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Calls for reform of the Chinese healthcare system are voiced at the highest levels of the Chinese government, but reform cannot succeed unless policymakers confront the incentives for corruption built into the institutional structure of the healthcare system. Focusing on the markets for pharmaceuticals and medical equipment, this article isolates the special features of the Chinese healthcare system that are conducive to corruption. Without denying the responsibility of individual corporate representatives (both domestic and foreign), middlemen, and healthcare professionals, this article looks beyond the individual deals to document the underlying incentives for corruption by hospitals, physicians, and companies and explains how corrupt practices are currently organized. Finally, we argue that curbing the prevalent corruption requires efforts from both private companies and from the government.

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