Published by ChinaMNC · Qinan

China's New Policy on Developing 'New Quality Productive Forces': A Guide for Foreign Founders

China's central government has issued a sweeping policy framework to develop 'new quality productive forces.' Here's what foreign founders need to know about the business environment, innovation priorities, and regulatory direction.

What Foreign Founders Should Know About China's New Quality Productive Forces Policy

China's central government has issued a major policy document on developing "new quality productive forces" — a concept that signals the country's strategic direction for innovation, industrial upgrading, and economic transformation. For foreign founders registering or operating a company in China, this policy framework offers valuable insight into where opportunities are emerging and how regulations may evolve. Below is a practical summary of the key points, based solely on the official government text.

Core Principles and Strategic Direction

The policy emphasizes innovation as the leading driver, with reform as a key mechanism. It calls for a holistic approach that balances government and market forces, development and security, and self-reliance with openness. The central goal is a significant rise in total factor productivity, achieved through technological breakthroughs, optimized allocation of production factors, and deep industrial transformation. The document stresses the need for production relations that better match the new productive forces, and an ecosystem that supports deep integration of technological and industrial innovation.

Innovation Priorities That May Affect Your Business

• Original and disruptive technological innovation: The policy directs major science and technology projects toward strategic, landmark, and leading products. It supports both goal-oriented and free exploration in basic research, and calls for systematic construction of major science and technology infrastructure with open sharing.
• Breakthroughs in key core technologies: Utilizing a new type of nationwide system, China will organize actions for high-quality development of key manufacturing supply chains and industrial innovation projects, with full-chain research and support. Policies for first-of-their-kind equipment and materials will be implemented to encourage technology iteration.
• National strategic science and technology forces: National laboratories, research institutions, high-level research universities, and leading technology enterprises will see optimized roles and layouts. More flexible management and compensation systems are planned for research institutions and universities to motivate researchers.
• Enterprise-led innovation: The policy strengthens the principal role of enterprises in technological innovation. It introduces a corporate R&D reserve system, encourages increased R&D spending by small and medium-sized tech firms, and raises the super-deduction ratio for enterprise R&D expenses. Eligible private enterprises are encouraged to lead national major technological breakthrough tasks.
• Commercialization of scientific results: Measures include pilot platforms for proof-of-concept and intermediate testing, large-scale application demonstrations for new technologies and products, and a mechanism for universities and research institutes to license results to SMEs with deferred payment. AI is highlighted to lead changes in research paradigms.

Industrial Upgrading and New Growth Areas

The policy outlines a multi-pronged approach to modernize the industrial base and cultivate new engines of growth:

• Transforming traditional industries: National standards will guide upgrades, with support for digital, intelligent, and green technologies. Key industries such as mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, and construction are targeted to maintain global competitiveness. Programs for industrial base reconstruction, major technical equipment, and large-scale equipment renewal are included.
• Fostering emerging industries: Strategic emerging industries — next-generation information technology, new energy, new materials, intelligent connected new energy vehicles, robotics, biopharmaceuticals, high-end equipment, and aerospace — will be developed into pillar industries. Clusters with distinct advantages are encouraged, while avoiding "involutionary" competition. Low-altitude economy and commercial space are to develop in a healthy and orderly manner under safety conditions.
• Laying out future industries: The policy explores multiple technology routes, application scenarios, business models, and regulatory rules for quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied intelligence, and 6G. A mechanism for investment growth and risk sharing will be established, guiding social capital to increase input.
• Deep integration of real and digital economies: Data property rights, market transactions, and benefit distribution systems will be improved. Initiatives like "East Data, West Computing," smart manufacturing, and industrial internet innovation are to be implemented, building a national integrated computing network and blockchain network.
• "AI+" action: The policy promotes AI application in traditional industries and accelerates the use of intelligent terminals such as connected new energy vehicles, AI phones and computers, and humanoid robots. It calls for breakthroughs in foundational theories and core technologies, with efficient supply of computing power, algorithms, and data. National AI industry application pilot bases and high-value scenarios will be laid out, alongside a system for technology monitoring, risk warning, and emergency response.

Green Transition and Energy Revolution

A green, low-carbon, and circular economic system is a priority. The policy aims to strengthen green manufacturing and services, expand green energy industries, and promote green technological innovation. It includes building zero-carbon factories and parks, improving resource management and waste recycling, and implementing fiscal, financial, investment, price, and environmental policies that support green development. A carbon emissions total and intensity dual-control system will be fully implemented, with improved carbon accounting, standards, labeling, and footprint management. The national carbon market will be expanded, and the national unified green certificate market improved. Financial institutions are encouraged to offer diverse green financial products.

Regarding energy, the policy focuses on carbon peak and carbon neutrality goals, orderly development of advanced nuclear fission energy, a high-proportion renewable energy power system, and measures to integrate new energy consumption. It seeks to accelerate green energy use across society and strengthen international cooperation.

Reform, Market Environment, and Opening Up

Institutional reforms aim to better link science and economy. Reforms include empowering researchers with property rights to job-related scientific achievements, allowing eligible state-owned enterprises to adopt various incentives, and building an open, shared, and secure national integrated data market.

Market supervision will be improved with better market access, stronger anti-monopoly and anti-unfair competition enforcement, and governance in AI and biology fields. Cross-departmental joint supervision will be strengthened, with less on-site inspection and more data-driven oversight. Intellectual property management will be integrated, and punitive damages for infringement improved. Tax rules for new business forms will be studied.

On finance, the policy encourages angel investment, venture capital, and private equity, with better support for long-term capital investing early, small, long-term, and in hard tech. Banks are encouraged to develop loan products suited to new quality productive forces. Bond products for tech innovation will be enriched, and qualified tech firms supported for listing and financing. Insurance products covering the entire tech innovation chain and tech leasing will be explored.

For global allocation of advanced production factors, the policy calls for higher-level opening up. Free trade zones are encouraged to cluster domestic and foreign advanced factors based on location and industrial advantages. Platforms such as jointly built science parks, "Belt and Road" joint laboratories, and international advanced technology application centers will be promoted. Foreign venture capital institutions and international standards organizations are encouraged to develop in China. A efficient, convenient, and secure cross-border data flow mechanism will be established.

Talent Development and Practical Implications

The policy emphasizes integrated reform of education, science and technology, and talent systems. Higher education will be expanded and improved, with new research-oriented universities and optimized discipline settings aligned with industrial and technological trends. Modern vocational education will be advanced, and enterprise-university joint customized training encouraged. Skilled talents, including master craftsmen, may serve as part-time vocational school instructors.

For foreign founders, this policy signals China's continued focus on innovation-driven growth, industrial upgrading, and opening up. Sectors such as AI, green energy, advanced manufacturing, and future industries may see increased policy support and market opportunities. The emphasis on enterprise-led innovation and financial reforms could also create a more conducive environment for tech startups. However, as with any policy, implementation details will matter. Staying informed and seeking professional advice is recommended.

Foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535 for help registering and operating a company in China.

This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.