On 9 August 2019, the Ministry of Science and Technology published the Several Policies and Measures on Supporting Tech-based SMEs to Boost Innovation Development in the New Era (Guo Ke Fa Qu  No. 268). The Policies and Measures represent a concrete step follow-up to the State Council’s Guiding Opinions on Strengthening the Healthy Development of Small- and Medium-sized Enterprises published in April 2019; they outline a list of 17 actions under seven main areas that will start to be implemented to increase the growth, development and competitiveness of tech-based SMEs.
- Expand the base of tech-based SMEs:
- Through the optimisation of the distribution of incubators and accelerators in key regions and market segments, and through the promotion of incubators alliances;
- Professors and academic researchers will be encouraged to temporarily quit their job to start a business (specific national implementation rules will be formulated in the next months to regulate this area, and through launching industry-university “double-employment” mechanisms;
- Foreigners with permanent residence permits in China will enjoy the same rights of Chinese citizens when founding a tech-based SME;
- Factors relating to tech-based SME growth and development will be officially included in the lists of KPIs for national high-tech zones.
- Enhance the optimisation and implementation of STI policies:
- Through formulating new policies further increasing the amount of the tax deductible amount for R&D expenditure, and providing other tax benefits to early-stage start-ups;
- Increase public-awareness activities – through incubators, S&T parks, makerspaces, etc. – on the various preferential tax policies existing, including for HNTE status, VAT and CIT exemption for technology transfer, VAT exemption for micro and small-scale enterprises, etc.,
- Increase the financial support to the R&D activities of tech-based SMEs:
- The evaluation and management procedures of national STI funding programmes will be adjusted in order to increase the proportion of government STI funding allocated to SMEs. Local governments will be strongly encouraged to establish ad hoc funds to support the R&D activities of tech-based SMEs;
- Leading enterprises, universities and research structures will be encouraged to include tech-based SMEs in their consortia when applying to NKPs, 2030 Innovation Megaprojects and other national STI funding programmes. When appropriate, tech-based SMEs will be encouraged to apply as consortium leads.
- Direct and cluster innovation resources towards tech-based SMEs:
- Encourage tech-based SMEs to optimise their operational and management mechanisms, to establish internal innovation departments/platforms, to apply to national HNTE status, and (if relevant requirements are met) to participate actively in the construction of State Key Laboratories and Engineering Centres, or in other cooperative platforms with universities and research structures;
- Increase the accessibility of tech-based SMEs to large-scale equipment, instruments and services offered by universities and research institutes, especially in national high-tech zones.
- Expand the supply of innovation services for tech-based SMEs:
- Support local governments to establish or expand STI Innovation Vouchers; increase government subsidies, rewards and procurement of services provided by service-oriented tech-based SMEs;
- Establishment, in universities and research structures, of professional technology transfer firms and teams to promote the implementation of tech transfer projects from SMEs;
- A National Tech-based SME Information Service Platform will be established, and a Tech-based SME Innovative Product Exhibition will be organised.
- Strengthen the support of the financial capital market to tech-based SMEs:
- Increase venture capital investment in tech-based SMEs, by expanding of the currently existing National Fund for Technology Transfer and Commercialisation, or by encouraging local governments and other investors to establish ad hoc investment funds for SMEs;
- Expansion of financing channels, by piloting or expanding credit risk compensation funds for banks granting credit to SMEs for their R&D or tech transfer activities, also through innovative products such as IPR pledge financing, etc.
- Encourage tech-based SMEs to launch international cooperation:
- Explore the launch of a Belt and Road IPR transaction and tech transfer projects;
- Support personnel from tech-based SMEs to receive mid- to long-term trainings overseas.
Note: tech-based SMEs refer to SMEs involved in scientific research, production, development, and/or sale of high-tech products or services. Relevant SMEs need to submit an official application to provincial-level S&T authorities in order to be recognised as ‘technology-based’. After recognition, tech-based SMEs will be eligible to the national preferential pre-tax deduction policy for R&D expenses.