Published by ChinaMNC · Anyuan

China’s New Productivity Push: What Foreign Founders Need to Know

A practical guide for foreign entrepreneurs on how China’s new policy framework for developing ‘new quality productive forces’ could affect company registration and operations.

Understanding China’s New Productivity Drive

China’s central government has issued a major policy document on developing “new quality productive forces” (新质生产力). For foreign founders planning to register or operate a company in China, this framework signals where the government intends to direct resources, regulatory attention, and market opportunities over the coming years. The policy emphasizes innovation-led development, reform, and adapting measures to local conditions, while balancing government and market roles, development and security, and self-reliance and openness.

The core goal is a substantial rise in total factor productivity, driven by technological breakthroughs, better allocation of production factors, and deep industrial upgrading. The policy calls for coordinated innovation in technology, industry, development models, institutions, and talent mechanisms—creating a more supportive environment for integrating technological and industrial innovation. Below we break down the key areas most relevant to foreign founders.

Key Policy Priorities and What They Mean for Your Business

1. Strengthened Support for Science and Technology Innovation

The policy prioritizes original and disruptive technological innovation, targeting strategic and leading-edge products. It supports both goal-oriented and free-exploration basic research, and calls for better coordination of science infrastructure and open sharing. For foreign founders in tech-intensive sectors, this suggests growing government investment in research platforms and potential opportunities to participate in collaborative projects.

It also emphasizes breakthroughs in core technologies through a “new nationwide system,” including actions for high-quality development of key manufacturing supply chains. The policy mentions implementing application policies for first-of-their-kind equipment and materials to spur technology iteration.

2. Greater Role for Enterprises in Innovation

Enterprises are to be given a more central role in technological innovation. The policy calls for inclusive incentive policies, a corporate R&D reserve system, and higher R&D expense tax deductions for small and medium-sized tech firms. Enterprises meeting national strategic needs can have their R&D projects elevated to national projects, and capable private companies are encouraged to lead major national technology missions.

For foreign founders, this indicates a more supportive tax and funding environment for R&D activities, and potential pathways to participate in national projects if your company qualifies.

3. Accelerating Commercialization of Research

The policy aims to better connect technology with markets, leveraging China’s large market to scale new productive forces. It calls for demonstration actions for large-scale application of new technologies, products, and scenarios, and for building platforms for proof-of-concept and pilot testing. It also encourages universities and research institutes to license research results to small and medium-sized enterprises on a “use first, pay later” basis.

Large enterprises are encouraged to open their supply chains to smaller firms, and AI is to be used to transform research paradigms. Foreign founders commercializing new technologies may find more opportunities for pilot testing and market entry support.

4. Upgrading Traditional Industries and Expanding Emerging Ones

The policy stresses upgrading traditional industries with digital, intelligent, and green technologies, and maintaining China’s position in global supply chains for mining, metallurgy, chemicals, light industry, textiles, machinery, shipbuilding, and construction. It also promotes large-scale equipment renewal and technological transformation.

At the same time, it calls for developing strategic emerging industries such as next-generation information technology, new energy, new materials, intelligent connected new energy vehicles, robotics, biomedicine, high-end equipment, and aerospace. It encourages clustering of these industries and avoiding “involutionary” competition. Future industries like quantum technology, biomanufacturing, hydrogen and nuclear fusion, brain-computer interfaces, embodied intelligence, and 6G are also to be cultivated.

For foreign founders, these sectors may offer incentives and a growing ecosystem of suppliers and partners.

5. Deep Integration of Digital and Real Economies

The policy aims to improve data property rights, trading, and protection, and to implement pilot projects for data factors. It calls for optimizing national data infrastructure, advancing manufacturing digitalization, and building a national integrated computing network. The “AI+” initiative is to be fully implemented, promoting AI applications in traditional industries and new intelligent terminals such as smart connected vehicles, AI phones and computers, and humanoid robots.

It also emphasizes AI safety, reliability, and controllability through monitoring and risk warning systems. Foreign founders in digital sectors should note the focus on data governance and AI regulation.

6. Green and Low-Carbon Development

The policy outlines building a green, low-carbon circular economy, including green manufacturing, green services, and green energy. It calls for green upgrades in key industries, zero-carbon factories and parks, and improved recycling systems. It also details policies for carbon pricing, expanding the national carbon market, and promoting green finance.

Foreign founders in green tech or energy may find supportive policies and market mechanisms, but should also prepare for stricter environmental and carbon-related compliance.

7. Reforms in Market Regulation and Finance

The policy calls for deepening reforms to better integrate science and economy, including reforms to empower researchers and manage state-owned enterprise incentives. It also aims to improve market regulation, strengthen anti-monopoly and anti-unfair competition enforcement, and enhance intellectual property protection with punitive damages.

Financial reforms include encouraging angel investment, venture capital, and private equity, with policies to support long-term capital investing in early-stage, small, long-term, and hard-tech projects. Banks are encouraged to develop loan products suited to new productive forces, and tech firms are supported in listing and financing. Insurance products covering the entire innovation chain are to be developed.

For foreign founders, these reforms could improve access to venture funding and financial services, while also bringing more sophisticated regulatory oversight.

8. Opening Up and Global Talent

The policy emphasizes allocating advanced production factors globally. It encourages free trade zones to cluster domestic and foreign advanced factors, and supports platforms like joint science parks, Belt and Road joint laboratories, and international advanced technology application centers. Foreign venture capital institutions and international standards organizations are encouraged to develop in China. A mechanism for efficient, convenient, and secure cross-border data flow is to be established.

It also calls for cultivating talent needed for new productive forces, including reforming higher education, vocational education, and encouraging joint customized training by enterprises and universities.

Foreign founders can expect a more open environment for talent recruitment and cross-border data, though specific implementation may vary by region.

Practical Steps for Foreign Founders

• Align with priority sectors: Consider whether your business falls into strategic emerging, future, or green industries, which may receive more policy support.
• Leverage R&D incentives: Explore available tax deductions and funding for research activities, and consider partnering with universities or research institutes.
• Engage with local ecosystems: Look for industry clusters, pilot testing platforms, and supply chain openings from large enterprises.
• Stay compliant: Keep abreast of evolving regulations in data, AI, anti-monopoly, and environmental protection.
• Utilize open policies: If located in a free trade zone, take advantage of facilitation for cross-border data and foreign investment.

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

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