China has issued a new set of guidelines for cultivating what officials call new quality productive forces, laying out 19 measures across five priority areas, with technological innovation named as the top task.
Innovation takes the lead
Jointly released by the Communist Party of China Central Committee and the State Council, the guidelines call for strengthening original and disruptive innovation and speeding up the path from research results to real world application. Corporate research spending is expected to account for more than 77 percent of the country's total research and development investment in 2025, according to official figures, and the guidelines call for broadening tax breaks on corporate R&D spending. Li Chao, chief economist at Zheshang Securities, said the deduction rate for qualifying tech companies' R&D expenses could eventually rise from the current 100 percent to 120 percent, giving firms a stronger incentive to spend more on research.
From government led to business led
The guidelines also call for a corporate R&D reserve system and for letting qualifying company led projects be folded into national level science and technology programs. Fu Yifu, a researcher at Jiangsu Su Merchants Bank, said the shift signals that the allocation of innovation resources is moving away from being mainly government led toward a model driven more by markets and enterprises, calling it a fairly significant change.
