Published by ChinaMNC · Minqin
China’s New Productivity Policy: A Guide for Foreign Founders
A practical overview of China’s new policy on developing ‘new quality productive forces’, highlighting opportunities and compliance points for foreign entrepreneurs registering and operating companies in China.
China’s New Productivity Policy: A Guide for Foreign Founders
China’s central government has issued a major policy document on developing “new quality productive forces” (新质生产力). For foreign founders, this signals where China is directing investment, innovation, and regulatory reform over the coming years. The policy emphasizes technological breakthroughs, industrial upgrading, and deeper integration of science and economy. Below is a practical summary of the key points relevant to foreign-invested enterprises (FIEs) registering or operating in China.
1. Innovation as the Core Driver
The policy calls for strengthening original and disruptive scientific research, focusing on strategic and leading-edge products. It supports both goal-oriented and free-exploration basic research, and plans to build major science infrastructure with open sharing. For foreign founders, this means opportunities in R&D collaboration and access to shared research platforms.
2. Enterprise as the Main Body of Innovation
Enterprises are encouraged to increase R&D investment. The policy mentions a system of R&D reserve funds, higher tax deductions for R&D expenses (the specific ratio is not stated in the source), and allowing capable private enterprises to lead national major technology projects. Foreign-invested companies may also benefit from inclusive incentive policies if they qualify.
3. Faster Commercialization of Research
China aims to bridge the gap between technology development and market application. Measures include building proof-of-concept and pilot-testing platforms, opening application scenarios, and allowing universities and research institutes to license科研成果 to small and medium enterprises on a “use first, pay later” basis. Large enterprises are encouraged to open their supply chains to SMEs. Foreign founders with innovative products may find opportunities to pilot in China’s large market.
4. Upgrading Traditional Industries
The policy supports traditional sectors—mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, construction—to upgrade using digital, intelligent, and green technologies. It also promotes large-scale equipment renewal and technological transformation. Foreign companies in these fields can participate in upgrading projects and benefit from tax incentives for technological transformation.
5. Growing Emerging Industries
Strategic emerging industries are prioritized: next-generation information technology, new energy, new materials, intelligent connected new energy vehicles, robotics, biomedicine, high-end equipment, and aerospace. The policy encourages building distinctive industrial clusters and avoiding “involutionary” competition. It also supports the healthy development of low-altitude economy and commercial aerospace, subject to safety. Foreign founders in these sectors may find favorable cluster policies.
6. Future Industries
China will explore multiple technology routes and regulatory rules for future industries: quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied intelligence, and 6G. A mechanism for investment growth and risk sharing will be established, with social capital encouraged. Foreign participation in these early-stage fields may be possible through pilot programs.
7. Digital and Real Economy Integration
The policy aims to improve data property rights, trading, and protection. It promotes data infrastructure, “East Data West Computing,” industrial internet, and a national integrated computing network. Digital industrialization and industrial digitalization are supported. Foreign companies should note the emphasis on data compliance and cross-border data flow mechanisms, which are being developed.
8. “AI+” Initiative
A national “AI+” action plan will apply artificial intelligence across industries, including intelligent connected vehicles, AI phones and computers, and humanoid robots. The policy supports AI pilot bases and high-value application scenarios, while building monitoring and emergency response systems for AI safety. Foreign AI firms may find opportunities in application scenarios but must comply with safety and reliability requirements.
9. Green and Low-Carbon Development
The policy promotes green manufacturing, green services, and green energy. It includes building zero-carbon factories and parks, improving carbon footprint management, expanding the national carbon market, and developing green finance products. Foreign companies in green tech and renewable energy can align with these incentives.
10. Energy Revolution
China will orderly develop advanced nuclear fission, build a high-proportion renewable energy power system, and improve new energy consumption policies. International cooperation is encouraged. Foreign energy firms may participate in demonstration projects and technology cooperation.
11. Reforms to Link Science and Economy
Reforms include deploying science tasks in major national projects, reforming职务科技成果 ownership, and building a unified data market. State-owned enterprises are allowed various incentives. These reforms aim to ease technology transfer and market access.
12. Market Regulation
The policy calls for improving market access, strengthening anti-monopoly and anti-unfair competition, and enhancing governance in AI and biology. It encourages cross-departmental supervision using data. Intellectual property protection will be strengthened with punitive damages. Tax rules for new business forms will be studied. Foreign founders should ensure compliance with these evolving regulations.
13. Financial Support
China will encourage angel investment, venture capital, and private equity, with government funds playing a guiding role. Policies support long-term capital for early-stage, small, long-term, and hard-tech projects. Banks are encouraged to develop loan products for new productivity features. Bond markets and IPOs for tech firms are supported. Insurance products covering the innovation chain will be developed. Foreign investors may find more financing channels.
14. Global Allocation of Production Factors
China will expand high-level opening up. Free trade zones are encouraged to cluster advanced production factors. Platforms like joint science parks, “Belt and Road” joint laboratories, and international technology application centers will be promoted. Foreign venture capital institutions and international standard organizations are encouraged to develop in China. A safe and convenient cross-border data flow mechanism will be established. This is particularly relevant for foreign founders setting up in FTZs.
15. Talent Development
The policy integrates education, science, and talent reforms. Higher education will be expanded, new research universities developed, and vocational education improved with work-study integration. Enterprises and universities are encouraged to jointly cultivate talent. Foreign founders can tap into these talent pipelines and consider joint training programs.
Practical Takeaways for Foreign Founders
- Registration and operation: The policy environment favors innovation-driven FIEs, especially in emerging and future industries. When registering, consider sectors with explicit support.
- Incentives: R&D tax deductions and technology transformation incentives may apply, but eligibility rules are not detailed in the source; consult local authorities.
- Compliance: Data, AI, and competition rules are tightening. Build compliance into your China strategy.
- Financing: Explore venture capital, government-guided funds, and bank products tailored to tech firms.
- Location: Free trade zones and industrial clusters offer advantages for foreign founders.
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 company registration and ongoing operations in China, foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535.