Published by ChinaMNC · Sihong

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

A practical guide for foreign founders on how China's official policy on developing new productive forces affects company registration, R&D, and operations in China.

Why This Policy Matters for Foreign Founders

China’s Central Committee and State Council have issued a major policy document on developing “new productive forces.” For foreign founders registering or operating a company in China, it is a broad statement of direction rather than a set of immediate legal requirements. Still, it signals where policy support, regulatory attention, and market opportunities are likely to concentrate. The following is a practical summary of the source text, framed for foreign-invested businesses.

Core Direction of the Policy

The document calls for innovation-led development, reform, and adaptation to local conditions. It emphasizes high technology, high efficiency, and high quality, and seeks to balance the roles of government and market, development and security, and self-reliance and openness. The stated goal is to raise total factor productivity through technological breakthroughs, better allocation of production factors, and industrial upgrading. It also calls for a production relations framework better suited to these new productive forces and a favorable ecosystem for integrating technological and industrial innovation.

What the Policy Says About Innovation

Original and disruptive technology

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, stronger basic and applied basic research, coordinated science infrastructure, and open sharing of research platforms to avoid duplication.

Key core technologies

It proposes using the “new system for mobilizing resources nationwide” to organize high-quality development actions for key manufacturing supply chains and industrial innovation projects. It also calls for implementing application policies for first-of-their-kind equipment and first-batch materials to support technology iteration.

National strategic science and technology capacity

National laboratories are expected to organize major projects and build innovation platforms, with experimental reforms. The policy also calls for optimizing the roles of national research institutes, high-level research universities, and leading technology enterprises, and for more flexible management of research-type public institutions.

Enterprises as innovation actors

The document encourages enterprises to lead research investment. Measures include a corporate R&D reserve system, incentives for small and medium-sized technology enterprises, a higher R&D expense super-deduction ratio, and pathways for enterprise R&D projects that meet national strategic needs to be elevated to national projects. It supports capable private enterprises in leading major technical breakthroughs and encourages specialized, refined, distinctive, and innovative SMEs.

Commercialization and Market Access

The policy emphasizes turning research results into real productivity. It calls for large-scale application demonstrations of new technologies, products, and scenarios; concept validation and pilot-testing platforms; and evaluation of research projects that covers both R&D and commercialization. Universities and research institutes are encouraged to license results to SMEs on a “use first, pay later” basis. Large enterprises are encouraged to open their supply chains to SMEs. Artificial intelligence is to be used to transform research methods.

Industrial Priorities Relevant to Foreign Investors

Traditional industries

The policy supports upgrading traditional sectors with digital, intelligent, and green technologies. It names mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, and construction as sectors where China aims to maintain global competitiveness. It also calls for industrial base rebuilding, major technical equipment, manufacturing upgrades, and large-scale equipment renewal, supported by funding and tax incentives.

Emerging industries

Priority areas include next-generation information technology, new energy, new materials, intelligent connected new energy vehicles, robotics, biomedicine, high-end equipment, and aerospace. The policy calls for distinctive industrial clusters and cross-regional cooperation, while cautioning against “involutionary” competition. It also supports low-altitude economy and commercial space activities, subject to safety conditions.

Future industries

The document lists quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied intelligence, and sixth-generation mobile communications. It calls for diverse technical routes, application scenarios, business models, and regulatory rules, plus investment growth and risk-sharing mechanisms.

Digital economy and AI

The policy calls for data property rights, data trading, and data protection rules, plus pilot programs for data elements. It supports manufacturing digitalization, the “East Data, West Computing” initiative, smart manufacturing, industrial internet, a national computing network, and a national blockchain network. A separate “AI+” action aims to apply AI across traditional industries and promote intelligent connected vehicles, AI phones and computers, and humanoid robots. It also calls for monitoring, risk warning, and emergency response systems for AI safety.

Green Transition

The policy promotes green manufacturing, green services, and green energy, with green upgrades in key industries and support for green technology. It calls for green consumption incentives, green product certification, zero-carbon factories and parks, and better waste recycling. It also proposes fiscal, financial, investment, price, technology, and environmental policies for green development, including carbon emission controls, carbon accounting, carbon labeling, carbon footprint management, and an expanded national carbon market.

Energy

Toward carbon peak and neutrality goals, the policy calls for orderly development of advanced nuclear fission energy, a power system with a high share of renewable energy, better renewable energy absorption and dispatch, and demonstration of major application scenarios.

Institutional and Market Reforms

The policy calls for closer links between science and the economy, including demand-oriented project selection, reformed ownership and management of job-related scientific results, and flexible incentives for eligible state-owned enterprises. It also calls for a unified national data market and a technology market. On supervision, it proposes market access reform, stronger antimonopoly and anti-unfair competition enforcement, governance in AI and biology, cross-departmental supervision, less on-site inspection, data-based supervision, stronger intellectual property protection with punitive damages, and tax rules suited to new business forms.

Finance and Talent

Financial measures include encouraging angel investment, venture capital, and private equity; improving policies for long-term capital that invests early, small, long-term, and in hard technology; and expanding patient capital. Banks are encouraged to develop loan products suited to new productive forces. The policy also supports science and technology bonds, listings for qualified technology firms, insurance products covering the innovation chain, and technology leasing. On talent, it calls for coordinated reform of education, science, and talent systems, new research universities, better vocational education, and joint customized training between enterprises and universities.

Opening Up and Foreign Participation

The policy calls for expanding high-level opening up and using global markets. Free trade zones are encouraged to attract advanced production factors based on their location and industrial strengths. It supports multilateral and bilateral cooperation mechanisms, jointly built science parks, Belt and Road joint laboratories, and international advanced technology application centers. It encourages foreign venture capital institutions and international standards organizations to develop in China. It also calls for an efficient, convenient, and secure mechanism for cross-border data flows.

Practical Takeaways for Foreign Founders

• Registration and location: Free trade zones are explicitly mentioned as platforms for gathering advanced production factors, which may make them worth considering when choosing a registration location.
• Sector choice: The policy names specific emerging, future, digital, green, and advanced manufacturing sectors where policy attention is concentrated.
• R&D and IP: Enterprise-led R&D, technology commercialization, and stronger IP protection are stated priorities, relevant to structuring research and licensing arrangements.
• Data and AI: Cross-border data flow mechanisms and AI governance are flagged, so data handling and AI product deployment should be planned carefully.
• Finance: The policy mentions expanded financing channels for technology firms, including venture capital, bonds, listings, and insurance.

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