Published by ChinaMNC · Huai'an

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

A practical overview of China’s official opinions on developing new productive forces, highlighting implications for foreign entrepreneurs setting up and operating companies in China.

What Foreign Founders Need to Know About China’s New Productive Forces Policy

China’s central government has issued official opinions on developing “new productive forces” — a policy framework that will shape industrial priorities, innovation support, and business regulation. For foreign founders registering or operating a company in China, understanding these directions can help align business plans with available incentives and regulatory expectations.

The policy emphasizes innovation-led development, reform, and tailored approaches, with a focus on high technology, high efficiency, and high quality. It calls for coordinating the roles of government and market, and balancing development with security. The core marker is a substantial rise in total factor productivity, driven by technological breakthroughs, innovative allocation of production factors, and deep industrial upgrading. The document outlines measures across science and technology, industrial modernization, digitalization, green development, and institutional reform.

Strengthening Original and Disruptive Innovation

The policy directs efforts toward global science frontiers, the main economic battlefield, major national needs, and public health. It calls for major science and technology projects focused on strategic, landmark, and leading products. Both goal-oriented and free exploration research are to be supported, with organized basic research and applied basic research addressing weaknesses in technical and engineering sciences. The construction of science and technology platforms and major infrastructure is to be coordinated, with open sharing emphasized to avoid duplication. A breakthrough plan for basic and interdisciplinary disciplines is to be implemented, and original theoretical research, key generic technologies, frontier technologies, modern engineering technologies, and disruptive technologies are to be strengthened.

Breaking Through Key Core Technologies

China will leverage its new nationwide system to organize major manufacturing industry chain quality development actions and industrial innovation projects in key fields. This includes whole-chain research, all-factor support, and full-ecosystem development. Policies for first-of-its-kind and first-batch applications will be implemented to promote technology iteration and upgrading.

Coordinating National Strategic Science and Technology Forces

National laboratories are to play a role in organizing major national science and technology projects and building major innovation platforms, with pilot reforms in institutional mechanisms. The positioning and layout of national research institutes, high-level research universities, and leading science and technology enterprises are to be optimized based on national strategic needs. A salary system for universities and research institutes that stimulates innovation, values knowledge, ensures effective management, and balances guarantees and incentives is to be gradually established. Reforms of national research institutes and high-level research universities are to be advanced in parallel. Research-type public institutions may adopt more flexible management systems. Leading science and technology enterprises are to play a key role in integrating innovation, industrial, capital, and talent chains.

Reinforcing Enterprises’ Central Role in Innovation

The policy calls for increasing inclusive incentive policies, establishing a corporate R&D reserve fund system, and strengthening enterprises’ leading role in science and technology investment. Technology-based small and medium-sized enterprises (SMEs) are encouraged to increase R&D investment, and the ratio of additional tax deductions for enterprise R&D expenses is to be raised. Enterprise R&D projects that meet national strategic needs may be elevated to national projects through procedures. Enterprises are encouraged to lead national science and technology tasks, and capable private enterprises are supported to lead major national technological breakthroughs. A mechanism for users to evaluate outcomes is to be established, strengthening enterprises’ role in commercializing results. State-owned enterprises’ institutional arrangements for original innovation are to be improved. Specialized and sophisticated SMEs are supported.

Accelerating Commercialization of Scientific and Technological Achievements

China will leverage its super-large market to connect technology and market efficiently and promote the scaled development of new productive forces. A large-scale application demonstration action for new technologies, products, and scenarios is to be implemented. Concept validation and pilot testing platforms are to be established, and application scenarios are to be opened up. A whole-process evaluation mechanism for science and technology projects is to be explored, integrating R&D and commercialization tasks at project approval and assessing application performance at acceptance. Universities and research institutes are guided to license results to SMEs on a “use first, pay later” basis. Large enterprises are encouraged to open their supply chains to SMEs, and SMEs are supported to become important forces in industrialization. Artificial intelligence is to lead changes in research paradigms to improve efficiency.

Transforming and Upgrading Traditional Industries

The policy stresses maintaining the foundation of the real economy and consolidating China’s manufacturing strength. National standards are to guide the optimization and upgrading of traditional industries, and enterprises are supported to use digital, intelligent, and green technologies for transformation. Key industrial quality and upgrading actions are to be organized to consolidate and enhance the position and competitiveness of mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, and construction in the global division of labor. Industrial foundation reconstruction, major technical equipment research, major manufacturing technological transformation and upgrading, and large-scale equipment renewal projects are to be carried out. Financial support for manufacturing technological transformation is to be strengthened, tax incentives for technological transformation investment implemented, and manufacturing digital and intelligent transformation promoted, developing smart manufacturing, green manufacturing, and service-oriented manufacturing. Quality and technical infrastructure and brand building are to be enhanced. New actions for grain production capacity, seed industry revitalization, smart agriculture, agricultural machinery high-quality development, facility agriculture modernization, and agricultural science and technology innovation conditions are to be implemented, developing new forms such as agricultural factories. Service industry capacity expansion and quality improvement actions are to be implemented, promoting producer services toward specialization and higher value chains, and consumer services toward high quality, diversity, and convenience.

Cultivating and Strengthening Emerging Industries

Emerging pillar industries are to be built. The development of strategic emerging industries such as next-generation information technology, new energy, new materials, intelligent connected new energy vehicles, robotics, biomedicine, high-end equipment, and aerospace is to be accelerated. Strategic emerging industry clusters with distinctive features and complementary advantages are to be built according to local conditions, promoting resource concentration, subject concentration, achievement integration, and division of labor. Professional division within industries and products is to be deepened, cross-industry and cross-regional integration promoted, and “involutionary” competition avoided. Cross-regional industrial collaboration mechanisms led by industrial chains and enterprises are to be established, supporting the eastern region to drive central, western, and northeastern regions to develop emerging industries according to local conditions. The low-altitude economy and commercial aerospace are to be developed in a healthy and orderly manner under safety preconditions.

Forward-Looking Layout of Future Industries

China will explore diverse technical routes, typical application scenarios, feasible business models, and market regulatory rules to promote future industries such as quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied intelligence, and sixth-generation mobile communications, accelerating the formation of a relatively complete industrial ecosystem. A mechanism for investment growth and risk sharing in future industries is to be established, making full use of existing fiscal policies and guiding social capital to increase investment.

Deep Integration of the Real Economy and Digital Economy

Systems for data property rights confirmation, market transactions, benefit distribution, and interest protection are to be improved. Pilot demonstration projects for data factors are to be implemented to unlock data potential. The layout, construction, and operation of national data infrastructure are to be optimized. Manufacturing digital transformation actions are to be deepened, and projects such as “East Data, West Computing,” smart manufacturing, and industrial internet innovation are to be implemented. A national integrated computing network and national blockchain network are to be built. Policies for digital industrialization and industrial digitalization are to be improved, and digital industry clusters with international competitiveness are to be created.

Full Implementation of the “AI+” Action

The policy calls for advancing AI transformation of traditional industries and accelerating scenario applications of new-generation intelligent terminals such as intelligent connected new energy vehicles, AI phones and computers, and humanoid robots. AI and other digital-intelligent technology innovation is to be accelerated, basic theories and core technologies are to be突破, and efficient supply of computing power, algorithms, and data is to be strengthened. National AI industry application pilot bases and high-value application scenarios are to be laid out according to local conditions and sector-specific policies, vigorously promoting AI applications across industries. Technical monitoring, risk warning, and emergency response systems are to be built to ensure AI is safe, reliable, and controllable.

Building a Green, Low-Carbon, Circular Economic System

Green manufacturing is to be strengthened, green services developed, and the green energy industry expanded. Source reduction, process control, and efficient end-of-pipe treatment are to be combined to advance green transformation of key industries and accelerate green technology innovation and application. Green consumption incentive mechanisms are to be improved, green product certification and labeling systems strengthened, and green consumption levels raised to drive green product supply. A number of zero-carbon factories and parks are to be built. Resource total management and comprehensive conservation systems are to be improved, and the waste recycling system perfected.

Optimizing the Green Development Policy Toolbox

Fiscal, financial, investment, price, science and technology, and environmental policies promoting green and low-carbon development are to be implemented. Mechanisms for realizing the value of ecological products are to be improved. A comprehensive system of dual control over total carbon emissions and intensity is to be implemented, and carbon emission statistics and accounting systems, standards and measurement systems, product carbon labeling certification, and product carbon footprint management systems are to be improved. The national carbon market is to be the main body for improving carbon pricing, expanding coverage of the national carbon emission trading market, optimizing allowance allocation, accelerating the construction of the voluntary greenhouse gas emission reduction trading market, and improving the unified national green certificate market. Financial institutions are to be encouraged to provide diversified green financial products. Government green procurement policies are to be optimized, and the green tax system improved. A green ecology-oriented agricultural subsidy system is to be implemented.

Actively Promoting the Energy Revolution

Focusing on carbon peak and carbon neutrality goals, China will develop advanced nuclear fission energy in an orderly manner, build a high-proportion renewable energy power system, improve policies for renewable energy consumption and regulation, organize demonstration and promotion of major application scenarios, accelerate green energy use in production and daily life, and promote revolutions in energy consumption, supply, technology, and systems, while strengthening international cooperation in all aspects.

Deepening Reform for Closer Integration of Science, Technology, and the Economy

Science and technology tasks are to be deployed as needed in major national engineering projects. Demand-oriented topic selection systems, management systems with consistent responsibilities and rights, and application-oriented evaluation systems are to be improved. Reforms to grant ownership of job-related scientific and technological achievements and separate asset management are to be deepened. Qualified state-owned enterprises are allowed to adopt various forms of incentives. A national integrated data market that is open, shared, and secure is to be built, and an efficient technology market is to be improved to promote the efficient gathering and smooth flow of advanced and high-quality production factors.

Improving Market Supervision Systems

Market access systems are to be improved, and anti-monopoly and anti-unfair competition enforcement strengthened. Governance in fields such as AI and biology is to be enhanced. Cross-departmental joint supervision is to be strengthened, supervision methods innovated, on-site supervision reduced, and a regulatory model of “decision-making with data, management with data” explored to improve intelligent comprehensive supervision. An efficient comprehensive intellectual property management system is to be established, and the punitive damages system improved. Tax systems suitable for new business forms are to be studied.

Increasing Financial Innovation Product Supply

Angel investment, venture capital, and private equity investment are to be encouraged and regulated. The guiding role of government investment funds is to be better leveraged. Support policies for long-term capital to invest early, in small businesses, for the long term, and in hard technology are to be improved, strengthening patient capital. Banks are encouraged to develop loan products suited to new productive forces. The science and technology innovation bond product system is to be enriched, quality technology enterprises supported to list and raise funds, and systems for mergers and acquisitions, restructuring, and equity incentives optimized. Insurance products covering the entire science and technology innovation chain are to be developed, and businesses such as technology leasing explored.

Allocating Advanced Production Factors Globally

China will expand high-level opening-up and explore global markets. Free trade pilot zones are encouraged to cluster domestic and foreign advanced production factors based on location, resources, and industrial advantages. Various multilateral and bilateral cooperation mechanisms are to be used to promote joint science parks, “Belt and Road” joint laboratories, and international advanced technology application promotion centers, actively building a global innovation cooperation network. China will lead and actively participate in international big science programs and projects. 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.

Cultivating Talent Urgently Needed for New Productive Forces

Reforms of education, science and technology, and talent systems are to be advanced in an integrated manner. Higher education is to be improved in quality and expanded, new research-oriented universities developed, and the mechanism for adjusting disciplines and majors in higher education optimized according to industrial and technological trends. Modern vocational education is to be developed with high quality, and the work-study integrated skill training model comprehensively promoted. Talent is to be cultivated in practice. Enterprises and universities are encouraged to jointly customize talent training, and master craftsmen and highly skilled talents are supported to serve as part-time internship trainers in vocational schools.

For foreign founders, these policy directions signal opportunities in emerging and future industries, digitalization, green development, and innovation-driven sectors. Understanding the emphasis on enterprise-led innovation, financial support, and talent development can help in planning investment and operations in China. However, specific incentives and regulatory requirements may vary by region and sector, so consulting local authorities and professional advisors 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.