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

A concise briefing for foreign entrepreneurs on China’s policy direction for innovation, industrial upgrading, and business environment, highlighting opportunities for company registration and operations.

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

The Chinese government has issued a comprehensive policy document on developing “new quality productive forces”—a strategic framework that emphasizes innovation, advanced technology, and industrial upgrading. For foreign founders considering registering or operating a company in China, this policy signals priorities and opportunities across multiple sectors. Below is a practical summary of the key points from the official document, framed for an international business audience.

1. Overall Direction and Guiding Principles

The policy is guided by the need to fully and accurately implement the new development philosophy. It stresses innovation as the leading driver, reform as the key, and adaptation to local conditions. The approach includes:

• Pursuing high technology, high efficiency, and high quality.
• Balancing the roles of government and market, quality and business forms, reform and development, and self-reliance and openness.
• Coordinating development and security.
• Using scientific and technological innovation to drive revolutionary breakthroughs, innovative allocation of production factors, and deep industrial transformation and upgrading.
• Promoting the optimization and upgrading of labor, means of production, and objects of labor.
• Accelerating the formation of production relations that better match new quality productive forces.
• Creating a favorable ecosystem for deep integration of technological and industrial innovation.

2. Strengthening Original and Disruptive Technological 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, with organized basic research and applied basic research to address weaknesses in technical and engineering sciences. Key measures include:

• Coordinated construction of science and technology platforms and major infrastructure, with open sharing to avoid duplication.
• Implementing breakthrough plans for basic disciplines and interdisciplinary fields.
• Strengthening original theoretical research and innovation in key generic technologies, frontier technologies, modern engineering technologies, and disruptive technologies.

3. Breaking Through Key Core Technologies

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

4. Coordinating National Strategic Science and Technology Forces

The policy outlines roles for national laboratories, research institutions, high-level research universities, and leading technology enterprises. It includes:

• Pilot reforms in institutional mechanisms for national laboratories.
• Optimizing the positioning of research institutes, universities, and enterprises based on national strategic needs.
• Gradually establishing salary systems for universities and research institutes that stimulate innovation, value knowledge, ensure effective management, and balance incentives and guarantees.
• Allowing research-type public institutions to adopt more flexible management systems.
• Encouraging leading technology enterprises to play a key role in integrating innovation, industrial, capital, and talent chains.

5. Strengthening the Principal Role of Enterprises in Innovation

Enterprises are to be given a more prominent role in technological innovation. Measures include:

• Increasing inclusive incentive policies and establishing a corporate R&D reserve fund system.
• Encouraging small and medium-sized tech enterprises to increase R&D investment and raising the super deduction ratio for enterprise R&D expenses.
• Elevating enterprise R&D projects that meet national strategic needs to national projects.
• Supporting capable private enterprises to lead national major technology research tasks.
• Establishing mechanisms for user evaluation of outcomes and strengthening enterprises’ role in commercialization.
• Improving institutional arrangements for original innovation in state-owned enterprises.
• Supporting the development of specialized and sophisticated SMEs.

6. Accelerating Commercialization of Scientific and Technological Achievements

Leveraging China’s super-large market, the policy aims to connect technology with the market efficiently and promote the scaled development of new quality productive forces. Key actions:

• Implementing large-scale application demonstration programs for new technologies, products, and scenarios.
• Building concept validation and pilot testing platforms, and increasing the construction and opening of application scenarios.
• Exploring whole-process evaluation mechanisms for science and technology projects, integrating R&D and commercialization tasks at project inception and assessing application performance upon acceptance.
• Guiding universities and research institutes to license科技成果 to SMEs on a “use first, pay later” basis.
• Encouraging large enterprises to open supply chains to SMEs, supporting SMEs as important forces in industrialization.
• Using artificial intelligence to lead changes in scientific research paradigms and improve efficiency.

7. Upgrading Traditional Industries

The policy emphasizes consolidating the foundation of the real economy and enhancing China’s manufacturing strength. Actions include:

• Using national standards to guide optimization and upgrading of traditional industries, and supporting enterprises to transform with digital, intelligent, and green technologies.
• Implementing quality improvement actions for key industries such as mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, and construction.
• Carrying out industrial base reconstruction, major technical equipment research, major manufacturing technology transformation and upgrading, and large-scale equipment renewal projects.
• Strengthening financial support for technological transformation and implementing tax incentives.
• Promoting digital and intelligent transformation of manufacturing, and developing smart manufacturing, green manufacturing, and service-oriented manufacturing.
• Enhancing quality and technical infrastructure and brand building.
• Implementing actions for grain production capacity, seed industry revitalization, smart agriculture, high-quality agricultural machinery, and modernization of protected agriculture.
• Expanding and upgrading the service sector, promoting producer services toward specialization and higher value chains, and developing consumer services with high quality, diversity, and convenience.

8. Cultivating and Expanding Emerging Industries

The document identifies strategic emerging industries as new pillars. Focus areas include:

• Next-generation information technology, new energy, new materials, intelligent connected vehicles, robotics, biomedicine, high-end equipment, and aerospace.
• Building distinctive and complementary industrial clusters based on local conditions.
• Deepening professional division of labor within industries and products, promoting cross-industry and cross-regional integration, and avoiding “involutionary” competition.
• Establishing cross-regional industrial cooperation mechanisms led by industrial chains and enterprises, supporting eastern regions to drive development in central, western, and northeastern regions.
• Promoting the healthy and orderly development of the low-altitude economy and commercial aerospace under safety conditions.

9. Forward-Looking Layout for Future Industries

China will explore diverse technological routes, typical application scenarios, viable business models, and market supervision rules to promote future industries such as quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied intelligence, and 6G. The policy calls for:

• Accelerating the formation of a relatively complete industrial ecosystem.
• Establishing investment growth and risk-sharing mechanisms for future industries.
• Fully utilizing existing fiscal policies and guiding social capital to increase investment.

10. Deep Integration of the Real Economy and Digital Economy

The policy aims to release the potential of data elements by:

• Improving systems for data property rights confirmation, market transactions, benefit distribution, and interest protection.
• Implementing pilot demonstration projects for data elements.
• Optimizing the layout, construction, and operation of national data infrastructure.
• Deepening manufacturing digital transformation actions and implementing projects such as “East Data West Computing,” smart manufacturing, and industrial internet innovation.
• Building a national integrated computing network and national blockchain network.
• Improving policies for digital industrialization and industrial digitalization, and creating internationally competitive digital industrial clusters.

11. Full Implementation of the “AI+” Action

Artificial intelligence is to be applied across traditional industries. The policy includes:

• Accelerating application scenarios for intelligent connected vehicles, AI phones and computers, humanoid robots, and other next-generation intelligent terminals.
• Advancing AI and other digital intelligent technologies, breaking through basic theories and core technologies, and strengthening the efficient supply of computing power, algorithms, and data.
• Establishing national AI industry application pilot bases and high-value application scenarios according to local conditions and sector-specific policies.
• Building technology monitoring, risk warning, and emergency response systems to ensure AI is safe, reliable, and controllable.

12. Building a Green, Low-Carbon, Circular Economy

The policy supports green manufacturing, green services, and green energy industries. Key points:

• Promoting green transformation of key industries through source reduction, process control, and efficient end-of-pipe treatment.
• Accelerating green technology innovation and application.
• Improving green consumption incentive mechanisms and the certification and labeling system for green products.
• Building zero-carbon factories and parks.
• Improving resource management and waste recycling systems.

13. Optimizing Green Development Policy Tools

Fiscal, financial, investment, pricing, technology, and environmental policies will support green and low-carbon development. Measures include:

• Improving mechanisms for realizing the value of ecological products.
• Implementing dual control of total carbon emissions and intensity.
• Improving carbon emission statistics, standards, product carbon labeling, and carbon footprint management systems.
• Using the national carbon market as the main body to improve carbon pricing, expand coverage, optimize allowance allocation, and accelerate the construction of the voluntary greenhouse gas emission reduction trading market.
• Improving the national unified green certificate market.
• Encouraging financial institutions to provide diverse green financial products.
• Optimizing government green procurement and improving the green tax system.
• Implementing green ecology-oriented agricultural subsidy systems.

14. Actively Promoting the Energy Revolution

Focusing on carbon peak and carbon neutrality goals, the policy includes:

• Orderly development of advanced nuclear fission energy.
• Building a high-proportion renewable energy power system.
• Improving policies for renewable energy consumption and regulation.
• Organizing major application scenario demonstrations and promotions.
• Accelerating the green transformation of energy consumption and supply, technology, and institutional revolutions.
• Strengthening international cooperation comprehensively.

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

The policy calls for deploying science and technology tasks in major national engineering projects and improving demand-oriented topic selection, responsibility-consistent management, and application-oriented evaluation systems. Other measures include:

• Deepening reforms for granting scientific and technological achievements and separate asset management.
• Allowing eligible state-owned enterprises to adopt various forms of incentives.
• Building an open, shared, and secure national integrated data market and a technology market with efficient transformation.
• Promoting the efficient aggregation and smooth flow of advanced and high-quality production factors.

16. Improving Market Supervision Systems

The document outlines improvements to market access, anti-monopoly, and anti-unfair competition. It also includes:

• Strengthening governance in AI, biology, and other fields.
• Enhancing cross-departmental joint supervision, innovating supervision methods, reducing on-site inspections, and exploring “data-based decision-making and management” supervision models.
• Establishing an efficient comprehensive intellectual property management system and improving punitive damages.
• Studying tax systems suitable for new business forms.

17. Increasing Financial Innovation Product Supply

Financial support for innovation includes:

• Encouraging and regulating angel investment, venture capital, and private equity investment.
• Better leveraging government investment funds and improving policies to support long-term capital investing early, in small businesses, for the long term, and in hard technology.
• Encouraging banks to develop loan products suited to new quality productive forces.
• Enriching science and technology innovation bond products and supporting qualified tech enterprises to list and finance.
• Optimizing systems for M&A, restructuring, and equity incentives for tech enterprises.
• Developing insurance products covering the entire chain of technological innovation and exploring technology leasing.

18. Allocating Advanced Production Factors Globally

China will expand high-level opening up and utilize global markets. Measures include:

• Encouraging free trade pilot zones to cluster domestic and foreign advanced production factors based on location, resources, and industrial advantages.
• Using multilateral and bilateral cooperation mechanisms to promote joint science parks, “Belt and Road” joint laboratories, and international advanced technology application centers.
• Actively building a global innovation cooperation network and leading or participating in international big science programs.
• Encouraging foreign venture capital institutions and international standards organizations to develop in China.
• Establishing efficient, convenient, and secure cross-border data flow mechanisms.

19. Cultivating Talent Urgently Needed for New Quality Productive Forces

The policy promotes integrated reform of education, science and technology, and talent systems. Actions include:

• Improving higher education quality and expanding capacity, developing new research universities, and optimizing discipline and major settings based on industrial and technological trends.
• Promoting high-quality modern vocational education and comprehensively advancing the work-study integrated skill training model.
• Encouraging enterprises and universities to jointly customize talent training.
• Supporting master craftsmen and highly skilled talents to serve as part-time internship instructors in vocational schools.

What This Means for Foreign Founders

For foreign entrepreneurs looking to register or operate a company in China, this policy direction suggests several practical implications:

• Innovation-driven sectors are prioritized: Advanced manufacturing, AI, green energy, biotech, and digital services are likely to receive policy support and incentives.
• R&D incentives: Enterprises investing in research and development may benefit from tax deductions and other supportive measures.
• Commercialization pathways: The policy encourages pilot testing, application scenarios, and licensing from universities—useful for startups seeking to validate and scale technologies.
• Open innovation ecosystem: Foreign venture capital and international standards organizations are explicitly encouraged to operate in China.
• Data and cross-border flows: Efforts to establish secure cross-border data flow mechanisms could ease some operational concerns for foreign-invested companies.
• Green transition: Green manufacturing, zero-carbon parks, and carbon markets offer opportunities for companies with sustainable technologies.

While the document sets out broad policy directions, foreign founders should consult local authorities and professional advisors for specific implementation details, incentives, and compliance requirements in their sector and location.

Call to Action: 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.