Background: A competent medical leadership and management workforce is key to the effectiveness and efficiency of health service provision and to leading and managing the health system reform agenda in China. However, the traditional recruitment and promotion approach of relying on clinical performance and seniority provides limited incentive for competency development and improvement. Methods: A three-component survey including the use of a validated management competency assessment tool was conducted with Directors of Medical Services (n = 143) and Deputy Directors of Medical Services (n = 152) from three categories of hospital in Jinan, Shandong Province, China. Results: The survey identified the inadequacy of formal and informal management training received by hospital medical leaders before commencing their management positions and confirms that the low self-perceived competency level across two medical management level and three hospitals was beyond acceptable. The study also indicates that the informal and formal education provided to Chinese medical leaders have not been effective in developing the required management competencies. Conclusions: The study suggests two system level approaches (health and higher education systems) and one organization level approach to formulate overall medical leadership and management workforce development strategies to encourages continuous management competency development and self-improvement among clinical leaders in China.