, speed, and policy support. National AI strategies, abundant medical datasets, and proactive infrastructure investments create a dynamic environment for foreign investors, particularly in areas such as medical imaging, disease prediction, telemedicine, and hospital automation.

By contrast, Japan has a more mature and regulated healthcare system, with its AI healthcare market valued at US$265 million in 2021, expected to grow to US$1.87 billion by 2030 (CAGR 21.7 percent). Its Society 5.0 initiative encourages AI adoption in healthcare, especially in robotics and wearables. However, the slower growth rate and smaller population base limit the scalability seen in China. Japan offers innovation quality but less volume and speed.

South Korea, with impressive R&D spending (4.53 percent of GDP) and agile regulation, especially during the pandemic, is projected to grow its medical AI market from US$0.1 billion in 2022 to US$2.11 billion by 2030. While it excels in fast-track approval of diagnostics and medical devices, South Korea’s market is niche-oriented and significantly smaller than China’s.

In emerging markets:

• India’s AI healthcare market is expanding rapidly—from US$0.95 billion in 2023 to a projected US$6.5 billion by 2030, growing at an estimated 31 to 40 percent CAGR, driven by robust national missions, digital infrastructure, and major tech investments. Yet, most clinical AI deployments (about 68 percent) remain at pilot or PoC stages and regulatory clarity is still evolving, making China more deployment ready.
• Indonesia is positioning AI as a national priority through its 2020 National AI Strategy, explicitly identifying healthcare as a key focus area. While its AI healthcare market is still nascent and lacks clear market size estimates, foundational policies and private sector activity are driving momentum. Nevertheless, Indonesia’s AI healthcare sector still lacks the data infrastructure and regulatory maturity seen in China.
• Vietnam shows early but growing traction, led by private-sector innovation. Solutions like DrAid are deployed in 100+ hospitals. Government EHR rollout and Nvidia-led AI capacity building signal long-term readiness, though still behind China in scale and infrastructure maturity.

Why China leads the pack

Despite the innovation and policy momentum seen across APAC, China’s AI healthcare market remains the most compelling for foreign investors, thanks to:

• Unmatched scale: A massive population and healthcare system support large-scale deployments and fast commercialization.
• Favorable policy ecosystem: Government incentives, fast-track AI approval, and integration mandates accelerate time-to-market.
• Diverse applications: From imaging and diagnostics to smart hospitals and wearables, China offers depth and breadth for innovation.
• Strong digital infrastructure: 5G networks, cloud platforms, and large language models enable advanced AI use cases.
• Demographic drivers: An aging population and growing middle class create long-term demand for scalable, AI-enhanced healthcare.

In short, while Japan and South Korea remain important hubs of healthcare innovation, and India, Vietnam, and Indonesia present promising long-term opportunities, China uniquely combines maturity, momentum, and market size, making it the most strategically important AI healthcare market in APAC.

Key takeaways

China’s AI healthcare market has exploded from roughly US$1.6 billion in 2023 to an expected US$16 billion by 2028 and nearly US$19 billion by 2030, driven by state-led initiatives, centralized health data from over 38,000 hospitals, and urgent demand from an aging population and rural physician shortages.

This surge is driven not just by investment, but by access—to wall-to-wall digitized hospital records and imaging across 38,000+ hospitals, underpinned by federated learning models that protect patient privacy. For example, Tencent’s AIMIS, operational in over 100 major hospitals, has analyzed more than 100 million medical images, achieving diagnostics accuracy upwards of 97 percent in conditions like diabetic retinopathy and colorectal cancer.

What’s more, the Chinese government offers a remarkably enabling backdrop: streamlined device approvals via pilot zones, convergence with the “Made in China 2025” strategy, and a country‑wide roll‑out of 5G and unified EMR systems—conditions ideal for rapid AI deployment in diagnostics, telehealth, and smart-hospital operations . At the same time, public funding (from the Ministry of Science and Technology) and private sector R&D, particularly from giants like Tencent and Ping An, ensures a steady flow of capital and technical support.

Find Business Support

Get help conducting compliance audits, penetration tests, computer security and impact assessments, and training for improved cybersecurity in China.

For international investors, the implications are clear: this is a market of unparalleled scale, supported by enormous patient datasets, generous R&D subsidies, and cutting-edge digital infrastructure. China’s demographic pressure, an aging population and rural doctor shortages, further drives demand for early detection tools and scalable remote monitoring solutions.

Yet foreign players should note the regulatory reality: accessing data demands local partnerships (typically with public hospitals or provincial platforms); compliance with China’s Data Security Law and PIPL; and localized operations via joint ventures, WFOEs, or licensing models.

Navigating multiple layers of approval, from hospital ethics committees to provincial and central regulators, is a necessary step. But when done right, through aligned hospital pilots, integration with local workflows, and embedding in the urban–rural delivery matrix, foreign AI-healthcare firms can build real momentum. The opportunity isn’t just in medical imaging or telemedicine, but in digital Traditional Chinese Medicine, AI-aided drug development, and enterprise-level smart hospital systems.

The next segment of this Report will offer a detailed playbook, covering regulatory pathways, business‐model options, pilot deployment strategies, and localization tactics, to translate these insights into actionable entry plans. By aligning with China’s policy framework, leveraging its data assets, and addressing both urban and rural needs, foreign investors can tap into one of the fastest-growing AI healthcare markets, driving innovation and real-world impact.

Up next: Investors guide

Having established why China represents a unique and high-velocity market for AI in healthcare, the next installment will shift focus toward practical entry strategies and the foreign investor perspective. In the second part of the Report, we will delve into:

• Investment opportunities and niche verticals: Identifying high-growth segments—such as advanced medical imaging tools, AI-augmented telehealth platforms, and digital TCM innovations—and evaluating where differentiated offerings can gain traction.
• Regulatory and compliance landscape: Unpacking the nuances of the NMPA approval process, regional pilot zones, and data localization mandates under the Personal Information Protection Law (PIPL), to help investors anticipate potential challenges.
• Optimal business models and partnerships: Examining joint ventures, technology licensing approaches, and wholly foreign-owned entity structures that have enabled foreign firms to navigate local channels, align with hospitals, and build trust with government stakeholders.
• Pilot zones and go-to-market roadmap: Highlighting fast-track channels where early-stage proof-of-concept studies can be conducted, such as designated Free Trade Zones and AI incubators, as well as recommendations for selecting pilot hospitals in tier-2 cities.
• Localization and long-term strategy: Discussing the importance of customizing solutions to China’s clinical protocols, disease burdens, and payment models, alongside strategies for building onshore R&D teams and forging academic collaborations.

Stay tuned for a deep dive into how international players can successfully enter and thrive in China’s transformative AI healthcare landscape.

• Previous Article China’s AI Healthcare Market (Part II): Opportunities and Strategies for Foreign Investors 
• Next Article