China Returns Funeral Homes to Public Ownership in Cost-Cutting Reform

Multiple funeral homes across China are transitioning from private to public ownership as part of a sweeping national reform to restore the public welfare nature of funeral services, according to The Paper. The movement, reported in June 2026, spans at least six provinces and regions — including Hunan, Inner Mongolia, Jiangxi, Heilongjiang, and Guangxi — and follows the implementation of the newly revised Funeral Management Regulations on March 30, 2026, which mandate that all new funeral service institutions be government-run and non-profit.

Context: An Industry Under Fire

China’s funeral industry has long been viewed as a “never-recession eternal business,” with profit margins reportedly reaching as high as 2,000%. A 2020 SunLife report found that Chinese citizens spend an average of 37,375 yuan (approximately $5,200) on funerals — 45.4% of the average annual salary, the second-highest rate in the world after Japan. Scandals have fueled public outrage, including a Beijing hospital morgue case where a family was charged 38,000 yuan for three days of body storage, with line items including “bath SPA” and “golden path” services.

These abuses prompted the central government to act. The revised Funeral Management Regulations, the most comprehensive overhaul in 30 years, ban new for-profit funeral institutions, prohibit hospital morgue outsourcing, and establish government pricing for basic services such as body transport, storage, and cremation.

Key Transitions Across the Country

On June 15, 2026, Yueyang City in Hunan Province inaugurated its newly public funeral home. Yueyang Civil Affairs Bureau Director Qing Yi described the transition as a “fundamental, strategic transformation,” stating that the institution’s core mission is to “return to the public welfare origin” and “unequivocally prioritize social benefits.”

Similar transitions have occurred across the country. The Horqin Left Wing Middle Banner in Inner Mongolia returned its funeral home to government management on May 20. Jing’an County in Jiangxi and Jiamusi City in Heilongjiang followed suit on May 1. In Lipu City, Guangxi, the funeral home became the first in the province to transition from a “public-built, private-run” model to full public operation on November 1, 2025.

Tangible Cost Reductions

The reforms are already delivering measurable savings. In Lipu City, average funeral costs dropped from 3,400 yuan under private management to 2,900 yuan — a 14.7% reduction. The city abolished 43 extended service fee items, reduced 24 fee categories, and lowered prices on 19 funeral products. Between January and May 2026, residents saved a total of 622,000 yuan, with 34,000 yuan waived for 80 impoverished households.

Lianyuan City in Hunan has gone even further. On June 21, the city announced it had converted its funeral home from a “Public Welfare Class II” institution — which was permitted to generate revenue — to a “Public Welfare Class I” fully government-funded entity with no profit allowed. According to Lianyuan Funeral Home Director Wang Wenhua, basic services including body transport, storage, and cremation are now completely free, with dedicated staff accompanying families throughout the process. The city has cancelled 21 unreasonable fee items and reduced 12 fee standards.

Nationally, 23,200 fee items have been cancelled across funeral service institutions, China Youth Net reported.

A New Regulatory Framework

The reforms are underpinned by the revised Funeral Management Regulations, which represent the most significant update to China’s funeral governance since 1997. Key provisions include:

• All new funeral service institutions must be government-run and non-profit
• Basic services are subject to government pricing
• Hospital morgue outsourcing is banned
• Funeral service providers are included in the national credit supervision system
• Ecological burial methods — including sea burial, tree burial, and flower burial — are promoted with government subsidies

In April 2026, the Ministry of Civil Affairs launched the China Funeral Network, an online platform integrating policies, regulations, case warnings, and complaint reporting. Yang Genlai, President of the Funeral Governance Research Branch at the China Social Governance Research Association, noted that the platform extends industry supervision “from offline to online, achieving full-process supervision of funeral service institutions.”

Challenges Ahead

Despite the progress, significant challenges remain. Traditional cultural preferences for lavish funerals — known as “厚葬” (houzang) — remain deeply entrenched, particularly in rural areas. Local implementation capacity varies widely across regions, and existing for-profit enterprises must fundamentally transform their business models.

Lawyer Dong Guonü of Beijing Yingying Law Firm suggests that private funeral enterprises can no longer rely on basic services for profit; their future growth lies in non-basic services such as personalized memorial ceremonies and grief counseling.

What to Watch

The funeral industry is expected to evolve toward full life-cycle care, integrating pre-planning, hospice care, and grief counseling. Technology integration — including AI restoration of deceased images and IoT-based traceability — is also on the horizon. As China’s population ages and public demand for affordable, dignified funeral services grows, the success of this reform will be measured not just in cost reductions, but in whether public institutions can deliver quality service without the profit motive that once drove the industry.