Published by ChinaMNC · Yuzhou

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

A practical guide for foreign founders on China’s latest policy to develop new quality productive forces, covering innovation, industrial upgrades, digitalization, green transition, talent, and financing—based on the official government document.

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

The Chinese government has issued a major policy opinion on developing “new quality productive forces” (新质生产力). For foreign founders registering or operating a company in China, this document signals where government support, market access, and regulatory attention are likely to focus in the coming years. Below we summarize the key points that matter for your business planning, without reproducing the original text.

1. What the Policy Emphasizes

The policy is guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and the spirit of the 20th Party Congress and subsequent plenary sessions. It calls for fully and accurately implementing the new development philosophy, with innovation as the leading driver, reform as the key, and measures tailored to local conditions. The core marker is a substantial increase in total factor productivity, achieved through revolutionary technological breakthroughs, innovative allocation of production factors, and deep industrial transformation and upgrading. The policy also stresses coordinating development and security, and creating production relations that better match new quality productive forces.

For foreign founders, this means China is prioritizing high-tech, high-efficiency, and high-quality development. Sectors aligned with these goals may benefit from supportive policies, while traditional industries are encouraged to upgrade.

2. Strengthening Original and Disruptive Innovation

The document calls for major science and technology projects focused on strategic, landmark, and leading products. It emphasizes both goal-oriented and free exploration in basic research, and supports the construction of science and technology platforms and major infrastructure with open sharing. It also announces plans for breakthroughs in basic and interdisciplinary disciplines, and strengthens research in original theories, key generic technologies, frontier technologies, modern engineering technologies, and disruptive technologies.

Foreign founders in deep tech, AI, biotech, and advanced materials should note that China is building a more organized basic research system and encouraging open innovation platforms. This could create collaboration opportunities with universities and research institutes.

3. Breaking Through Key Core Technologies

Using the advantage of the new nationwide system, the policy organizes actions for high-quality development of key manufacturing industrial chains and industrial innovation projects in key areas. It strengthens whole-chain research, all-factor support, and full-ecosystem construction. It also implements policies for first-of-a-kind and first-batch applications to promote technology iteration and upgrading.

For foreign companies with advanced manufacturing technologies, this indicates a push to localize supply chains and adopt new technologies. Partnering with Chinese manufacturers on pilot applications may be supported.

4. Building National Strategic Science and Technology Strength

National laboratories are expected to play a greater role in organizing major projects and building innovation platforms, with pilot reforms. The policy optimizes the positioning of national research institutes, high-level research universities, and leading science and technology enterprises. It gradually establishes compensation systems for universities and research institutes oriented toward innovation vitality and knowledge value, and allows more flexible management for research-type public institutions. Leading enterprises are encouraged to integrate innovation, industrial, capital, and talent chains.

Foreign founders should be aware that China is reforming its public research system to be more flexible and enterprise-oriented. This may ease collaboration with state-owned research bodies.

5. Enhancing Enterprises’ Role in Innovation

The policy strengthens inclusive incentive policies, establishes a corporate R&D reserve fund system, and reinforces enterprises’ leading role in S&T investment. It encourages small and medium-sized tech enterprises to increase R&D spending and raises the super-deduction ratio for enterprise R&D expenses. Enterprise R&D projects that meet national strategic needs can be elevated to national projects through procedures, and capable private enterprises are supported to lead major national technology breakthroughs. It also builds mechanisms for user evaluation of results and supports specialized and sophisticated SMEs.

Foreign-invested enterprises can benefit from R&D tax incentives and may participate in national projects if their work aligns with strategic priorities. However, eligibility conditions apply, so consult a professional.

6. Commercializing Scientific and Technological Achievements

Leveraging China’s super-large market, the policy promotes efficient matching of technology and market, and large-scale application demonstrations of new technologies, products, and scenarios. It plans concept validation and pilot testing platforms, and opens application scenarios. It explores whole-process evaluation of S&T projects, integrating R&D and commercialization tasks at project approval and assessing application performance at acceptance. Universities and research institutes are encouraged to license results to SMEs on a “use first, pay later” basis. Large enterprises are encouraged to open supply chains to SMEs. AI is promoted to transform research paradigms.

For foreign founders, this means more opportunities to pilot technologies in China and access government-supported testing platforms. Licensing from Chinese universities may become easier.

7. Upgrading Traditional Industries

The policy aims to consolidate the real economy and enhance China’s manufacturing strength. National standards will guide upgrades, and enterprises are supported to use digital, intelligent, and green technologies to transform traditional industries. Key industries such as mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, and construction are targeted to maintain global competitiveness. Programs include industrial base reconstruction, major technology equipment breakthroughs, major manufacturing technological transformation, and large-scale equipment renewal. Financial support and tax incentives for technological transformation are emphasized, along with smart manufacturing, green manufacturing, and service-oriented manufacturing. Agriculture and services are also addressed.

Foreign founders in manufacturing or services should note that upgrading traditional industries is a priority, and participation in equipment renewal or digital transformation projects may be supported.

8. Cultivating Emerging Industries

The policy focuses on building new pillar industries: next-generation information technology, new energy, new materials, intelligent connected new energy vehicles, robotics, biomedicine, high-end equipment, and aerospace. It encourages building distinctive and complementary industrial clusters, deepening professional division of labor, and avoiding “involutionary” competition. Cross-regional industrial collaboration mechanisms are to be established, with eastern regions supporting central, western, and northeastern regions. Low-altitude economy and commercial aerospace are to develop in an orderly manner under safety conditions.

Foreign founders in these sectors may find local governments eager to attract investment and expertise, but should be mindful of “involution” risks and focus on differentiated advantages.

9. Laying Out Future Industries

The policy explores multiple technology routes, typical application scenarios, viable business models, and market regulation rules for future industries: quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied intelligence, and 6G. It aims to form a relatively complete industrial ecosystem and establishes investment growth and risk-sharing mechanisms, using existing fiscal policies and guiding social capital.

Foreign founders in deep tech should monitor these areas for early-stage funding and pilot opportunities.

10. Deep Integration of Real and Digital Economies

The policy improves data property rights, market transactions, benefit distribution, and interest protection systems. It implements pilot demonstration projects for data factors and optimizes national data infrastructure. It promotes manufacturing digital transformation, “East Data West Computing,” smart manufacturing, and industrial internet innovation, building a national integrated computing network and national blockchain network. It also aims to build internationally competitive digital industry clusters.

Data compliance is crucial for foreign companies. The policy signals a more structured data governance framework, which may bring both opportunities and compliance obligations.

11. Implementing “AI+” Action

The policy promotes AI transformation of traditional industries and accelerates applications of intelligent connected vehicles, AI phones and computers, and humanoid robots. It supports AI technology innovation, breakthroughs in basic theory and core technologies, and efficient supply of computing power, algorithms, and data. It plans national AI industry application pilot bases and high-value scenarios, and builds technology monitoring, risk warning, and emergency response systems to ensure AI is safe, reliable, and controllable.

Foreign AI founders should note China’s emphasis on both application and safety, and may need to align with local AI governance requirements.

12. Green and Low-Carbon Development

The policy builds a green, low-carbon, circular economic system: strengthening green manufacturing, developing green services, and expanding green energy industries. It promotes green transformation of key industries, green technology innovation, and application. It improves green consumption incentives, green product certification, and builds zero-carbon factories and parks. It also improves resource management and waste recycling.

Green policies include fiscal, financial, investment, price, technology, and environmental measures. It improves ecological product value realization, implements dual control of carbon emissions, and builds carbon statistics, standards, labeling, and footprint systems. The national carbon market is to be expanded, with a voluntary emission reduction market and a unified green certificate market. Financial institutions are encouraged to provide green financial products, and government green procurement and tax systems are optimized.

Foreign founders in green tech or sustainable manufacturing can find supportive policies, but should prepare for carbon compliance and reporting.

13. Energy Revolution

Focusing on carbon peak and neutrality goals, the policy calls for orderly development of advanced nuclear fission energy, a high-proportion renewable energy power system, improved new energy consumption and regulation measures, and major application demonstrations. It aims to accelerate green energy use across society and strengthen international cooperation.

Foreign energy companies may find opportunities in demonstration projects and international collaboration.

14. Deepening Reform for Technology-Economy Integration

The policy deploys S&T tasks in major national projects as needed, improves demand-oriented topic selection, management with clear responsibilities, and application-oriented evaluation. It deepens reform of job-related S&T achievement rights and separate asset management. Qualified state-owned enterprises may adopt various incentives. It builds an open, shared, and secure national integrated data market and a technology market with efficient transformation.

Foreign founders should note that data and technology markets are becoming more structured, which may ease technology trading but require compliance.

15. Improving Market Regulation

The policy improves market access, strengthens anti-monopoly and anti-unfair competition, and enhances governance in AI and biology. It promotes cross-departmental joint supervision, innovative supervision methods, reduces on-site inspections, and explores “data-based decision-making and management.” It establishes an efficient intellectual property comprehensive management system and improves punitive damages. It studies tax systems suitable for new business formats.

Foreign companies should be aware of stronger IP protection but also stricter competition and data-related supervision.

16. Increasing Financial Innovation Products

The policy encourages and regulates angel investment, venture capital, and private equity, better leverages government investment funds, and improves support policies for long-term capital to invest early, small, long-term, and in hard tech. It encourages banks to develop loan products suited to new quality productive forces, enriches S&T innovation bond products, supports qualified tech enterprises to list and finance, and optimizes merger, reorganization, and equity incentive systems. It develops insurance products covering the entire S&T innovation chain and explores tech leasing.

Foreign founders may find more financing channels, including government-guided funds and specialized bank products, but should review terms carefully.

17. Allocating Advanced Production Factors Globally

The policy expands high-level opening up and encourages free trade pilot zones to cluster domestic and foreign advanced production factors based on location, resources, and industrial advantages. It uses multilateral and bilateral cooperation mechanisms to build science parks, “Belt and Road” joint laboratories, and international advanced technology application centers, and to build a global innovation cooperation network. It leads and participates in international big science programs and encourages foreign venture capital institutions and international standards organizations to develop in China. It establishes efficient, convenient, and secure cross-border data flow mechanisms.

Foreign founders can benefit from free trade zones’ openness and cross-border data mechanisms, but should monitor implementation details.

18. Talent Development

The policy integrates reforms of education, science and technology, and talent systems. It promotes higher education quality and expansion, develops new research universities, and optimizes discipline and major adjustment mechanisms based on industrial and technological trends. It promotes high-quality modern vocational education and integrated work-study talent training. It encourages enterprises and universities to jointly customize talent training and supports master craftsmen and highly skilled personnel to teach in vocational schools.

Foreign companies may find it easier to collaborate with universities on talent development and to hire skilled graduates.

Key Takeaways for Foreign Founders

• Innovation focus: Sectors like AI, biotech, new energy, advanced manufacturing, and future industries are prioritized.
• Tax and financial incentives: R&D super-deduction, government funds, and specialized financial products may be available.
• Commercialization support: Pilot platforms, application scenarios, and “use first, pay later” licensing can lower barriers.
• Green compliance: Carbon reporting and green certification are becoming more important.
• Data and regulation: Expect stronger data governance and IP protection, with streamlined supervision.
• Openness: Free trade zones and cross-border data mechanisms offer opportunities for foreign participation.

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 registering and operating a company in China, foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535.