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

A practical overview of China’s official opinions on developing new productive forces, highlighting opportunities and compliance points for foreign entrepreneurs setting up or running a company in China.

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

The Chinese government has issued official opinions on developing “new productive forces,” a policy framework that emphasizes technological innovation, industrial upgrading, and deeper integration of the digital and real economies. For foreign founders registering or operating a company in China, this policy signals priority sectors, incentive mechanisms, and regulatory directions that can shape business strategy. Below is a practical summary of the key elements, based solely on the official document.

Core Principles and Strategic Direction

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 plenary sessions. It stresses innovation-led development, reform as the key, and adapting measures to local conditions. The approach is to “establish the new before abolishing the old,” pursue high technology, high efficiency, and high quality, and balance the roles of government and market, quality and business format, reform and development, self-reliance and opening-up, and development and security. The core marker is a substantial increase in total factor productivity, achieved through revolutionary technological breakthroughs, innovative allocation of production factors, deep industrial transformation and upgrading, and optimized combination of labor, means of labor, and objects of labor. The goal is to accelerate the formation of production relations more compatible with new productive forces and create a favorable ecosystem for deep integration of technological and industrial innovation.

Innovation and Technology Priorities

The document outlines several actions to strengthen original and disruptive technological innovation. It calls for organizing major science and technology projects focused on strategic, landmark, and leading products, targeting global frontiers, the main economic battlefield, major national needs, and people’s health. Both goal-oriented and free exploration are emphasized, with organized basic research and applied basic research to address weaknesses in technical and engineering sciences. The policy supports the construction of science and technology platforms and major infrastructure with open sharing, and implements plans for breakthroughs in basic and interdisciplinary disciplines. It also stresses strengthening original theoretical research and key generic technologies, frontier leading technologies, modern engineering technologies, and disruptive technologies.

To break through key core technologies, the policy leverages the new nationwide system to organize high-quality development actions for key manufacturing supply chains and industrial innovation projects in key areas, strengthening whole-chain, all-factor, and full-ecosystem support. It also calls for implementing policies for first-of-a-kind and first-batch applications to promote technology iteration.

Enterprise Innovation and Talent

The policy reinforces the principal role of enterprises in technological innovation. It proposes inclusive incentive policies, a corporate R&D reserve fund system, and strengthening enterprises’ leading role in S&T investment. It encourages small and medium-sized tech enterprises to increase R&D investment and raises the proportion of R&D expense additional deduction. Eligible enterprise R&D projects that meet national strategic needs can be elevated to national projects, and capable private enterprises are supported to lead major national technological breakthroughs. The policy also establishes user assessment mechanisms for outcomes and strengthens enterprises’ role in commercialization. It supports the development of specialized, refined, distinctive, and innovative SMEs.

On talent, the policy calls for integrated reform of education, science and technology, and talent systems. It promotes higher education quality and expansion, develops new research-oriented universities, and optimizes discipline and major adjustment mechanisms in higher education according to industrial and technological trends. It also advances modern vocational education and work-study integrated skill training. Enterprises and universities are encouraged to jointly customize talent training, and master craftsmen and highly skilled talents are supported to serve as part-time practical training instructors in vocational schools.

Commercialization and Industrial Upgrading

To accelerate the transformation of scientific and technological achievements into real productive forces, the policy leverages the super-large market advantage to match technology with the market and promote large-scale application of new productive forces. It implements demonstration actions for large-scale application of new technologies, new products, and new scenarios, and builds proof-of-concept and pilot testing platforms. It explores whole-process evaluation mechanisms for S&T projects, integrating R&D and commercialization tasks at project approval and assessing application performance at acceptance. Universities and research institutes are guided to license achievements to SMEs on a “use first, pay later” basis. Large enterprises are encouraged to open their supply chains to SMEs, and AI is promoted to lead changes in research paradigms.

For traditional industries, the policy aims to upgrade them with national standards, digital-intelligent technologies, and green technologies. It organizes actions to improve key industries, including mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, and construction, and implements industrial base reconstruction, major technical equipment, major manufacturing technology upgrading, and large-scale equipment renewal projects. It strengthens financial support for technological upgrading, implements tax incentives for upgrading investment, and promotes digital-intelligent transformation, smart manufacturing, green manufacturing, and service-oriented manufacturing. It also supports agriculture and services upgrading.

Emerging and Future Industries

The policy calls for cultivating and strengthening emerging industries, including next-generation information technology, new energy, new materials, intelligent connected new energy vehicles, robots, biomedicine, high-end equipment, and aerospace. It encourages building distinctive strategic emerging industry clusters based on local conditions, deepening intra-industry and intra-product specialization, and avoiding “involution-style” competition. It establishes cross-regional industrial collaboration mechanisms led by supply chains and enterprises, supporting eastern regions to help central, western, and northeastern regions develop emerging industries. The low-altitude economy and commercial aerospace are to develop in a healthy and orderly manner under safety conditions.

For future industries, the policy explores diverse technology routes, typical application scenarios, viable business models, and market supervision rules. It promotes quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied intelligence, and 6G. It establishes investment growth and risk-sharing mechanisms for future industries, uses existing fiscal policies, and guides social capital to increase investment.

Digital Economy, AI, and Green Transition

The policy promotes deep integration of the real economy and digital economy. It improves data property rights confirmation, market transactions, benefit distribution, and interest protection systems, and implements pilot demonstration projects for data factors. It optimizes national data infrastructure layout and operations, deepens manufacturing digital transformation actions, implements “East Data West Computing,” smart manufacturing, and industrial internet innovation projects, and builds a national integrated computing network and national blockchain network.

It fully implements the “AI+” action, advancing AI transformation of traditional industries and accelerating scenario applications of intelligent connected new energy vehicles, AI phones and computers, and humanoid robots. It speeds up AI and other digital-intelligent technology innovation, breaks through basic theories and core technologies, and strengthens efficient supply of computing power, algorithms, and data. It also builds a technology monitoring, risk warning, and emergency response system to ensure AI is safe, reliable, and controllable.

For green development, the policy builds a green, low-carbon, circular economic system. It strengthens green manufacturing, develops green services, and expands the green energy industry. It promotes green transformation of key industries, green technology innovation, and application of advanced green technologies. It improves green consumption incentives, green product certification and labeling, and builds zero-carbon factories and parks. It also improves resource management and waste recycling systems.

The policy optimizes green development policy tools, including fiscal, financial, investment, price, science and technology, and environmental policies. It improves the mechanism for realizing ecological product value, implements dual control of total carbon emissions and intensity, and improves carbon emission statistics, standards, product carbon labeling, and carbon footprint management. It uses the national carbon market as the main body to improve carbon pricing, expands coverage of the national carbon emissions trading market, and accelerates the voluntary greenhouse gas emission reduction trading market. It also promotes green financial products and green government procurement.

It actively promotes an energy revolution, focusing on carbon peak and carbon neutrality goals, orderly developing advanced nuclear fission energy, building a high-proportion renewable energy power system, and improving new energy consumption and regulation policies. It accelerates green energy use across society and promotes revolutions in energy consumption, supply, technology, and system, with international cooperation.

Reform, Market Regulation, and Finance

The policy deepens reform to closely combine science and technology with the economy. It deploys S&T tasks in major national engineering projects as needed, improves demand-oriented topic selection, management systems with consistent responsibilities and rights, and application-oriented evaluation. It deepens reforms for empowering researchers with property rights of job-related S&T achievements and separate asset management. Qualified state-owned enterprises are allowed to adopt various incentives. It builds an open, shared, and secure national integrated data market and a technology market with efficient transformation.

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

It increases the supply of innovative financial products. It encourages and regulates angel investment, venture capital, and private equity investment, better leverages government investment funds, and improves support policies for long-term capital to invest early, small, long-term, and in hard technology, expanding patient capital. It encourages banks to develop loan products suited to new productive forces, enriches science and technology innovation bond products, supports qualified tech enterprises to list and finance, and optimizes M&A and equity incentive systems. It develops insurance products covering the whole chain of S&T innovation and explores science and technology leasing.

Global Integration and Talent

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

It cultivates talent urgently needed for new productive forces. It promotes integrated reform of education, science and technology, and talent systems, improves higher education, develops new research-oriented universities, and optimizes discipline adjustments. It advances modern vocational education and work-study integrated training. It encourages enterprises and universities to jointly customize talent training and supports master craftsmen and highly skilled talents to serve as part-time practical training instructors in vocational schools.

Practical Takeaways for Foreign Founders

• Priority sectors: Emerging industries such as next-generation IT, new energy, new materials, intelligent connected vehicles, robots, biomedicine, high-end equipment, aerospace, and future industries like quantum tech, biomanufacturing, hydrogen, brain-computer interfaces, embodied intelligence, and 6G are highlighted.
• Innovation incentives: Policies support enterprise R&D, including R&D expense additional deduction, R&D reserve funds, and participation in national projects for qualified enterprises.
• Commercialization support: Proof-of-concept and pilot testing platforms, application scenario opening, and “use first, pay later” licensing from universities can help startups bring technologies to market.
• Digital and AI integration: The “AI+” action and data factor reforms create opportunities in smart manufacturing, industrial internet, and AI applications, with regulatory systems being developed.
• Green transition: Green manufacturing, zero-carbon factories, carbon markets, and green finance are expanding, offering openings for sustainable technologies.
• Opening-up: Free trade pilot zones, international cooperation platforms, and cross-border data flow mechanisms are intended to facilitate foreign participation.

Foreign founders should note that the policy emphasizes compliance with market supervision, anti-monopoly, data security, and AI governance. It also encourages foreign venture capital and international standards organizations to operate in China, which may ease market entry for qualified entities. However, specific implementation details and local variations will determine actual requirements. Founders are advised to monitor subsequent regulations and local pilot policies.

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

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.