Published by ChinaMNC · Donglan

China Signals Policy Direction on ‘New Quality Productive Forces’: What Foreign Founders Should Watch

A practical read for foreign founders on the Chinese government’s policy document on developing “new quality productive forces,” covering innovation, industrial upgrading, digital and AI adoption, green transition, finance, talent and openness.

Why This Policy Matters for Foreign-Owned Companies

The Central Committee of the Communist Party of China and the State Council issued an opinion on developing “new quality productive forces.” For foreign founders registering or running a company in China, the document is not a set of concrete tax rates or licensing rules. It is a directional policy statement that signals where government support, regulatory attention and market opportunities are likely to concentrate. Understanding its themes can help you position your China entity, plan research and development, and anticipate compliance expectations.

The overarching framing links scientific and technological innovation with a substantial rise in total factor productivity. The stated aim is to combine technological breakthroughs, better allocation of production factors and deep industrial upgrading, while improving how workers, means of production and objects of production are combined. The document also stresses creating production relations better suited to these goals and a development ecosystem that supports closer integration of technological and industrial innovation.

Innovation Priorities Relevant to Your China Operations

Basic research and key technologies

The opinion calls for stronger original and disruptive innovation, with major science and technology projects organized around strategic and leading products. It emphasizes both goal-oriented and free-exploration research, organized basic research, and efforts to address weaknesses in technical and engineering sciences. It also proposes a plan for breakthroughs in basic and interdisciplinary disciplines, and support for original theoretical research, key generic technologies, frontier technologies, modern engineering technologies and disruptive technologies.

It further calls for using the “new system of mobilizing nationwide resources” to tackle core technologies in key fields, including actions for high-quality development of key manufacturing supply chains and industrial innovation projects. It mentions policies for first-of-their-kind and first-batch applications to encourage technology iteration.

Enterprises as innovation actors

A significant section addresses the role of enterprises. Measures include a corporate research and development reserve fund system, encouragement for small and medium-sized technology enterprises to increase R&D spending, and an increased super-deduction ratio for enterprise R&D expenses. Enterprise R&D projects that meet national strategic needs may be elevated to national projects through procedures, and capable private enterprises are encouraged to lead major national technology breakthroughs. The document also calls for a mechanism in which users evaluate outcomes, strengthening enterprises’ role in commercialization, and support for specialized, refined, distinctive and innovative small and medium-sized enterprises.

Commercialization and application

The opinion emphasizes converting scientific results into real productive capacity. It proposes demonstration actions for large-scale application of new technologies, products and scenarios, and the construction of proof-of-concept and pilot-testing platforms. It also suggests a whole-process evaluation mechanism for science and technology projects, with R&D and commercialization tasks deployed together at project approval and application results assessed at acceptance. Universities and research institutes are encouraged to license results to small and medium-sized enterprises on a “use first, pay later” basis, and large enterprises are encouraged to open their supply chains to smaller firms. Artificial intelligence is cited as a way to transform research paradigms and improve efficiency.

Industrial Upgrading: Traditional, Emerging and Future Sectors

For manufacturers and service providers, the document sets out a three-track industrial strategy.

• Traditional industries: upgrading mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding and construction, supported by national standards, digital and intelligent technologies, green technologies, industrial base reconstruction, major equipment breakthroughs, large-scale equipment renewal and tax policies for technological transformation. It also covers agricultural modernization and service-sector upgrading.
• Emerging industries: next-generation information technology, new energy, new materials, intelligent connected new energy vehicles, robotics, biomedicine, high-end equipment and aerospace, with clusters built according to local conditions. The document warns against “involution-style” competition and encourages cross-regional industrial cooperation, including eastern regions supporting central, western and northeastern regions.
• Future industries: quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied intelligence and sixth-generation mobile communications, with mechanisms for investment growth and risk sharing and guidance for private capital.

The document also promotes low-altitude economy and commercial space activities on a healthy and orderly basis, subject to safety.

Digital, AI and Green Compliance Expectations

Data and the digital economy

The opinion calls for rules on data ownership determination, market trading, benefit distribution and rights protection, pilot demonstrations for data factors, and optimization of national data infrastructure. It lists manufacturing digital transformation, “East Data West Computing,” intelligent manufacturing and industrial internet projects, and a nationwide integrated computing network and national blockchain network. It also aims to build internationally competitive digital industry clusters.

“AI Plus” action

A full “AI Plus” initiative is proposed, covering AI application in traditional industries and intelligent terminals such as connected new energy vehicles, AI phones and computers, and humanoid robots. The document calls for breakthroughs in basic theory and core technologies, efficient supply of computing power, algorithms and data, and national pilot bases and high-value application scenarios by industry and location. It also calls for technology monitoring, risk early warning and emergency response systems to keep AI safe, reliable and controllable.

Green transition

The green agenda includes greener manufacturing, services and energy industries; green upgrades in key sectors; green consumption incentives; certification and labeling; zero-carbon factories and parks; and circular waste systems. Policy tools include fiscal, financial, investment, price, technology and environmental measures; carbon emission总量 and intensity dual control; carbon accounting and footprint systems; expansion of the national carbon market; a voluntary emission reduction market; a unified green certificate market; green financial products; green public procurement; and green-oriented agricultural subsidies. An energy revolution section covers nuclear fission, high-share renewable power systems, renewable consumption measures and international cooperation.

Market Rules, Finance and Openness

The document proposes reforms linking science, technology and the economy, including demand-oriented project selection, application-oriented evaluation, and reform of职务科技成果 ownership and separate asset management. It calls for an open, shared and secure national unified data market and a technology market with efficient conversion.

On market supervision, it mentions improving market access, strengthening antitrust and anti-unfair competition enforcement, governance in AI and biology, cross-departmental joint supervision, reduced on-site inspections, data-based supervision, a comprehensive intellectual property management system, punitive damages, and research on tax rules suited to new business forms.

On finance, it encourages angel investment, venture capital and private equity, government investment fund guidance, long-term capital for early-stage, small, long-term and hard-technology projects, patient capital, bank loan products suited to new quality productive forces, science and technology bonds, listings for qualified technology firms, insurance products covering the innovation chain and technology leasing.

On openness, it encourages free trade pilot zones to gather advanced production factors, cooperation platforms such as jointly built science parks, Belt and Road joint laboratories and international advanced technology application centers, participation in international big science programs, foreign venture capital institutions and international standards organizations to develop in China, and efficient, convenient and secure cross-border data flows.

Practical Takeaways for Foreign Founders

• Map your China entity’s R&D and commercialization activities to the priority sectors and mechanisms described, especially enterprise-led projects and application demonstration.
• Review data, AI and green compliance policies early, given the emphasis on data rules, AI governance and carbon-related systems.
• Consider how licensing, supply-chain opening and pilot-testing platforms could support partnerships with local universities, research institutes and smaller suppliers.
• Monitor implementing rules from ministries and local governments, because the opinion sets direction rather than operational detail.

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