Published by ChinaMNC · Yudou

China’s New Push for ‘New Quality Productive Forces’: What Foreign Founders Need to Know

A practical guide for foreign founders in China on how the government’s new policy direction for ‘new quality productive forces’ may affect R&D, market access, financing, and operations.

What the Policy Is About

The Central Committee of the Communist Party of China and the State Council have issued an opinion on developing new quality productive forces—a policy direction that emphasizes innovation-led growth, higher efficiency, and industrial upgrading. For foreign founders, this is not a single law but a broad framework that signals where China intends to direct policy support, market opening, and regulatory reform over the coming years. The document calls for better coordination between government and market, reform and development, and self-reliance and openness, while safeguarding development and security.

The core goal is to achieve technological breakthroughs, allocate production factors more efficiently, and upgrade industries. It also stresses aligning production relations—how businesses are organized and regulated—with these new productive forces. In practical terms, foreign founders should expect continued emphasis on high-tech sectors, innovation ecosystems, and closer links between research and commercial application.

Innovation and R&D: Where Support Is Directed

The policy places original and disruptive technological innovation at the center. It calls for major science projects focused on strategic, landmark, and leading products, and for both goal-oriented and free-exploration research. It also proposes a breakthrough plan for basic and interdisciplinary disciplines.

For companies with R&D operations in China, several measures are relevant:

• Enterprise R&D reserve system: The document proposes establishing a reserve system for enterprise R&D and strengthening enterprises’ role in science and technology investment.
• Higher R&D expense deduction: It calls for increasing the additional tax deduction ratio for enterprise R&D expenses—a tangible incentive for tech SMEs.
• National project participation: Enterprise R&D projects that meet national strategic needs may be elevated to national projects through procedures. Capable private enterprises are encouraged to lead major national technology tasks.
• User-based evaluation: A mechanism for evaluating results based on user assessment is proposed, strengthening enterprises’ role in commercializing outcomes.

Foreign founders with innovative products should note the emphasis on first-of-its-kind and first-batch application policies for equipment and products, which can help with market entry and iteration.

Commercializing Technology and Scaling Up

The policy seeks to accelerate the conversion of scientific results into real productivity. It proposes:

• Large-scale application demonstrations for new technologies, products, and scenarios.
• Construction of concept validation and pilot-testing platforms, with greater openness of application scenarios.
• Whole-process evaluation of science projects, with R&D and commercialization tasks deployed together at project launch and application performance assessed at acceptance.
• A “use first, pay later” licensing approach for universities and research institutes to license results to SMEs.
• Large enterprises opening their supply chains to SMEs, supporting SMEs as important players in industrialization.
• AI to lead changes in research paradigms and improve efficiency.

For foreign founders, this suggests opportunities to participate in pilot programs, access licensed technologies, and integrate into supply chains—provided they meet relevant requirements.

Upgrading Traditional Industries

The document does not focus only on new sectors. It explicitly supports upgrading traditional industries with digital, intelligent, and green technologies. Key actions include:

• Raising national standards to guide traditional industry upgrading.
• Supporting enterprises using digital and green technologies to transform.
• Industrial base reconstruction, major technical equipment, and large-scale equipment renewal programs.
• Financial support and tax incentives for manufacturing technological transformation.
• Developing smart manufacturing, green manufacturing, and service-oriented manufacturing.
• Brand building and quality infrastructure.

It also lists mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, and construction as sectors where China aims to maintain global competitiveness. Foreign founders in these areas may find opportunities in equipment renewal, digitalization, and green upgrades.

Emerging and Future Industries

The policy identifies strategic emerging industries to be strengthened: next-generation information technology, new energy, new materials, intelligent connected new energy vehicles, robotics, biomedicine, high-end equipment, and aerospace. It encourages clusters with local characteristics and cross-regional cooperation, while seeking to avoid “involutionary” competition.

It also calls for forward-looking布局 of future industries—using多元 technology routes, typical application scenarios, viable business models, and market supervision rules—in quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied intelligence, and sixth-generation mobile communications. A funding growth and risk-sharing mechanism is proposed, with existing fiscal policies and social capital encouraged.

For foreign founders, these areas may offer access to government support, pilot scenarios, and cluster development—especially if the technology aligns with local priorities.

Digital Economy, AI, and Data

The document emphasizes integrating the real economy with the digital economy. It proposes:

• Improving data property rights, market trading, benefit distribution, and interest protection systems.
• Pilot demonstration projects for data factors.
• Optimizing national data infrastructure and advancing manufacturing digital transformation.
• Projects such as “East Data West Computing,” smart manufacturing, and industrial internet innovation.
• A national integrated computing network and national blockchain network.
• Building internationally competitive digital industry clusters.

A full “AI+” action is announced, promoting AI transformation of traditional industries and applications such as intelligent connected vehicles, AI phones and computers, and humanoid robots. It calls for breakthroughs in basic theory and core technologies, and efficient supply of computing power, algorithms, and data. It also proposes technology monitoring, risk early warning, and emergency response systems to ensure AI is safe, reliable, and controllable.

Foreign founders in AI or data-related fields should pay attention to the balance between support and regulation, particularly in data flows and security.

Green Transition and Energy

The policy outlines a green, low-carbon, circular economic system. It supports green manufacturing, green services, and green energy industries. Measures include:

• Green upgrades in key industries and promotion of green technologies.
• Incentives for green consumption and certification/labeling systems.
• Zero-carbon factories and parks.
• Resource management and waste recycling systems.
• Fiscal, financial, investment, price, technology, and environmental policies for green development.
• A carbon emissions total and intensity dual-control system, carbon accounting, standards, product carbon labeling, and carbon footprint management.
• Expanding the national carbon market and improving the voluntary emission reduction market and green certificate market.
• Green financial products, government green procurement, and green tax system.

An energy revolution is also emphasized: orderly development of advanced nuclear fission, a high-share renewable electricity system, and policies for renewable consumption. Foreign founders in green tech, energy, or carbon services may find a supportive policy environment.

Reform, Market Regulation, and Finance

The document links science and economy more closely through reforms. It proposes:

• Deploying science tasks within major national projects as needed.
• Reforming the ownership of job-related scientific results and separate asset management.
• Allowing eligible state-owned enterprises to use多种 incentives.
• Building an open, shared, and secure national integrated data market and a technology market.

On market regulation, it calls for improving market access, strengthening anti-monopoly and anti-unfair competition, and governance in AI and biology. It also proposes cross-departmental supervision, fewer on-site inspections, data-based regulation, and better intellectual property management with punitive damages. Tax rules for new business forms are to be studied.

On finance, it encourages angel investment, venture capital, and private equity, with government funds playing a guiding role. It calls for policies supporting long-term capital to invest early, in small firms, for the long term, and in hard tech—growing “patient capital.” Banks are encouraged to develop loan products suited to new quality productive forces. It also proposes enriching science and technology bond products, supporting qualified tech firms to list and finance, and optimizing M&A and equity incentive rules. Insurance products covering the whole innovation chain and technology leasing are mentioned.

Global Talent and Open Innovation

The policy encourages allocating advanced production factors globally. It supports free trade zones to cluster domestic and foreign advanced factors based on location and industry advantages. It promotes platforms such as jointly built science parks, “Belt and Road” joint laboratories, and international advanced technology application centers, and participation in international big science programs. Foreign venture capital institutions and international standards organizations are encouraged to develop in China. An efficient, convenient, and secure cross-border data flow mechanism is to be established.

On talent, it calls for integrated reform of education, science, and talent systems, optimizing university disciplines based on industry and technology trends, developing modern vocational education, and encouraging enterprises and universities to jointly customize talent training. High-skilled talent is encouraged to teach in vocational schools.

Practical Takeaways for Foreign Founders

• Align with priority sectors: Emerging and future industries listed in the document are more likely to receive policy support and pilot opportunities.
• Use R&D incentives: The proposed R&D reserve system and higher deduction ratio may reduce R&D costs if implemented.
• Watch for pilot programs: Application scenarios, concept validation platforms, and “use first, pay later” licensing can lower barriers to commercialization.
• Prepare for data and AI rules: Support for AI and data is paired with security and governance requirements.
• Explore green opportunities: Carbon markets, green finance, and zero-carbon parks are areas of focus.
• Engage with open innovation: Free trade zones, joint labs, and cross-border data mechanisms may offer pathways for foreign participation.

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