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Encouraged Catalogue for Western China 2025: Trends and Opportunities

China BriefingDecember 11, 2024

China has unveiled the latest Encouraged Catalogue for Western China 2025 after launching another round of its “Go West” campaign, in a bid to lure investment into its vast western region. Eligible companies can enjoy lower corporate income tax rates. The Western region is also acquiring strategic importance as China seeks to enhance the construction of the Belt and Road and cement its position in global supply chains.

On November 29, 2024, the National Development and Reform Commission (NDRC) released the Catalogue of Encouraged Industries in Western China (2025 Edition)(hereinafter referred to as the Encouraged Catalogue for Western China), which will take effect on January 1, 2025. It will repeal the 2020 Edition simultaneously.

Under the current policy, eligible companies established and operating in western China can benefit from a reduced corporate income tax (CIT) rate of 15 percent, compared to China’s standard CIT rate of 25 percent. To qualify, a company’s primary business must fall under one of the categories listed in the Encouraged Catalogue for Western China, and revenue from this business must account for at least 60 percent of the company’s total revenue. This preferential policy will remain in effect until the end of 2030.

What are the western regions of China?

The western regions include 12 provinces – Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia, and Xinjiang, which cover more than 70 percent of the country’s land area and have nearly a third of its population. Some cities or regions in other provinces, such as Xiangxi of Hunan, Enshi of Hubei, Yanbian of Jilin, and Ganzhou of Jiangxi are also within the scope of applying the Encouraged Catalogue for Western China.

What is in the Encouraged Catalogue for Western China 2025?

The Encouraged Catalogue for Western China 2025 includes two parts:

Encouraged industries as detailed in the existing national industry catalogues, such as the Catalogue for Guiding Industry Restructuring and Catalogue of Encouraged Industries for Foreign Investment; and
A list of newly added encouraged industries in the Western Region, which applies only to domestic companies.

Foreign-invested enterprises (FIE) will need to follow the Catalogue of Encouraged Industries for Foreign Investment.

The Encouraged Catalogue for Western China 2025 includes 564 encouraged industries, representing a net increase of 29 categories compared to the 2020 edition. The newly added industries emphasize alignment with local economic strengths and emerging market trends, such as specialized agriculture and animal husbandry, electronics, resource processing, and equipment manufacturing.

Below we summarize some major encouraged industries in each Western province:


Province	Major encouraged industries (non-exclusive)
Chongqing	Virtual Reality (VR), Augmented Reality (AR), and Mixed Reality (MR) immersive and interactive entertainment facilities and equipment; R&D of radiopharmaceuticals, artificial organs, in vitro diagnostics and point-of-care testing (POCT) devices, and related components; Laptops, tablets, all-in-one PCs, workstations, servers, industrial control computers, and embedded systems), communication products, and key components; and Operation of wind power, photovoltaic, pumped hydro storage, and advanced energy storage facilities.
Sichuan	Specialty agricultural and forestry products, including tea, vegetables, traditional Chinese medicinal materials, fruits, silkworms, and aquatic products; New carbon materials such as graphene, nano-carbon materials, fine-structure graphite, and lithium battery anode materials; Manufacturing and application of equipment for CNG and LNG vehicle fueling stations, including gas storage cylinders, compressors, and oil-water separators; and R&D of frontier aviation power technologies and products.
Guizhou	Construction and operation of wind and solar power plants, pumped-storage hydropower stations; R&D in manufacturing of new energy photovoltaic modules and energy storage integrated equipment and hydraulic transmissions; R&D in thermal protection materials and composite materials for high-speed aircraft; and Manufacturing of special high-temperature alloys and components for nuclear energy equipment; and R&D and production of green coal chemical products.
Yunnan	Production and deep processing of rice, corn, oil crops, tea, flowers, vegetables (including edible fungi), silkworms, fruits, nuts, coffee, traditional Chinese medicinal materials, cattle, sheep, pigs, poultry, and bee products; Manufacturing of green building materials, development, and production of phosphogypsum building materials and new energy-saving wall materials; Green aluminum industry (production and advanced processing); R&D in high-efficiency solar cell modules, solar cells, lithium batteries for consumption and energy storage, sodium-ion batteries, hydrogen fuel cells, and other new energy battery technologies, as well as lithium battery recycling and material recovery; R&D in power transmission, power distribution, and control equipment for special environments (e.g., high-altitude, hot and humid, extremely cold, or heavily polluted conditions); Manufacturing of equipment for water and air pollution control; and R&D in AI large models, generative AI, and big data management.
Tibet	Manufacturing of clean energy equipment and materials; Manufacturing of oxygen supply equipment; Construction and operation of 5G, mobile internet, industrial internet, IoT, and broadband networks, as well as research and development in artificial intelligence and blockchain technology; and Scientific research and decision evaluation services, natural science research and experimental development, engineering and technology research, and experimental development.
Shaanxi	Facility agriculture such as greenhouse cultivation; planting and production of region-specific products, including apples, citrus, kiwis, grapes, pomegranates, tea, minor cereals, konjac, edible fungi, silkworms, and traditional Chinese medicinal materials; Production of organic-inorganic compound fertilizers; Comprehensive utilization of multi-element coexisting ores and tailing resources; exploration and development of strategic and scarce mineral resources; Production of biodegradable materials using biological and chemical methods; R&D in coal mining machinery, petroleum equipment, and power equipment; Development and manufacturing of mine safety instruments and emergency rescue equipment; R&D in the application of industrial energy-saving technologies (e.g., waste heat, residual pressure, differential pressure, and gas recovery), digital energy management, and digital energy-saving technologies and software; New energy materials, including special alloy materials such as titanium, zirconium, nickel, magnesium, lithium, zinc, molybdenum, tungsten, and vanadium; Manufacturing and operational services for commercial aerospace and related industries, as well as general aviation (helicopters and drones); Production of semiconductors, integrated circuits, connectors, sensors, AI processors, and new electronic components; and Construction and operation of unconventional water treatment and utilization projects, including recycled water, rainwater collection, and mining pit water transportation and distribution systems.
Gansu	Production of organic peroxides and electronic-grade hydrofluoric acid (HF); Development and application of technologies using natural gas as a substitute and hydrogen as a partial substitute for heavy oil, diesel, and coal in chemical production and non-ferrous metal smelting and advanced material processing; R&D in the production of cathode materials for power and energy storage batteries, including nickel sulfate, ternary precursors, lithium manganese iron phosphate, and nickel-cobalt secondary battery materials; R&D in vacuum technology and production of new materials for cryogenic equipment and aerospace pressure vessels; Development and manufacturing of green coating equipment; and Construction and operation of green data centers within national computing power hub nodes, providing services such as computing power, application scenario development and promotion, data collection, storage, processing, ownership confirmation, valuation, pricing, trading, analysis, data asset services, and data security services.
Qinghai	Planting and processing of desert plants, distinctive forestry and grass planting, specialty animal husbandry, under-forest economic industries, and production and deep processing of forestry products; Production of high-purity alumina (4N and above); Exploration and research of deep underground pressurized brine resources; Green hydrogen production, hydrogen energy equipment manufacturing, and operation of hydrogen pipelines and hydrogen refueling stations; and Construction of new energy vehicle (NEV) charging stations and charging piles.
Ningxia	Development of treatments for major diseases, including tumors, cardiovascular and cerebrovascular conditions, diabetes, immune system disorders, viral infections, and drug-resistant bacterial infections; Production of amino acids through biological fermentation and chemical synthesis; Manufacturing of materials for chip production and packaging, such as electronic-grade polysilicon, electronic ceramics, sputtering targets, electronic chemicals, and specialty gases; Production of key raw materials, components, and equipment for new energy sources like wind power, photovoltaics, hydrogen energy, and energy storage; Recycling and utilization of decommissioned clean energy equipment, including wind power, photovoltaic, and energy storage devices; R&D in the production of modular, IoT-enabled, systematic, and intelligent meters for electricity, water, gas, and heat; and Development and manufacturing of IGBT inverter welding machines, plasma cutting machines, and welding robots.
Xinjiang	Demonstration and application of water-saving aquaculture and integrated ecological farming models for saline-alkali land (water); Development, application, and production of local aquaculture species in Xinjiang, including the introduction and cultivation of cold-water fish; Textile and apparel industry, chemical fiber manufacturing; Research and production of green coal chemical products; Exploration, development, equipment manufacturing, and technical engineering for ultra-deep oil and gas reserves; and Production of new environmentally friendly building materials, including the manufacturing of sintered waste materials for new wall components and road construction materials.
Inner Mongolia	New projects for the integrated development and utilization of natural soda with an annual capacity of 1.5 million tons or more; Development and equipment manufacturing for biomass gasification methanol production technology; Production and manufacturing of intelligent transportation equipment, including cameras, sensors, onboard terminals, and communication devices; Joint operation of new energy power stations and novel energy storage facilities; and Low-altitude economy, including short-distance transportation, testing, education and training, operation of general airports and aviation takeoff/landing points, and manufacturing of aviation equipment.
Guangxi	Advanced processing and supporting industries for functional masterbatches and biodegradable materials; Production and deep processing of polymer materials and food additives, catalysts, daily chemicals, bio-based chemicals, and bioenergy; Manufacturing of complete equipment and systems for compressed natural gas (CNG and LNG) fueling station equipment; Manufacturing of marine auxiliary equipment and research and development of marine equipment; Production of offshore wind power equipment, subsea cables, and research and development of offshore wind farm construction machinery; Development AI, mobile internet, industrial internet, the Internet of Things, and the Metaverse; and Cross-border trade, international logistics, freight forwarding, cross-border e-commerce, foreign trade services, and market procurement trade.

The full list can be found here.

These updates align with China’s broader national goals for high-quality development as outlined during the Third Plenary Session of the 20th CPC Central Committee. By continuing to support industrial upgrading, economic diversification, and sustainable growth, the policy aims to enhance the Western region’s role as a hub for strategic industries, further cementing its position as a key driver of China’s economic future.

Trends and opportunities

The periodic update of the Encouraged Catalogue for Western China reflects China’s strategic focus on leveraging regional strengths and promoting high-quality development. The 2025 edition highlights opportunities in renewable energy, medical technologies, advanced manufacturing, and Information and Communication Technologies (ICT), along with emerging markets like AI, green technologies, and the low-altitude economy.

Renewable energy

The Encouraged Catalogue for Western China 2025 emphasizes renewable energy development across multiple provinces, signaling a shift toward sustainability and green energy innovation.

Offshore wind power: Guangxi’s focus on manufacturing offshore wind power equipment and subsea cables reflects a growing trend in utilizing coastal resources for renewable energy. This aligns with China’s new priorities for carbon neutrality and green infrastructure.
Photovoltaic and energy storage: Provinces like Guizhou and Yunnan are ramping up R&D and manufacturing in solar power technologies, advanced energy storage systems, and battery recycling. Industries in these regions can take advantage of being key players in the national renewable energy supply chain.
Green hydrogen and biomass: Qinghai is encouraging green hydrogen production and hydrogen pipeline infrastructure, while Inner Mongolia explores biomass technologies, addressing the need for diversified energy sources.

Medical technologies and services

Many regions in Western China are enriched by their traditional Chinese medicine and also encouraging medical technology innovation such as:

Pharmaceutical R&D: Ningxia is focusing on treatments for major diseases like cancer and cardiovascular conditions, and Chongqing is advancing research in radiopharmaceuticals and artificial organs.
Medical devices: Chongqing also leads in developing in vitro diagnostics and point-of-care testing (POCT) devices, essential for modern healthcare services.
Health-tech integration: The manufacturing of oxygen supply equipment in Tibet and AI-powered healthcare applications in Yunnan demonstrate the region’s alignment with global health-tech trends.

The Chinese government is actively encouraging the development of the medical field in the Western Region for several strategic reasons. First, the region faces significant challenges in healthcare resource distribution, with gaps in service availability and quality compared to China’s more developed regions. By advancing the medical industry, the government aims to address these inequities, enhance healthcare outcomes, and ensure equitable access to medical services for all citizens.

Moreover, fostering medical innovation in the region can drive technological advancements, attract high-level talent, and build an ecosystem conducive to innovation and commercialization of cutting-edge medical advancements.

Beyond improving healthcare resource allocation, the government’s push to develop medical technologies and services in the Western Region is also economically motivated. Investment in the medical industry can stimulate economic activity, generate employment, and support related industries such as biotechnology, pharmaceuticals, and medical equipment manufacturing. This initiative aligns with efforts to diversify the region’s economy, reducing its historical reliance on resource-based industries.

Advanced and high-performance technologies

The Encouraged Catalogue for Western China 2025 highlights the growing emphasis on R&D and manufacturing of high-performance and advanced technologies:

Aerospace innovations: Provinces like Guizhou are focused on high-temperature alloys for nuclear and aerospace applications, and Shaanxi prioritizes commercial aerospace technologies and drones.
Special materials and alloys: Shaanxi and Gansu are advancing production in titanium, zirconium, and electronic-grade hydrofluoric acid for strategic industries. These developments cater to sectors like defense, semiconductors, and renewable energy.
Green manufacturing: The adoption of technologies using natural gas and hydrogen to replace coal in metal smelting and chemical production reflects a shift toward low-emission industrial processes in Gansu and Qinghai.

In the information and communication technology (ICT) sector:

Artificial intelligence: Yunnan and Tibet are fostering AI research, including generative AI and large-scale AI models, reflecting China’s intention of promoting R&D in AI development on a large scale.
Low-altitude economy: Inner Mongolia’s focus on the low-altitude economy, including short-distance transportation and aviation equipment, opens new opportunities for drones and general aviation.
Metaverse and IoT: Guangxi’s inclusion of the Metaverse and IoT technologies highlights the integration of immersive digital environments with real-world applications, offering the potential for innovation in entertainment, education, and logistics.

China’s strategy to encourage the development of high-performance technology and ICT in the Western region aligns closely with its national objectives for balanced regional development, technological self-reliance, and industrial upgrading. This focus supports broader strategic goals of achieving high-quality economic growth, fostering innovation, and ensuring the nation’s technological and economic resilience. In addition, the western region offers vast land resources, relatively lower operational costs, and growing infrastructure development, such as green energy production, which can support energy-intensive high-tech industries.

The impact of the CIT incentives on Western China

The implementation of preferential CIT policies for Western China has yielded remarkable results in recent years. Between 2021 and 2023, tax reductions exceeding RMB 400 billion (approximately US$55 billion) have supported local enterprises and attracted significant domestic and foreign investment. These measures have bolstered confidence in businesses and facilitated the development of strategic and emerging industries, such as electronics, equipment manufacturing, and biopharmaceuticals. As a result, the region has developed nine strategic industrial clusters, and five advanced manufacturing clusters tailored to its strengths.

These incentives have also fueled substantial economic growth in the western provinces. By 2023, the region recorded a 5.5 percent GDP growth rate and a 6.1 percent increase in industrial output, both outpacing national averages. This growth underscores the Western Region’s growing contribution to China’s economy and its improving per capita income levels, positioning it as an increasingly attractive destination for long-term investment.

[Salon] Encouraged Catalogue for Western China 2025: Trends and Opportunities