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Chapter III Investment and Financing Facilitation

Article 26 [Original Text]

Article 26 A sound mechanism for the collection and sharing of credit information shall be established and improved. Credit reporting agencies shall be supported in providing credit reporting services to facilitate financing for private economic entities. Credit rating agencies shall be supported in optimizing their rating methodologies for private economic entities, increasing the effective supply of credit ratings, and facilitating financing access for private economic entities.

Interpretation of the Provision

Legislative Background and Purpose: Credit serves as the cornerstone of a market economy, and a well-developed credit system is fundamental to alleviating information asymmetry in financing and reducing financing costs. This provision aims to create a more favorable credit environment for private enterprises' financing by strengthening the construction and application of credit information.

Interpretation of Provisions: a. “Establish and improve credit information collection and sharing mechanisms”: ● Collection: Extensively, comprehensively, accurately, and promptly gather credit information on enterprises regarding production and operations, contract fulfillment, tax payments, social security contributions, administrative penalties, judicial rulings, etc. ● Sharing: Promote credit information sharing among government departments, between government and enterprises, and between credit reporting agencies and financial institutions under lawful and compliant conditions, breaking down “information silos.” b. “Support credit reporting agencies in providing credit services for private sector financing”: ● Credit reporting agencies: Legally established institutions primarily engaged in collecting, organizing, storing, and processing credit information on enterprises and individuals, and providing such information to users (e.g., the People's Bank of China Credit Reference Center, Baihang Credit, Pudao Credit, and market-based corporate credit reporting agencies). ● Credit services: Such as providing credit reports and credit scores to assist financial institutions in assessing the credit risk of private enterprises. c. “Support credit rating agencies in optimizing rating methodologies for private economic entities and increasing the effective supply of credit ratings”: ● Credit rating agencies: Institutions that conduct comprehensive evaluations of enterprises' ability and willingness to repay debts, assigning credit ratings using specific symbols. ● Optimizing rating methodologies: Refining rating models and indicator systems to better reflect the creditworthiness of private enterprises by addressing their specific characteristics (e.g., governance structures, financial transparency, asset composition). ● Increase effective supply of credit ratings: Encourage more qualified rating agencies to participate in market competition, enhancing the coverage and quality of rating services. d. “Facilitate financing access for private economic entities”: This is the ultimate goal—to help private enterprises accumulate credit assets and lower financing barriers through improved credit reporting and rating services.

【Relevant Regulations】

● Regulations on the Administration of Credit Reporting Industry: Standardizes credit reporting activities and protects the lawful rights and interests of information subjects. ● Interim Measures for the Administration of Credit Rating Industry: Regulates credit rating operations. ● State Council's Outline Plan for Social Credit System Development and related policy documents. ● Personal Information Protection Law of the People's Republic of China, Data Security Law of the People's Republic of China: Mandatory compliance in credit information collection, sharing, and credit reporting services.

【Practical Guidelines】

a. Credit Building for Private Enterprises:

● Place high importance on maintaining their own credit records, ensuring honest and trustworthy conduct and lawful operations.

● Proactively monitor their own credit reports and promptly raise objections if erroneous information is found.

● Enterprises with financing needs may proactively apply for credit ratings.

b. Development of Credit Reporting and Rating Agencies:

● Credit reporting agencies should collect and use information in compliance with laws and regulations, ensuring information security and the rights of information subjects. ● Rating agencies should maintain independence, objectivity, and fairness while continuously improving rating techniques and quality. c. Government Promotion: ● Governments should accelerate the construction and integration of public credit information platforms to enable cross-departmental and cross-regional information sharing. ● Guide and regulate the development of credit reporting and rating markets, fostering credible institutions. ● Promote the use of credit reports and ratings in government procurement, bidding, administrative approvals, market access, and qualification reviews. d. Credit-Based Lending Model: Encourage innovative lending models based on credit information, enabling trustworthy enterprises to more easily obtain unsecured, unguaranteed credit loans.

Chapter IV Scientific and Technological Innovation

Article 27 [Original Text]

Article 27 The State encourages and supports private economic entities to actively contribute to advancing scientific and technological innovation, cultivating new productive forces, and building a modern industrial system. Private economic entities shall be guided to strengthen fundamental and frontier research in accordance with national strategic needs, industry development trends, and global technological frontiers. They shall develop key core technologies, common foundational technologies, and cutting-edge interdisciplinary technologies to promote the integrated development of scientific and technological innovation with industrial innovation, thereby fostering new industries, new models, and new drivers of growth. Non-profit funds shall be guided to provide lawful funding support for private economic entities engaged in fundamental research, frontier technology research, and socially beneficial technological research.

[Interpretation of Provisions]

Legislative Background and Purpose: Scientific and technological innovation is the primary driving force for development, and private enterprises have become a vital force in this innovation. This provision aims to encourage and guide private enterprises at the strategic level to play a greater role in the national innovation system, particularly in the fields of frontier technologies and key core technologies.

Interpretation of Provisions: a. Paragraph 1: National Encouragement and Guidance: ● “Promoting scientific and technological innovation, cultivating new productive forces, and building a modern industrial system”: This clarifies the strategic direction and objectives for private enterprises' scientific and technological innovation. “New productive forces” is a key concept in current economic development, referring to contemporary advanced productive forces generated by revolutionary technological breakthroughs, innovative allocation of production factors, and deep industrial transformation and upgrading. ● “Based on national strategic needs, industry development trends, and global technological frontiers”: Provides guidance for private enterprises' research directions, encouraging them to target high-end, precision, and cutting-edge fields. ● “Strengthen fundamental and frontier research, develop key core technologies, common basic technologies, and frontier cross-disciplinary technologies”: Specifies the focal points for technological breakthroughs. ● Fundamental research: Scientific exploration into the essence and laws of phenomena. ● Frontier research: Exploratory studies at the cutting edge of scientific and technological development. ● Key core technologies: Technologies with decisive influence on industrial development that require independent mastery. ● Common foundational technologies: Universal technologies supporting multiple industrial sectors. ● Frontier cross-disciplinary technologies: New technologies emerging from the integration of different scientific fields. ● “Promoting the integrated development of scientific and technological innovation with industrial innovation to foster new industries, new models, and new growth drivers”: Emphasizes the need to closely integrate scientific and technological innovation with industrial development, with the ultimate goal of creating new economic growth points. b. Second Clause: Guiding Social Funding: ● “Guiding non-profit funds to provide support in accordance with the law”: Opens up channels for social funding sources for private enterprises engaged in basic research and public-benefit technology research.

【Relevant Regulations】

● Law of the People's Republic of China on the Advancement of Science and Technology: The fundamental legislation governing the science and technology sector, providing comprehensive provisions on innovation entities, R&D investment, achievement transformation, and incentive mechanisms. ● Law of the People's Republic of China on the Promotion of the Transformation of Scientific and Technological Achievements: Regulates activities related to the transformation of scientific and technological achievements. ● National plans and policy documents concerning strengthening the leading role of enterprises in technological innovation, developing strategic emerging industries, and building an innovation-driven nation. ● Charity Law of the People's Republic of China: Regulates the operation of non-profit funds.

【Practical Guidelines】

a. Innovation Strategy for Private Enterprises:

● Eligible private enterprises should increase R&D investment, establish R&D institutions, attract scientific talent, and focus on tackling key core technologies.

● Actively pursue industry-academia-research collaborations with universities and research institutes. ● Monitor funding opportunities from non-profit foundations to secure external support. b. Government Support: ● Governments should support private enterprises' technological innovation through tax incentives (e.g., additional deductions for R&D expenses), fiscal subsidies, establishing innovation guidance funds, and opening access to scientific research infrastructure. ● Foster a societal atmosphere that encourages innovation and tolerates failure. c. Cultivating New Productive Forces: Private enterprises are indispensable entities in cultivating new productive forces. They should actively embrace digital and intelligent transformation while developing strategic emerging industries and future industries. d. Intellectual Property Protection: Strengthening intellectual property protection for scientific and technological innovations is a crucial safeguard for incentivizing innovation (see Article 33).

Article 28 [Original Text]

Article 28 Support private economic entities in participating in national science and technology projects. Enable qualified private economic entities to lead national major technological breakthrough initiatives. Open national major scientific research infrastructure to private economic entities. Support the open sharing of public R&D platforms and common technology platforms, providing equal technological innovation services to private economic entities. Encourage enterprises, higher education institutions, research institutes, and vocational schools to establish innovative cooperation mechanisms with private economic entities, engage in technological exchanges and the transfer and commercialization of achievements, and promote deep integration of industry, academia, and research.

【Interpretation】

Legislative Background and Purpose: Breaking down barriers to private enterprises' participation in national-level science and technology projects and access to national research resources, while promoting collaborative innovation among industry, academia, and research institutions, is key to enhancing the nation's overall innovation capacity. This article enumerates specific measures to support private enterprises' technological innovation.

Interpretation of Provisions: a. “Support private economic entities in participating in national science and technology projects”: This includes initiatives such as the National Key R&D Program and major national science and technology projects, where private enterprises should have equal opportunities to apply and participate. b. “Support capable private economic entities in leading national major technology R&D tasks”: Beyond participation, private enterprises with strong technical capabilities and outstanding innovation capacity should be supported to serve as project leaders or primary implementing entities. c. “Opening national major scientific research infrastructure to private economic entities”: Facilities such as national (key) laboratories, large scientific instruments, and scientific data centers should be shared with private enterprises within reasonable limits to reduce their R&D costs. d. “Supporting the open sharing of public R&D platforms and common technology platforms”: These platforms, typically established by governments or research institutions, should provide services to all innovation entities, including private enterprises. e. “Provide equal service access for technological innovation to private economic entities”: Emphasizes non-discriminatory service provision. f. “Encourage innovation cooperation mechanisms between enterprises, universities, research institutes, vocational schools, and private economic entities”: Promotes closer collaboration among industry, academia, research, and application sectors through joint R&D centers, talent cultivation programs, and intellectual property sharing. g. “Conduct technological exchanges and promote the transfer and commercialization of achievements to deepen industry-academia-research integration”: Facilitates the transition of scientific and technological achievements from laboratories to the market, transforming them into tangible productive capacity.

【Relevant Regulations】

● Law of the People's Republic of China on the Advancement of Science and Technology: Article 15 stipulates that the state shall establish and improve a competitive application and merit-based support system for scientific research projects; Article 19 requires scientific research and development institutions and higher education institutions established with public funds to actively promote the transformation of scientific and technological achievements. ● Administrative Measures for the Open Access and Shared Use of National Major Scientific Research Infrastructure and Large Scientific Research Instruments. ● Series of policy documents issued by the Ministry of Science and Technology, Ministry of Finance, and other departments regarding the management of national science and technology programs, transformation of scientific and technological achievements, and industry-academia-research collaboration.

【Practical Guidelines】

a. Private enterprises should actively pursue:

● Proactively understand national science and technology project application guidelines and channels, and actively submit applications.

● Seek collaborations with universities and research institutes to jointly apply for projects and share research resources. ● Monitor information on the national scientific research infrastructure open access platform and apply for usage according to regulations. b. Governments and research institutions implement open access: ● Entities possessing major national scientific research infrastructure should formulate specific open access management measures, clearly defining scope of access, application procedures, fee standards, etc., and make these publicly available. ● Public R&D platforms should lower service thresholds and enhance operational efficiency. c. Innovation in Industry-Academia-Research Collaboration Models: Encourage exploration of diverse collaboration models such as contract-based R&D, technology equity participation, and co-building new R&D institutions. d. Incentives for Achievement Commercialization: Implement policies for distributing benefits from scientific achievement commercialization to motivate researchers and institutions to transfer and commercialize outcomes to market entities, including private enterprises.