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AI Innovation Zones in
China: Opportunities for
Foreign Investors
By Zoey Zhang, China Briefing, Dezan Shira & Associates
In the last five years, China has consistently • Encouraging Catalogues 2020
prioritized efforts to become the first global According to the Catalogue of Industries for
superpower in artificial intelligence (AI). This Encouraging Foreign Investment, effective from
includes strategies like Made in China 2025 and January 27, 2021, foreign investments in the
the Digital Silk Road, where China is able to AI sector are encouraged at the national level
combine and direct multiple resources towards the (“National Catalogue”) as well as at the regional
growth and development of the AI sector, such as level (“Regional Catalogue”). Foreign investors
incentivizing talents, nurturing an R&D ecosystem, will benefit from favorable policies, such as tariff
generating capital, creating a high-tech supply exemptions on imported equipment, access to
chain, and encouraging foreign investments in preferential land prices, looser regulation of land
select industries. use, and lower corporate income tax.
China also intends to set up AI innovation zones The Chengdu AI innovation zone, situated
where specific technologies are developed based in the Sichuan province, will be regulated by
on the city’s features, which will complement the the Catalogue for Encouraged Industries in
strategy adopted at the national level for the area the Western Regions (2020 Edition), to be
where the city is located (such as the Beijing- implemented from March 1, 2021.
Tianjin-Hebei development strategy, for example). • National Security Review and Export
Control Law
Newly introduced AI innovation zones On December 19, 2020, the National Development
in China and Reform Commission (NDRC) and the
Ministry of Commerce (MOFCOM) jointly issued
On February 20, 2021, the Ministry of Industry the Measures for Security Review of Foreign
and Information Technology (MIIT) issued a Investment (“Measures”), effective from January
circular to support the creation of five new AI 18, 2021.
innovation zones. This will raise the total to These Measures apply to foreign investments
eight, as three of such zones are presently set up across China, including the Pilot Free Trade Zones,
in Shanghai (Pudong New Area), Shenzhen, and and stipulate that a working office set up under
Jinan-Qingdao. NDRC, but led by both NDRC and MOFCOM, will
The new AI innovation zones include Beijing, be responsible for the national security review of
Tianjin (Binhai New District), Hangzhou, foreign investments.
Guangzhou, and Chengdu. Each of them will be The Measures are not clear regarding what could
built to pursue a specific purpose, as explained trigger the national security review, and do not
directly by the MIIT’s circular. precisely define which are the “key” sectors
Incentives and relevant regulation
impacting foreign investors in
China’s AI sector
3 AMCHAM SOUTH CHINA
AI Innovation Zones in
China: Opportunities for
Foreign Investors
By Zoey Zhang, China Briefing, Dezan Shira & Associates
In the last five years, China has consistently • Encouraging Catalogues 2020
prioritized efforts to become the first global According to the Catalogue of Industries for
superpower in artificial intelligence (AI). This Encouraging Foreign Investment, effective from
includes strategies like Made in China 2025 and January 27, 2021, foreign investments in the
the Digital Silk Road, where China is able to AI sector are encouraged at the national level
combine and direct multiple resources towards the (“National Catalogue”) as well as at the regional
growth and development of the AI sector, such as level (“Regional Catalogue”). Foreign investors
incentivizing talents, nurturing an R&D ecosystem, will benefit from favorable policies, such as tariff
generating capital, creating a high-tech supply exemptions on imported equipment, access to
chain, and encouraging foreign investments in preferential land prices, looser regulation of land
select industries. use, and lower corporate income tax.
China also intends to set up AI innovation zones The Chengdu AI innovation zone, situated
where specific technologies are developed based in the Sichuan province, will be regulated by
on the city’s features, which will complement the the Catalogue for Encouraged Industries in
strategy adopted at the national level for the area the Western Regions (2020 Edition), to be
where the city is located (such as the Beijing- implemented from March 1, 2021.
Tianjin-Hebei development strategy, for example). • National Security Review and Export
Control Law
Newly introduced AI innovation zones On December 19, 2020, the National Development
in China and Reform Commission (NDRC) and the
Ministry of Commerce (MOFCOM) jointly issued
On February 20, 2021, the Ministry of Industry the Measures for Security Review of Foreign
and Information Technology (MIIT) issued a Investment (“Measures”), effective from January
circular to support the creation of five new AI 18, 2021.
innovation zones. This will raise the total to These Measures apply to foreign investments
eight, as three of such zones are presently set up across China, including the Pilot Free Trade Zones,
in Shanghai (Pudong New Area), Shenzhen, and and stipulate that a working office set up under
Jinan-Qingdao. NDRC, but led by both NDRC and MOFCOM, will
The new AI innovation zones include Beijing, be responsible for the national security review of
Tianjin (Binhai New District), Hangzhou, foreign investments.
Guangzhou, and Chengdu. Each of them will be The Measures are not clear regarding what could
built to pursue a specific purpose, as explained trigger the national security review, and do not
directly by the MIIT’s circular. precisely define which are the “key” sectors
Incentives and relevant regulation
impacting foreign investors in
China’s AI sector
3 AMCHAM SOUTH CHINA
