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China’s New Policy on ‘New Quality Productive Forces’: What Foreign Founders Need to Know
A practical guide for foreign entrepreneurs to China’s latest national policy on developing ‘new quality productive forces’, covering innovation, industrial upgrading, digitalization, green transition, and market reforms that affect company registration and operations.
China’s New Policy on ‘New Quality Productive Forces’: What Foreign Founders Need to Know
The Chinese government has issued a major policy document on developing “new quality productive forces” — a term that signals a shift toward innovation-driven, high-tech, and efficient economic growth. For foreign founders planning to register or operate a company in China, this policy outlines priorities that shape market opportunities, regulatory trends, and support mechanisms. Below is a practical summary of the key points most relevant to foreign-invested enterprises.
Core Direction: Innovation-Led and High-Quality Development
The policy sets innovation as the primary driver and calls for a substantial increase in total factor productivity. It emphasizes coordinating the roles of government and market, reform and development, and self-reliance and openness. For foreign founders, this means China’s regulatory environment will increasingly favor projects that bring advanced technology, efficiency improvements, and alignment with national strategic goals.
Strengthening Original and Disruptive Technological Innovation
China will organize major science and technology projects focused on strategic, landmark, and leading products. It plans to support both goal-oriented and free exploration in basic research, build major science infrastructure, and promote open sharing to avoid duplication. The policy also calls for breakthroughs in key common technologies, frontier technologies, and disruptive innovations.
- Practical takeaway: Foreign founders with R&D-intensive projects may find more opportunities to participate in government-supported research platforms and programs.
Breakthroughs in Core Technologies and a New National Mobilization System
Leveraging a new type of nationwide mobilization system, China will implement actions for high-quality development of key manufacturing supply chains and industrial innovation projects. It will support the application of first-of-its-kind equipment and materials to accelerate technology iteration.
The policy also outlines reforms for national laboratories, research institutes, and universities, including more flexible management for research-type public institutions and salary systems that reward knowledge value. Enterprises are encouraged to lead national science and technology tasks, with capable private companies supported to undertake major technological breakthroughs.
Enterprises as the Mainstay of Innovation
China will strengthen inclusive incentive policies, establish a corporate R&D reserve fund system, and increase the proportion of R&D expenses eligible for additional tax deductions. Enterprise R&D projects that meet national strategic needs can be elevated to national projects. The policy supports user-based evaluation of outcomes and strengthens enterprises’ role in commercializing research. It also supports specialized and sophisticated SMEs.
- For foreign founders: Expect more fiscal incentives for R&D and closer integration between enterprise projects and national priorities.
Accelerating Commercialization of Scientific Results
Using China’s large market, the policy promotes large-scale application demonstrations for new technologies, products, and scenarios. It calls for building proof-of-concept and pilot testing platforms, and for evaluating the entire process of science projects with commercialization tasks built in from the start. Universities and research institutes are encouraged to license results to SMEs on a “use first, pay later” basis. Large enterprises should open their supply chains to SMEs. Artificial intelligence is expected to transform research methods and improve efficiency.
Upgrading Traditional Industries
The policy aims to upgrade traditional sectors using national standards, digital and intelligent technologies, and green technologies. Key industries such as mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, and construction are targeted to maintain global competitiveness. Programs include industrial base rebuilding, major technical equipment breakthroughs, and large-scale equipment renewal. Financial support and tax incentives for technological upgrading will be strengthened, and intelligent, green, and service-oriented manufacturing will be developed.
Agriculture and services are also covered: new actions for grain capacity, seed industry, smart agriculture, and agricultural machinery will be implemented, while producer services will move up the value chain and consumer services will be improved.
Cultivating Emerging and Future Industries
China will accelerate the development of strategic emerging industries including next-generation information technology, new energy, new materials, intelligent connected new energy vehicles, robotics, biopharmaceuticals, high-end equipment, and aerospace. It will build distinctive industrial clusters and encourage cross-regional cooperation, while avoiding “involutionary” competition. The low-altitude economy and commercial space are to develop in an orderly manner under safety conditions.
For future industries, the policy lists 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, with social capital encouraged to invest.
Deep Integration of the Real Economy and Digital Economy
The policy calls for improving data property rights, market trading, benefit distribution, and protection systems. Pilot demonstration projects for data elements will be implemented. National data infrastructure will be optimized, and manufacturing digital transformation actions, including “East Data West Computing,” smart manufacturing, and industrial internet, will be advanced. A national integrated computing network and national blockchain network will be built. The policy also aims to create internationally competitive digital industry clusters.
“AI+” Action and Safe AI Development
China will promote AI application in traditional industries, accelerate scenarios such as intelligent connected vehicles, AI phones and computers, and humanoid robots. It will support AI technology innovation, including basic theory and core technologies, and strengthen the supply of computing power, algorithms, and data. National AI industry application pilot bases and high-value scenarios will be established. A system for technology monitoring, risk warning, and emergency response will ensure AI is safe, reliable, and controllable.
Green and Low-Carbon Development
The policy aims to build a green, low-carbon circular economy. It includes green manufacturing, green services, and green energy industries. Key actions include green upgrades of traditional industries, promotion of green technologies, incentives for green consumption, and building zero-carbon factories and parks. A comprehensive resource management and waste recycling system will be improved.
Policy tools include fiscal, financial, investment, price, technology, and environmental policies. A carbon emissions dual-control system will be fully implemented, along with carbon statistics, standards, labeling, and footprint management. The national carbon market will be expanded, and the voluntary emission reduction market and unified green certificate market will be developed. Financial institutions are encouraged to offer diverse green financial products, and government green procurement and tax systems will be optimized.
Energy Revolution
Focusing on carbon peak and carbon neutrality goals, China will orderly develop advanced nuclear fission energy, build a high-share renewable energy power system, improve policies for renewable energy consumption, and accelerate green energy use across society. International cooperation in energy will be strengthened.
Reforms for Closer Integration of Technology and Economy
Science tasks will be deployed in major national projects as needed. Reforms will deepen the empowerment of researchers with intellectual property rights and separate management of state-owned assets. Qualified state-owned enterprises may adopt various incentives. A national integrated data market that is open, shared, and secure will be built, and the technology market will be improved to facilitate flow of advanced production factors.
Improved Market Regulation
Market access rules will be improved, and anti-monopoly and anti-unfair competition enforcement strengthened. Governance in AI and biology will be enhanced. Cross-departmental joint supervision will be strengthened with less on-site inspection and more data-driven supervision. A comprehensive intellectual property management system and punitive damages system will be established. Tax rules for new business forms will be studied.
Financial Innovation and Patient Capital
The policy encourages angel investment, venture capital, and private equity, with government investment funds playing a guiding role. Policies will support long-term capital investing early, in small firms, for the long term, and in hard technology. Banks are encouraged to develop loan products suited to new quality productive forces. The corporate bond market for technology innovation will be enriched, and qualified tech firms supported to list and finance. M&A and equity incentive systems will be optimized. Insurance products covering the entire innovation chain and technology leasing will be explored.
Global Allocation of Advanced Production Factors
China will expand high-level opening-up and utilize global markets. Free trade zones are encouraged to cluster advanced production factors based on their location and industrial strengths. Through multilateral and bilateral mechanisms, China will promote joint science parks, “Belt and Road” joint laboratories, and international advanced technology application centers. It will lead and participate 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 will be established.
Talent Development
Reforms of education, science, and talent systems will be coordinated. Higher education will be expanded with new research-oriented universities, and disciplines will be adjusted according to industrial and technological trends. Modern vocational education will be developed with integrated work-study training. Enterprises and universities are encouraged to jointly tailor talent training, and master craftsmen and highly skilled workers may teach at vocational schools.
What This Means for Foreign Founders
Foreign founders registering a company in China should note the policy’s emphasis on high-tech, green, and digital sectors. The document signals stronger support for R&D, easier commercialization pathways, and more open data and talent policies. Sectors such as AI, new energy, biotech, advanced manufacturing, and green technologies are highlighted. Foreign-invested enterprises may benefit from incentives for R&D, participation in national projects, and access to pilot programs, provided they align with strategic priorities.
When setting up operations, consider how your business plan fits these priority areas, as local governments often tailor support accordingly. The policy also stresses market-based reforms and opening-up, which can create a more predictable environment for foreign investors.
Need help registering and operating a company in China? Foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535 for assistance.
This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.