Published by ChinaMNC · Guanyang

China’s New Policy on New Quality Productive Forces: What Foreign Founders Need to Know

A practical guide for foreign founders on China’s latest policy direction for developing new quality productive forces, covering innovation, industrial upgrading, digitalization, green transition, and business environment changes.

China’s New Quality Productive Forces: A Guide for Foreign Founders

China’s central government has issued a major policy document on developing “new quality productive forces” (新质生产力). For foreign founders registering or operating a company in China, this policy signals where incentives, regulatory changes, and market opportunities are likely to emerge. Below is a practical summary of the key points most relevant to foreign-invested enterprises.

1. Core Direction: Innovation-Led and High-Tech

The policy emphasizes innovation as the primary driver, with a focus on high technology, high efficiency, and high quality. It calls for breakthroughs in original and disruptive technologies, better coordination between government and market, and a production relations framework that supports new quality productive forces. For foreign founders, this means opportunities in sectors aligned with national strategic priorities, especially those bringing advanced technology or innovative business models.

2. Strengthening Enterprise Innovation

The document highlights the role of enterprises as key actors in technological innovation. Measures include:

• Establishing a corporate R&D reserve fund system to encourage enterprise investment in research.
• Increasing the super-deduction ratio for enterprise R&D expenses.
• Allowing eligible private enterprises to lead national major technical breakthrough tasks.
• Supporting specialized, refined, distinctive, and innovative small and medium-sized enterprises (SMEs).

Foreign founders with R&D activities in China should monitor how these incentives are implemented locally, as they may reduce effective R&D costs.

3. Accelerating Commercialization of Research

To bridge the gap between research and market application, the policy proposes:

• Large-scale application demonstrations for new technologies, products, and scenarios.
• Building proof-of-concept and pilot testing platforms.
• Allowing universities and research institutes to license科技成果 to SMEs on a “use first, pay later” basis.
• Encouraging large enterprises to open their supply chains to SMEs.

Foreign startups may find opportunities to collaborate with Chinese research institutions and access pilot testing infrastructure.

4. Upgrading Traditional Industries

The policy aims to transform traditional sectors such as mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, and construction. Key actions include:

• Using national standards to guide upgrades.
• Supporting enterprises in adopting digital, intelligent, and green technologies.
• Implementing industrial base re-engineering and major equipment renewal programs.
• Providing financial support and tax incentives for technological upgrades.

Foreign companies in these sectors may benefit from participating in upgrade projects or supplying advanced equipment and solutions.

5. Growing Emerging Industries and Future Industries

Strategic emerging industries targeted for growth include next-generation information technology, new energy, new materials, intelligent connected new energy vehicles, robotics, biomedicine, high-end equipment, and aerospace. The policy encourages building distinctive industrial clusters and avoiding “involutionary” competition.

Looking further ahead, the policy identifies future industries such as quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied intelligence, and 6G. It calls for exploring diverse technical routes and business models, and establishing risk-sharing mechanisms for future industry investment.

Foreign founders in these deep-tech fields should watch for local government support programs and cluster development initiatives.

6. Deep Integration of Digital and Real Economies

The document stresses data as a production factor and outlines steps to:

• Improve data property rights, trading, and benefit-sharing rules.
• Optimize national data infrastructure and promote the “East Data, West Computing” project.
• Build a national integrated computing network and blockchain network.
• Advance manufacturing digitalization and the industrial internet.

Foreign companies in data services, cloud computing, and industrial software may find new market openings, while needing to comply with data security and cross-border transfer rules.

7. The “AI+” Initiative

China plans to implement an “AI+” action to apply artificial intelligence across traditional industries. Specific applications mentioned include intelligent connected new energy vehicles, AI-powered phones and computers, and humanoid robots. The policy also calls for breakthroughs in foundational AI theory and core technologies, and for ensuring AI is safe, reliable, and controllable.

Foreign AI startups and solution providers could explore partnerships in these application scenarios, subject to regulatory compliance.

8. Green and Low-Carbon Transition

The policy promotes a green, low-carbon, and circular economic system. Key measures include:

• Greening manufacturing and expanding green services and energy industries.
• Building zero-carbon factories and parks.
• Improving carbon accounting, labeling, and footprint management systems.
• Expanding the national carbon market and improving green certificate markets.
• Encouraging green finance products and government green procurement.

Foreign companies with green technologies or sustainable products may benefit from these trends, but should also prepare for stricter carbon-related reporting requirements.

9. Energy Revolution

The policy reaffirms the carbon peak and neutrality goals, calling for orderly development of advanced nuclear fission, a high-share renewable energy power system, and improved renewable energy consumption policies. It also emphasizes international cooperation in energy.

10. Reforms to Support Innovation

Several institutional reforms are planned:

• Deploying science and technology tasks within major national engineering projects.
• Deepening reforms on job-related科技成果 ownership and asset management.
• Allowing eligible state-owned enterprises to adopt various incentive forms.
• Building a unified national data market and technology market.

11. Market Regulation and Fintech

The policy outlines improvements to market supervision, including:

• Enhancing market access and anti-monopoly enforcement.
• Strengthening governance in AI and biology.
• Adopting data-driven regulatory models and reducing on-site inspections.
• Improving intellectual property protection with punitive damages.

On finance, it encourages angel investment, venture capital, and private equity, and calls for patient capital. It also promotes bank loans tailored to new quality productive forces, science and technology bonds, and insurance products covering the innovation chain. Foreign investors in these areas may find a more supportive policy environment.

12. Opening Up and Global Talent

China will continue to expand high-level opening up. The policy encourages free trade zones to attract advanced production factors, supports joint science parks and “Belt and Road” joint laboratories, and welcomes foreign venture capital institutions and international standard organizations. It also calls for a safe and convenient cross-border data flow mechanism.

On talent, the policy promotes integrated reform of education, science, and talent systems, including new research-oriented universities, vocational education, and customized talent training with enterprises.

Practical Takeaways for Foreign Founders

While this is a high-level policy document, it indicates clear directions for business environment changes. Foreign founders should:

• Align their China strategy with encouraged sectors such as high-tech manufacturing, AI, green energy, and digital services.
• Monitor local implementation for R&D tax incentives and talent policies.
• Prepare for stronger data and carbon compliance requirements.
• Explore partnerships with Chinese research institutions and industrial clusters.
• Stay informed about financial and capital market reforms that could affect fundraising.

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

For assistance with company registration, compliance, and operating in China, foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535.