China Puts Companies at Centre of Plan to Turn Research Into Industrial Growth

Companies to lead the journey from laboratory to market

China has issued 17 measures to bring scientific research closer to industrial production, giving companies a larger role in choosing research priorities, leading projects and turning discoveries into products. Released on October 21, 2026, the policy also calls for universities to let smaller businesses use research results before paying licensing fees.

The General Office of the Communist Party of China Central Committee and the General Office of the State Council issued the Opinions on Promoting the Deep Integration of Scientific and Technological Innovation and Industrial Innovation. Its priorities range from integrated circuits and industrial machinery to quantum technology, nuclear fusion and artificial intelligence.

For businesses, some of the most concrete proposals concern access to money, equipment and customers: larger research tax deductions for smaller technology companies, access to major scientific facilities, and opportunities to test products through larger companies and local government projects.

Qingdao provides a local example of how financial support can be structured. Its science and technology bureau has announced applications for projects in 2027, with support of up to 5 million yuan for each key technology project. Municipal funding is capped at 50% of total project investment.

The national document contains eight sections, with its numbered measures grouped into six substantive policy areas. Its central aim is to connect the whole process: identify an industrial problem, fund research, test the result and bring a useful product into production. China describes the intended result as developing new quality productive forces, meaning growth driven by technological advances, better production methods and more efficient use of resources.

Research projects will face a stronger market test

Companies would gain more influence at several stages of national science programmes. The policy calls for regularly collecting business needs and increasing participation by experts from companies and venture investment institutions when research guidelines are written, projects selected and results assessed.

National science projects with clear industrial applications should, in principle, be led by companies, which would also direct the commercial use of their results. Universities, research institutes and users would continue to participate, while businesses take greater responsibility for connecting research goals with production needs.

Project funding would make greater use of milestones and payments in stages. In practical terms, a team could receive funding as it completes agreed steps, rather than having the entire project judged only at the end. Assessments would examine both research achievements and progress towards industrial use.

Major national engineering projects and industrial development programmes would also have research tasks planned alongside them. The purpose is to identify the technology needed for a project while its wider development plans are being prepared.

Smaller firms could use technology before paying

Universities and research institutes are encouraged to license research results to small and micro businesses through arrangements that allow use before payment. This could reduce the initial cost of trying a technology for a company with limited cash.

Research organisations would receive support to establish technology transfer offices or specialist positions. Their work would include intellectual property services, business incubation and financing assistance. Research results could reach businesses through sales, licences or contributions valued as equity in a company.

Researchers are encouraged to remain involved throughout that process. The document also calls for reforms governing their rights over discoveries made through their employment and the way those research assets are managed.

Shared testing facilities would help bridge another gap between discovery and production. Proof of concept centres would examine whether an idea can work, while pilot platforms would test whether a process can operate at a larger scale. Those are different tasks: a successful laboratory experiment still needs a workable production method before it can become a dependable product.

Chips, machinery and future industries share the agenda

Integrated circuits, industrial machine tools, advanced instruments, advanced materials and biomanufacturing are named as priorities for breakthroughs in essential technologies. Machine tools are the equipment used to make other machines and precision parts. Biomanufacturing uses biological processes to produce materials or other goods.

The policy also targets weaknesses further down the production chain, including basic components, essential software, foundational materials and manufacturing processes. Its goal is greater domestic control over the technologies and inputs on which industrial production depends.

New energy, new materials and aerospace are identified as strategic emerging industries to expand. Local governments are asked to develop industrial clusters suited to their strengths, with different regions contributing complementary capabilities.

Longer term priorities include quantum technology, hydrogen and nuclear fusion energy, interfaces connecting brains with computers, embodied intelligence and sixth generation mobile communications. Embodied intelligence refers to artificial intelligence operating through a physical system, such as a robot that senses and acts in its surroundings.

For these frontier fields, the document calls for exploring different technical approaches, practical uses and viable business models. It also seeks orderly development of the low altitude economy, which includes activities involving aircraft such as drones.

Existing factories and farms are part of the plan

Traditional industries receive a separate set of measures focused on technological renovation and large scale equipment replacement. The policy calls for wider use of the industrial internet, which connects equipment and production systems so factories can collect information and coordinate operations.

Manufacturing upgrades are intended to make production smarter and greener. The nationwide AI Plus initiative would extend artificial intelligence across industries, linking digital tools to established economic activities rather than concentrating solely on new technology businesses.

Agriculture is included through research into seeds and agricultural machinery, alongside faster adoption of agricultural research results. The document also seeks technology services covering the full industrial chain, connecting research, testing and production support.

Private firms and state companies get different support

Private companies would gain access through a proposed pilot opening the National Natural Science Foundation of China to their participation. The policy also calls for expanding the scope and size of joint funds supporting enterprise innovation, and for companies to take part more regularly in shaping national technology and industrial strategies.

Smaller technology businesses are encouraged to increase research spending, supported by a higher additional tax deduction for eligible research and development expenses. Such a deduction allows a business to subtract more than the actual eligible expense when calculating taxable income.

State owned companies are encouraged to establish separately accounted research reserves that would be exempt from assessments requiring state assets to preserve or increase their value. The proposed arrangements would allow tolerance and correction of mistakes, giving research spending room for uncertainty.

Large technology companies would be encouraged to lead research partnerships and open their research platforms, supply chains and opportunities for product testing to smaller firms. They would also be encouraged to try smaller companies' innovative products early. That could give a young business both a testing partner and a route towards its first customers.

Financing is meant to follow the life of a technology

Government funded venture funds and venture funds backed by state capital are directed towards young businesses, small firms, long investment periods and technologies requiring substantial scientific or engineering development. The national venture capital guidance fund would play a supporting role.

Longer assessment periods and different supervisory arrangements are intended to fit investments whose results take time. The policy also calls for better arrangements for investors to exit, meaning to sell or otherwise realise their investment.

Other proposals include expanding an innovation points system to measure smaller technology companies' innovative capabilities, developing the technology segment of the bond market and establishing a technology insurance policy framework. Together, these measures seek financing options across different stages of a company's development.

The national document gives no total funding allocation, revised research deduction rate, nationwide completion deadline or detailed schedule for these changes. The financial provisions set a direction for subsequent implementation.

Researchers and students would move closer to industry

Universities and companies are encouraged to provide joint training, alternate academic study with workplace experience and use two mentors. A student could receive guidance from both an academic researcher and someone working in industry.

Technology and industrial departments would have a role in adjusting academic disciplines to national strategic needs and industrial demand. Companies are also encouraged to participate in university research and talent development, including through jointly established research organisations and projects.

Researchers would receive support through improved policies on temporary assignments, work undertaken alongside academic posts and leave to start businesses. Universities and institutes could appoint industry specialists as mentors or professors. The policy also supports young researchers starting companies and stronger postdoctoral research arrangements within businesses.

Market access, patents and assessment rules would change together

Regulators are asked to remove unreasonable barriers preventing innovative products from entering markets. Proposed trials include allowing entry after a business commits to meeting relevant requirements, alongside exploration of regulatory sandboxes.

A regulatory sandbox allows a new product or service to be tested within defined conditions and under supervision. The document pairs these experiments with calls to improve laws for artificial intelligence and biotechnology, as well as rules governing research ethics.

Intellectual property measures include stronger protection for trade secrets, wider implementation of open patent licensing and clearer arrangements for sharing benefits and risks in research partnerships. Open licensing lets patent holders make their technology available under published terms, helping potential users find permission to use it.

Major national research projects would also plan for patents and technical standards. Standards provide common requirements that help technologies work together or meet agreed performance levels. Universities, research institutes and researchers would be assessed partly on cooperation with industry and the practical use of their results.

For state owned enterprises, the policy proposes increasing the proportion of joint research spending with universities and institutes that can be added back as deemed profit in performance assessments. It also calls for stronger protection from liability when people carrying out technology transfer or venture investment have fulfilled their duties.

Qingdao puts figures on local support

Qingdao's application notice for 2027 covers key technology research and demonstration projects intended to improve public welfare. Universities, institutes and companies are among the organisations invited to participate.

Key technology projects can receive support through government funding, including payments after qualifying work, interest subsidies on loans or equity investment. Each project can receive up to 5 million yuan, with municipal fiscal support limited to half of total investment.

At that 50% ceiling, a project receiving the full 5 million yuan in municipal support would need a total investment of at least 10 million yuan. The calculation shows how public funding is intended to draw in other spending rather than cover the entire cost.

Public welfare demonstration projects have an execution period of two to three years. Nonrepayable support is generally capped at 2 million yuan, with particularly major projects eligible for individual consideration. These projects would bring companies, universities and research institutes together with local demonstration organisations to apply useful technologies in everyday services.

Nationally, the policy encourages local experiments in innovation centres, high technology development zones and other eligible areas. It calls for coordination between central and local investment, cooperation across regions and industrial specialisation based on local strengths.

How the policy reached this point

China's latest measures develop an agenda already reflected in earlier leadership statements, economic planning and industrial meetings. At a national science gathering in June 2024, President Xi Jinping described three central elements: stronger research supply, a leading role for companies and practical use of research results.

• June 2024: Xi set out those three elements in discussing closer links between scientific and industrial innovation.
• December 2024: The Central Economic Work Conference made closer integration of technology and industry a priority.
• April 2026: A national industry and information technology meeting called for more projects led by companies, coordinated research across supply chains and stronger links between research and production.
• October 2026: A separate central policy on developing new quality productive forces set out 19 priority measures across five areas.
• October 21, 2026: The two central general offices released the integration policy containing 17 numbered measures.
• 2027: Qingdao's announced application programme covers key technology and public welfare demonstration projects.

The 2026 government work programme also called for international innovation centres in Beijing and the surrounding region, Shanghai and the Yangtze River Delta, and the Guangdong Hong Kong Macao Greater Bay Area. Science and Technology Minister Yin Hejun has described four priorities for the 15th Five Year Plan period: stronger research supply, support for modern industries, research system reform and development suited to local conditions.

The October 21 policy brings those priorities into the same framework as funding, licensing, training and market access. Its practical focus is on the connections between institutions: who selects a research problem, who pays to solve it, who tests the result and who can turn it into something people use.

Key Points

• China released 17 measures on October 21, 2026, to connect scientific research more closely with industrial development.
• Companies should generally lead national research projects with clear industrial applications.
• Universities are encouraged to let smaller firms use research results before paying licensing fees.
• Priority sectors include chips, industrial machinery, advanced materials, biomanufacturing and frontier technologies.
• Funding reforms seek longer investment periods, stronger technology financing and better access to research facilities.
• Qingdao is accepting applications for 2027 projects, with support of up to 5 million yuan for each key technology project.