China’s emerging industries present a plethora of new opportunities for foreign investors and companies. Highlighted as key to securing China’s future economic prosperity, these industries are bolstered by support and incentive policies, while harboring huge growth potential. We outline opportunities across five emerging industries in China.
China’s drive to develop new and emerging technologies is presenting a host of new opportunities for foreign investors and companies. This drive is anchored in its shift towards an innovation-led growth model, recently represented by concepts such as new quality productive forces (NQPFs), new-type industrialization, and “future industries”.
Central to China’s economic agenda since 2023, NQPFs prioritize the development of cutting-edge technologies, such as AI, robotics, biotechnology, and new energy and materials, to enhance global competitiveness and economic growth. Meanwhile, another core tenet of China’s growth strategy, the new-type industrialization initiative complements NQPFs by promoting advanced manufacturing, secure supply chains, and technological self-sufficiency, thereby positioning China as a leader in high-tech sectors. “Future industries“, meanwhile, focus on emerging technologies that are still in the early stages of development, such as quantum computing and 6G networks. Together, these strategies reflect China’s broader goal to drive economic growth through technological innovation and leadership in frontier industries.
China’s drive to develop to become a leader in science and technology presents significant investment and development opportunities, especially for foreign companies. The Chinese government actively seeks to attract foreign investment, recognizing the critical role of private and foreign enterprises in achieving its innovation-led growth goals. In addition, key sectors, such as the industrial internet, industrial software, and industrial automation, are expected to grow rapidly, presenting strategic partnerships and market entry opportunities for foreign investors.
Biopharmaceuticals
Developing China’s biopharmaceutical industry is a strategic priority for the government. Recognized as a “strategic emerging industry” in the 14th Five-Year Plan (2021-2025), the biopharma sector is positioned for substantial growth, offering promising opportunities for foreign companies. According to the Qianzhan Industry Research Institute, the market size of China’s biopharmaceutical industry reached RMB 1.86 trillion (US$261.21 billion) in 2022, an 8.3 percent increase from the previous year. Between 2016 and 2020, the number of biotech science parks grew from 400 to 600, further reflecting government efforts to boost the sector.
Meanwhile, the 14th Five-Year Plan for Developing the Bio-Economy (2021-2025) outlines general development goals for the industry, such as increasing the contribution of the biopharmaceutical industry to GDP and enhancing the strategic position of biomedicine and related industries. The plan also emphasizes boosting R&D investment, increasing high-value patents, and strengthening innovation platforms.
Foreign companies are also encouraged to invest in the biopharmaceutical industry, with the sector listed in the 2022 Catalogue of Encouraged Industries for Foreign Investment (“2022 FI Encouraged Catalogue”) for multiple provinces, including Liaoning, Jilin, Heilongjiang, Henan, and Yunnan. This inclusion reflects the government’s desire to attract international expertise and capital to bolster domestic capabilities. Moreover, the government provides attractive incentive policies, such as a reduced 15 percent corporate income tax (CIT) rate for biopharmaceutical companies operating in certain development zones, including the Lingang New Area in Shanghai and the Nansha Economic Zone in Guangzhou.
Artificial intelligence
China’s AI industry presents significant opportunities for foreign companies, fueled by strong government commitment, a rapidly growing market, and policies encouraging private and foreign investment. The Chinese government has prioritized AI as a key driver of innovation and is actively encouraging the integration of AI technologies across a variety of sectors, such as healthcare, education, finance, and urban management.
The potential of China’s AI market is vast. According to iResearch, the industry is expected to grow from RMB 213.7 billion (US$30 billion) in 2023 to RMB 811 billion (US$113.89 billion) by 2028, particularly driven by large language models (LLMs). The emergence of LLMs is projected to increase the industry’s scale addition ratio by 32.9 percent by 2028, indicating substantial expansion opportunities, according to iResearch. This rapid growth presents a broad range of opportunities for investors, especially in high-impact sub-industries like AI chip development, generative AI, robotics, neural networks, and AI industry applications, to name a few.
The Chinese government has further outlined strategic areas for AI development through various policy documents, such as the Guiding Opinions on Accelerating Scenario Innovation and Promoting High-quality Economic Development with High-level Application of Artificial Intelligence. Released in 2022 by the Ministry of Science and Technology (MOST), these opinions encourage the deep exploration of AI applications in key industries, such as smart manufacturing, agriculture, logistics, finance, and home automation. In manufacturing, for example, AI is prioritized for scenarios involving industrial brains, robot-assisted processes, and machine vision. In agriculture, AI applications range from satellite navigation to smart farm management, while logistics innovations focus on intelligent warehousing and robot-assisted sorting. The diverse application scenarios across these industries offer companies multiple entry points to bring expertise, technology, and investment.
A commitment to an enterprise- and innovation-led AI ecosystem bolsters China’s supportive policy environment. The government encourages private companies to take the lead in scenario innovation, positioning them at the forefront of AI application development, resource sharing, and demonstration projects.
Moreover, China actively promotes foreign investment in the AI sector, including AI technologies such as smart devices, neural network chips, and neuron sensors, which are listed in the 2022 FI Encouraged Catalogue. This favorable policy environment, combined with tax incentives, such as a reduced 15 percent CIT rate for companies in certain development zones, provides significant opportunities for foreign companies to leverage China’s expanding AI market.
Quantum computing
China’s strategic focus on quantum computing development presents a significant opportunity for foreign companies, as the country is actively investing in and advancing this cutting-edge technology. In a set of implementation opinions on promoting the innovation and development of future industries released in January 2024, the Ministry of Industry and Information Technology (MIIT) identified quantum computing as an “iconic product” to be developed by 2025. Specifically, it called for a concerted effort to advance fault-tolerant quantum computing technology, improve physical hardware and algorithm error correction, and promote the integration of quantum software and cloud platforms. The overarching goal is to harness the unique advantages of quantum computers and drive their application across various industries, positioning China as a leader in this emerging field.
The quantum computing sector in China is also experiencing rapid growth, with significant potential for expansion in the coming years. According to the China Business Industry Research Institute, the country’s quantum communication market has grown from RMB 42.5 billion (US$5.97 billion) in 2019 to RMB 70.9 billion (US$9.96 billion) in 2022, representing a compound annual growth rate of 17.3 percent. Projections suggest that this market will continue to expand, reaching approximately RMB 89.2 billion (US$12.53 billion) by 2024.
China’s advancements in quantum computing technology have been marked by significant breakthroughs, positioning the country at the forefront of global innovation. Notable achievements include the development of the JiuZhang 3 prototype quantum computer, which reportedly broke records in 2023 by achieving a one million-fold increase in calculation speed compared to its predecessor. Additionally, in 2024 the Chinese Academy of Sciences (CAS) delivered a record-setting 504-qubit superconducting quantum computing chip, which will be critical for advancing the performance of quantum computers.
The Chinese government is actively encouraging foreign investment in the quantum computing sector, as outlined in the 2022 FI Encouraged Catalogue, which includes the research, development, and manufacturing of quantum and neuromorphic computing systems. Quantum computing is also encouraged through incentive policies in certain areas, such as a reduced 15 percent corporate income tax rate for companies operating within designated areas like the Hengqin Guangdong-Macao Deep Cooperation Zone.
China’s commitment to its “dual carbon” goals – peaking carbon emissions by 2030 and achieving carbon neutrality by 2060 – presents vast opportunities for foreign companies in the development of new energy, which has been labeled as one of the six “future industries” by the MIIT. Specifically, the MIIT calls for advancements in key areas such as nuclear energy, hydrogen energy, biomass, and cutting-edge solar technologies, emphasizing the creation of a comprehensive energy equipment system that spans collection, storage, transportation, and application.
China’s global leadership in the production and application of new and renewable energy technologies underscores the expansive opportunities available. As the world’s largest hydrogen supplier, China produces approximately 25 million tons of hydrogen, accounting for a quarter of global output. Additionally, China’s dominance in solar power is evident, having installed more than four times the solar PV capacity of the second-largest market, the United States, in 2022. This substantial expansion, alongside China’s leadership in other renewable sectors, reflects a robust market that foreign companies can engage in through strategic investments, technology transfers, and partnerships.
The rapid growth in energy storage capabilities further illustrates the market’s dynamism. According to data from the National Energy Administration (NEA), by the end of 2023, the total installed capacity of new energy storage projects that have been built and put into operation nationwide reached 31.39 million kilowatts/66.87 million kilowatt-hours. Meanwhile, the newly installed capacity in 2023 reached about 22.6 million kilowatts/48.7 million kilowatt-hours, an increase of more than 260 percent from the end of 2022.
Foreign companies are actively encouraged to participate in the new energy sector, as detailed in the 2022 FI Encouraged Catalogue. Key areas include the manufacturing of hydrogen production, storage, and transportation equipment, the construction and operation of nuclear power plants, the development of hydrogen refueling stations, and the advancement of new energy storage technologies.
6G networks
China has committed to positioning itself at the forefront of the next generation of mobile communications through the development of 6G technology. As with quantum computing, 6G technology is among the 100 “iconic products” to be developed by 2025 by the MIIT in the implementation opinions on promoting the innovation and development of future industries, underscoring its strategic importance in the nation’s future industrial landscape. At the 2023 Global 6G Development Conference in December 2023, the MIIT reportedly announced that China aims to achieve commercialization of 6G by 2030.
China’s ambition to lead the 6G era was further highlighted in July 2024, when the country successfully built the world’s first 6G test network integrating communication and intelligence. This breakthrough, achieved through comprehensive performance enhancements across key 6G scenarios, demonstrates China’s advanced capabilities and commitment to pioneering 6G research and development.
Foreign companies have significant opportunities to engage in the development of 6G technology in China, driven by favorable policies that encourage foreign investment. The 2022 FI Encouraged Catalogue explicitly encourages investment in the development and manufacturing of key technologies and equipment for mobile communication systems, including “fourth, fifth, and subsequent mobile communication systems”. Areas such as mobile phones, base stations, core network equipment, optical transmission, and network testing equipment are open to foreign participation, providing a pathway for international companies to contribute to and benefit from China’s rapid advancements in 6G.
