Published by ChinaMNC · Huanjiangmaonanzu

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

A practical guide for foreign founders on China’s policy to develop new productive forces, covering incentives for innovation, emerging industries, green development, and opening up.

Understanding China’s Push for New Productive Forces

The Chinese government has issued a major policy document on developing new productive forces—a framework that will shape industrial policy, innovation support, and market opportunities for years to come. For foreign founders registering or operating a company in China, this policy signals where incentives, regulatory changes, and growth opportunities are likely to emerge.

This article summarizes the key points from the official government document and explains how they may affect your business decisions. It does not provide legal or tax advice.

Core Principles: Innovation, Reform, and High-Tech Focus

The policy is guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and aims to implement the spirit of the 20th Party Congress and subsequent plenary sessions. It emphasizes:

• Innovation-led development with reform as a key tool
• Adaptation to local conditions and a “establish first, break later” approach
• Commitment to high technology, high efficiency, and high quality
• Balancing government and market, quality and business forms, reform and development, and self-reliance and openness

The overarching goal is to achieve revolutionary technological breakthroughs, innovative allocation of production factors, and deep industrial transformation, supported by a production relations system better suited to new productive forces.

Key Policy Directions Relevant to Foreign Founders

1. Strengthen Original and Disruptive Technological Innovation

The policy calls for major science and technology projects focused on strategic, landmark, and leading products. It supports both goal-oriented and free-exploration research, with efforts to address weaknesses in technical and engineering sciences. The construction of science and technology platforms and major infrastructure will be coordinated, with emphasis on openness and sharing. A plan for breakthroughs in basic and interdisciplinary disciplines will be implemented.

2. Break Through Key Core Technologies

China will leverage its new nationwide system to organize high-quality development actions for key manufacturing supply chains and industrial innovation projects in priority areas. The policy supports the application of first-of-its-kind and first-batch products to promote technological iteration and upgrading.

3. Coordinate National Strategic Science and Technology Forces

National laboratories will play a greater role in organizing major projects and building innovation platforms, with pilot reforms in institutional mechanisms. The layout of national research institutes, high-level research universities, and leading technology enterprises will be optimized. More flexible management systems will be allowed for research-type public institutions, and leading technology enterprises will be encouraged to integrate innovation, industrial, capital, and talent chains.

4. Reinforce Enterprises’ Central Role in Technological Innovation

The policy introduces a corporate R&D reserve fund system and increases the super deduction ratio for enterprise R&D expenses. Eligible enterprise R&D projects aligned with national strategic needs can be elevated to national projects. Private enterprises with capabilities are encouraged to lead major national technological breakthroughs. The policy also supports the development of specialized, refined, distinctive, and innovative small and medium-sized enterprises (SMEs).

5. Accelerate Commercialization of Scientific and Technological Achievements

China will use its super-large market to match technology with market demand and promote large-scale application demonstrations of new technologies, products, and scenarios. The policy plans to build concept verification and pilot testing platforms and increase the construction and opening of application scenarios. Universities and research institutes are encouraged to license科技成果 to SMEs on a “use first, pay later” basis. Large enterprises will be encouraged to open their supply chains to SMEs.

6. Transform and Upgrade Traditional Industries

National standards will be raised to guide the optimization of traditional industries. The policy supports enterprises using digital, intelligent, and green technologies to upgrade traditional sectors such as mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, and construction. Programs include industrial base reconstruction, major technical equipment breakthroughs, major manufacturing technological transformation, and large-scale equipment renewal. Financial support and tax incentives for technological transformation will be strengthened.

7. Cultivate and Expand Emerging Industries

The policy aims to build new pillar industries in next-generation information technology, new energy, new materials, intelligent connected new energy vehicles, robotics, biomedicine, high-end equipment, and aerospace. It encourages the formation of distinctive industrial clusters and cross-regional collaboration, while avoiding “involutionary” competition. The low-altitude economy and commercial aerospace will be developed in an orderly manner under safety conditions.

8. Plan for Future Industries

China will explore multiple technology routes and application scenarios for future industries including quantum technology, bio-manufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied intelligence, and 6G. A mechanism for investment growth and risk sharing will be established, with existing fiscal policies supporting these industries and guiding social capital.

9. Deepen Integration of the Real Economy and Digital Economy

The policy improves data property rights, market transactions, benefit distribution, and interest protection. Pilot demonstration projects for data factors will be implemented. National data infrastructure will be optimized, and actions for manufacturing digital transformation will be deepened, including the “East Data West Computing” project, smart manufacturing, and industrial internet innovation. A nationally integrated computing network and national blockchain network will be built.

10. Implement the “AI+” Action

AI will be applied to transform traditional industries. The policy accelerates applications of intelligent connected new energy vehicles, AI phones and computers, humanoid robots, and other new-generation intelligent terminals. It supports breakthroughs in basic theories and core technologies, and strengthens the supply of computing power, algorithms, and data. National AI industry application pilot bases and high-value application scenarios will be established. A system for technology monitoring, risk warning, and emergency response will be built to ensure AI is safe, reliable, and controllable.

11. Build a Green, Low-Carbon, Circular Economy

The policy aims to strengthen green manufacturing, develop green services, and expand the green energy industry. It promotes green transformation of key industries, green technology innovation, and application of advanced green technologies. Incentives for green consumption will be improved, and a batch of zero-carbon factories and parks will be built. The policy also improves resource management and waste recycling systems.

12. Optimize Green Development Policy Tools

Fiscal, financial, investment, pricing, technology, and environmental policies will support green low-carbon development. The policy improves the mechanism for realizing ecological product value and implements a dual control system for total carbon emissions and intensity. It improves carbon emission statistics, standards, product carbon labeling, and carbon footprint management. The national carbon market will be expanded, and the green certificate market will be unified. Financial institutions will be encouraged to offer diverse green financial products.

13. Advance 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, and improve policies for new energy consumption. Major application scenarios will be demonstrated and promoted to accelerate green energy use across society.

14. Deepen Reform to Integrate Science, Technology, and the Economy

Science and technology tasks will be deployed in major national projects as needed. The policy deepens reforms on property rights and separate management of scientific achievements. Qualified state-owned enterprises can adopt various incentive forms. A nationally integrated data market that is open, shared, and secure will be built, along with a technology market that facilitates efficient transformation.

15. Improve Market Regulation

The policy improves market access, strengthens anti-monopoly and anti-unfair competition enforcement, and enhances governance in AI and biology. Cross-departmental joint supervision will be strengthened, with less on-site supervision and more data-driven decision-making and management. A comprehensive intellectual property management system and punitive damages system will be improved. Tax systems adapted to new business forms will be studied.

16. Increase Supply of Innovative Financial Products

Angel investment, venture capital, and private equity investment will be encouraged and regulated. Government investment funds will play a guiding role, and policies will support long-term capital investing early, small, long-term, and in hard technology, thereby strengthening patient capital. Banks will be encouraged to develop loan products suited to new productive forces. The corporate bond market for technological innovation will be enriched, and qualified tech enterprises will be supported in listing and financing. Insurance products covering the entire innovation chain and technology leasing will be explored.

17. Allocate Advanced Production Factors Globally

China will expand high-level opening up and better utilize global markets. Free trade zones will be encouraged to cluster advanced production factors from home and abroad based on their location, resources, and industrial advantages. Platforms such as joint science parks, “Belt and Road” joint laboratories, and international advanced technology application centers will be promoted. Foreign venture capital institutions and international standards organizations will be encouraged to develop in China. An efficient, convenient, and secure mechanism for cross-border data flow will be established.

18. Cultivate Talent for New Productive Forces

The policy integrates reforms of education, science and technology, and talent systems. Higher education will be improved and expanded, new research universities will be developed, and disciplines will be adjusted according to industrial and technological trends. Modern vocational education will be promoted with an integrated work-study talent training model. Enterprises and universities will be encouraged to jointly customize talent training, and master craftsmen and highly skilled workers will be supported to teach in vocational schools.

What This Means for Foreign Founders

For foreign founders, this policy creates opportunities in several areas:

• R&D incentives: The corporate R&D reserve fund and higher super deduction ratio can reduce the cost of innovation for qualifying enterprises.
• Emerging and future industries: Sectors such as AI, new energy, robotics, biomedicine, quantum technology, and green energy are prioritized for support and may offer access to pilot programs, platforms, and funding.
• Commercialization support: Concept verification and pilot testing platforms, application scenario openings, and supply chain access for SMEs can help bring products to market.
• Green transition: Green finance, carbon markets, and zero-carbon parks provide frameworks for sustainable operations.
• Open innovation: Free trade zones, international cooperation platforms, and cross-border data flow mechanisms facilitate global collaboration.

When registering or operating a company in China, foreign founders should consider how their business aligns with these priority areas, as alignment may improve access to incentives and partnerships. It is advisable to consult local authorities and professional advisors for specific requirements.

Next Steps

To navigate these policies effectively, foreign founders should monitor implementing regulations at national and local levels, engage with industry clusters and free trade zones, and leverage available support mechanisms for innovation and commercialization.

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

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