Published by ChinaMNC · Cenxi

China’s New Push to Integrate Technology and Industry: What Foreign Founders Need to Know

A practical guide for foreign founders on China’s latest policy to deepen the integration of technological and industrial innovation, outlining key mechanisms, incentives, and compliance considerations for operating a company in China.

Overview of the Policy

China’s central government has issued a new opinion aimed at deeply integrating scientific and technological innovation with industrial innovation. The policy sets out a framework to build a modern industrial system, develop new quality productive forces, and create a new pattern where technological advances and industrial applications reinforce each other. For foreign founders registering or operating a company in China, this signals both opportunities and regulatory expectations in key sectors.

Key Objectives and Guiding Principles

The policy emphasizes systematic planning, balancing technology supply with demand, and strengthening the role of enterprises as innovation drivers. It calls for breaking down ideological and institutional barriers to integration, using reforms to stimulate innovation, and ensuring that innovation resources are concentrated in enterprises. The overarching goal is to smooth the path from technological strength to industrial, economic, and national strength.

Practical Mechanisms for Businesses

1. Coordinated Innovation Planning

China will leverage its new nationwide system to coordinate major policies, projects, and tasks across technology and industry. Monitoring and evaluation of integration will be conducted for localities and industries, with emphasis on how technological innovation leads industrial development. Foreign founders should be aware that local governments may use such assessments to guide support and resource allocation.

2. Reform of Task Organization

National science and technology programs will increasingly be oriented toward industrial application. Enterprises’ needs will be regularly collected, and experts from enterprises and venture capital institutions will be given more weight in guideline drafting, project review, and acceptance. Mechanisms such as “open competition” (揭榜挂帅) and “owner system” (业主制) will be improved, along with milestone-based management and phased funding. Acceptance will assess both technology and market performance, integrating R&D and industrialization goals. Foreign founders participating in national projects may encounter these approaches.

3. Smoother Technology Transfer

The policy promotes an integrated R&D-application mechanism. For national science and technology projects with clear industrial application goals, enterprises will generally lead implementation and dominate technology transfer. Universities and research institutes are encouraged to set up technology transfer offices, strengthen intellectual property and incubation services, and use methods such as technology transfer, licensing, and equity investment. Reforms will deepen the empowerment of researchers regarding职务科技成果 (job-related scientific and technological achievements) and separate asset management. A “use first, pay later” approach will be encouraged for licensing科技成果 to small and medium-sized enterprises. A unified national technology market will be developed, with professional technology transfer institutions and technology managers.

4. Scenario-Driven Innovation

A demonstration action for new technologies, products, and scenarios will be implemented, with greater efforts to cultivate and open application scenarios. Localities are supported to open scenarios in government services, smart cities, and rural construction, and to improve the collection and release of supply-demand information. Foreign founders with innovative solutions may find opportunities in these open scenarios.

5. Key Technology Breakthroughs

Decisive breakthroughs are sought in core technologies in integrated circuits, industrial machine tools, high-end instruments, advanced materials, and biomanufacturing. Industrial base reconstruction and major equipment upgrading projects will be deepened, focusing on weak links, basic components, key basic software, key basic materials, advanced basic processes, and industrial technology foundations.

6. Emerging and Future Industries

The policy supports basic research and disruptive technology identification. Industrial innovation projects will integrate innovation facilities, technology R&D, and product iteration. Strategic emerging industries such as new energy, new materials, and aerospace will be accelerated, with clusters built according to local conditions. The low-altitude economy will be developed in a healthy and orderly manner. In frontier fields like quantum technology, biomanufacturing, hydrogen and nuclear fusion, brain-computer interfaces, embodied intelligence, and 6G, multiple technology routes, application scenarios, and business models will be explored to commercialize frontier technologies and foster future industries.

7. Upgrading Traditional Industries

Major technological transformation and large-scale equipment renewal projects will be implemented. Industrial internet innovation will be accelerated, and the digital economy will be deeply integrated with the real economy, promoting intelligent, green, and integrated manufacturing. Agricultural science and technology breakthroughs in seed industry and agricultural machinery will be strengthened. A full-industry-chain technology service system will be built. The “AI+” action will be fully implemented to empower all industries with artificial intelligence.

Strengthening Enterprise Innovation Capabilities

Enterprises will have regular channels to participate in national science and technology and industrial development strategies, plans, and policies. The National Natural Science Foundation will pilot opening to private enterprises, and enterprise innovation development joint funds will be expanded. State-owned enterprises are encouraged to establish R&D reserve funds with independent accounting, exempt from value-preservation assessments, and with fault tolerance. Small and medium-sized technology enterprises are encouraged to increase R&D investment, with higher additional deduction ratios for R&D expenses. Enterprises are supported to lead the construction of science and technology innovation platforms and bases. National major science and technology infrastructure, large research instruments, and national science data centers will be more open to enterprises. Science and technology talent programs will increase support for enterprises, and enterprise postdoctoral workstation construction will be strengthened.

Cultivating Technology Enterprises

The policy aims to optimize the cultivation of leading technology enterprises, support high-tech enterprises, and improve the cultivation of small and medium-sized technology enterprises, “little giant” enterprises (specialized, refined, distinctive, and innovative), and manufacturing single-champion enterprises. Technology startups will be cultivated with improved incubation and investment services. Large, medium, and small enterprises and upstream-downstream enterprises will be encouraged to collaborate in innovation; large enterprises will be guided to open R&D platforms, application scenarios, and supply chains to small and medium-sized enterprises, and to pilot their innovative products.

Collaboration Among Innovation Actors

Leading technology enterprises are supported to play the role of chain leader in innovation and industry chains, and to lead the formation of innovation consortia. National laboratories, national research institutions, and high-level research universities will strengthen cooperation with leading technology enterprises, distilling scientific questions from industrial needs and strengthening strategic and forward-looking technology research. Enterprises are encouraged to participate in university and research institute activities and talent training, and to jointly build R&D institutions and set up research projects with other innovation actors.

Financial and Talent Support

A science and technology finance system will be built to match the financing needs of technology enterprises throughout their life cycle. The national venture capital guidance fund will play a role. Government-invested venture capital funds and state-owned capital venture capital funds will strengthen early-stage, small-scale, long-term, and hard-tech investments, with long-cycle assessment, differentiated regulation, and exit mechanisms. The “innovation points system” will be promoted to quantitatively assess the innovation capabilities of small and medium-sized technology enterprises. A “science and technology board” in the bond market will be built with high quality. A science and technology insurance policy system will be established.

Talent cultivation will be coordinated around scientific and technological innovation, industrial development, and national strategic needs. Discipline adjustment mechanisms involving multiple parties will be improved. Joint school-enterprise, work-study alternation, and “dual mentor” systems will be promoted. Policies for researchers to take temporary posts, part-time work, and leave to start businesses will be improved, and models such as science and technology special commissioners will be promoted. Universities and research institutes are supported to hire enterprise innovators as industry mentors and professors. Young science and technology talent will be supported in innovation and entrepreneurship, and technology entrepreneurs will be vigorously cultivated.

Platforms, Market Environment, and IP Protection

Integration innovation platforms will be built, including national emerging industry innovation centers, national industrial technology engineering centers, national technology innovation centers, and national manufacturing innovation centers, to strengthen key common technology supply. Concept validation centers and pilot testing platforms will be built to serve industrialization. Research institutes transformed into enterprises are supported to build industrial technology research institutes and other common technology platforms. Localities are supported to develop new R&D institutions in a regulated manner.

The market environment for innovation will be improved by removing unreasonable barriers to innovative products, piloting relaxed market access in new business forms, and exploring “commitment-based entry.” Regulation of new technology applications will be strengthened, and “sandbox regulation” will be explored. Laws and regulations in frontier fields such as artificial intelligence and biotechnology will be improved, along with science and technology ethics rules.

Intellectual property protection, application, and technical standards will be strengthened. Trade secret protection and IP protection in new business forms will be reinforced, and benefit-sharing and risk-sharing mechanisms will be improved in industry-university-research cooperation and technology transfer. The patent open licensing system will be fully implemented. Patent layout for national major science and technology projects will be strengthened. Standard layout for such projects will be strengthened, with coordinated standard research tasks and assessment goals. National and international standards in frontier fields will be developed, and pre-standard research will be strengthened. Enterprise standards and group standards will be improved.

Incentives and Evaluation

The policy improves the full-chain policy system for innovation activities, implementing tax incentives for scientific and technological innovation. Due diligence exemption mechanisms for technology transfer and venture capital will be improved, and a negative list will be explored. The classified assessment and evaluation system for state-owned enterprises will be improved, increasing the proportion of joint R&D expenses with universities and research institutes that are treated as profit add-back. Industry-university-research cooperation and technology transfer results will be important in the evaluation of high-level research universities, research institutes, and researchers.

Local Pilot Programs

Localities are supported to carry out pilot programs for deep integration. Macro guidance for local technology and industrial layout will be strengthened, guiding localities to build on their endowments. Central-local coordination will be enhanced, with mechanisms for shared central-local science and technology investment and joint implementation of major tasks. The regional innovation system will be improved, and cross-regional collaborative innovation will be strengthened. Various science and technology innovation and industrial innovation functional zones will be developed in a coordinated manner, and national high-tech industrial development zones and national independent innovation demonstration zones will be encouraged to pilot policies. International science and technology innovation centers, regional science and technology innovation centers, and qualified localities will carry out reform pilots for deep integration, implement special actions to stimulate industrial innovation vitality, build vibrant innovation cities, and create sources of original innovation.

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