China's rising demand for healthcare is exposing a chronic shortage of an essential commodity: blood.

With hospital blood supplies tight, desperate patients are turning to agents known as "blood heads", who sell certificates that give patients access to state blood banks, creating a black market at the heart of the healthcare system.

"To us patients, buying blood solves our problems," said Hong, a retired Shanghai civil servant who suffers from myelodysplastic syndrome, a debilitating blood condition. "If there were no blood heads, what would I do?"

The blood "famine", as it has been dubbed, is an unintended consequence of China's attempts to restore faith in the nation's scandal-stained blood supply and encourage people to donate.

In the late 1980s and 1990s, local officials urged farmers to sell their blood and plasma, and an earlier generation of blood heads sold this to hospitals and blood banks. Tens if not hundreds of thousands contracted HIV through unhygienic practices in the process.

A second scandal in 2011 further depressed donations. A young woman who claimed she worked at the Red Cross Society of China posted online pictures of her lavish lifestyle, damaging the image of a charity that helps the government collect blood.

In the mid-1990s, China started shuttering commercial blood stations and in 1998 it introduced a blood donation law, banning the commercial sale of blood and encouraging voluntary donation. It also tightened rules on plasma collection and increased blood testing.

Chinese law now encourages patients to present a certificate showing that they, friends or relatives have donated blood when they need to tap the national supply. Some hospitals will not provide blood without these certificates.

The effect has been to penalize chronically ill patients who depend on regular or large transfusions, as well as those who cannot count on family and friends nearby. Chinese law also limits individual whole blood donations to twice a year, and provinces rarely share blood.

To meet demand, a new generation of blood heads have moved in, paying people off the street to donate blood at a state blood bank and selling their donation certificates to those in need.

The blood heads include men like Zhang, a 25-year-old from northeastern Jilin province who late last year stood in a neon yellow puffer jacket outside the Red Cross Center in Beijing.

His terms: 1,000 yuan ($160) for every 100 cc (3.4 fl oz) he gets donated into the blood bank. All he needs - beyond money - is a day's notice, the name of the hospital and the blood type of the patient.

CRACKDOWNS INEFFECTIVE

Periodic crackdowns on blood heads appear to have had only limited effect. "Don’t worry about the police. We're outside most of the hospitals and we know all the police officers," Zhang said. Two police cars were parked nearby.

Patients such as Hong, whose son asked that her full name not be used for fear that the hospital would deny her a bed if its practices were exposed, are nothing but grateful.

Denied blood for the regular transfusions she needs at a top public hospital in Shanghai, Hong moved to a private specialist hospital that introduced her to blood heads. They deliver the blood donation certificates to her bedside.

Just under 1 percent of China's population donated blood in 2011, the most recent year for which figures are available, according to the World Health Organization – at the lower end of the WHO's recommended range.

That year, blood donations rose 5 percent to 4,164 tons, according to China's National Health and Family Planning Commission. The commission did not respond to a request for comment.

In a country where many are still loath to give blood, most legitimate donations come from students and members of the military. But the law also encourages government employees to donate. Chinese court documents show that government units have used blood heads to meet annual quotas for blood collection from residents or employees in recent years. Lawyers involved with these cases confirm that.

Local governments are resorting to unusual public campaigns to recruit new donors.

A county in eastern Zhejiang province made national headlines in September for proposing to raise the scores on the high school entrance exam for the children of people who donated 4,000 cc of blood.

Hunan province is offering to waive the costs of using the blood bank to residents who donate 900 cc.

But blood stocks in many places remain stubbornly low, and dip even lower at times such as the Chinese New Year season just beginning. In Changsha, in Hunan province, a blood donation center official said blood stores were currently a third of the levels considered safe. All but essential surgeries have been postponed.

($1 = 6.2400 Chinese yuan renminbi)