We must examine changes in the industry with the same meticulousness we would use to observe a tree. If we view the industry as the tree’s branches and trunk, then industrial policy serves as its fertilizer, profoundly influencing the direction of industrial investment promotion.

In 2022, as the reality of “the pandemic becoming the new normal” set in, various industries faced consolidation and transformation, propelled by the gears of the times toward the future in search of new opportunities and vitality.

Faced with market uncertainty, maintaining economic growth has become the top priority for local governments. Among these efforts, investment promotion serves as the “secret weapon” for achieving this goal. Consequently, as we enter 2022, many local governments have designated investment promotion as their top priority, with numerous policies set to guide the implementation of effective investment projects.

To provide a more detailed understanding of these policies, we will offer monthly interpretations and analyses of influential policies, helping investment promotion professionals clearly map out the trends and directions of investment attraction and industrial development.

01 Zhejiang Unveils New Phase of "Empty the Cage, Replace the Birds"

Hangzhou, Zhejiang Province, has issued the “Action Plan for the New Round of Manufacturing ‘Clearing Space for New Opportunities, Phoenix Rebirth’ Campaign,” proposing a series of initiatives to attract major and high-quality enterprises, with the aim of strengthening the new manufacturing sector.

“Empty the Cage, Replace the Birds; Phoenix Reborn”—eight words all too familiar to the people of Zhejiang. As early as the end of 2004, the Economic Work Conference proposed that “to break through Zhejiang’s development bottlenecks, we must fundamentally transform our economic development model.”

This time, Zhejiang is by no means merely "rehashing the past"; rather, by employing a two-pronged approach—"emptying" with the left hand and "replacing" with the right—it seeks to achieve a comprehensive upgrade of the manufacturing sector’s industrial structure, spatial configuration, and output per unit of land.

With its left hand, it is firmly implementing a “weeding out the weak and retaining the strong” strategy, phasing out enterprises with low production efficiency, insufficient innovation-driven growth, inadequate support for emerging industries, high energy consumption per unit, and high carbon emissions per unit.With the right hand, it employs a chain-reaction “transplantation” strategy: aligning with the trends of “carbon peaking” and “carbon neutrality,” honing the “internal capabilities” of digital, green, and low-carbon technologies, while simultaneously leveraging the “external forces” of attracting major and high-quality enterprises to form a closed-loop “emptying the cage to welcome new birds”—all without resorting to drastic measures.

02 New Land Policies Bring a Ray of Hope to Major Cities

Recently, the General Office of the State Council issued an important document titled “Overall Plan for Comprehensive Reform Pilots on the Market-Based Allocation of Production Factors.” Central cities and metropolitan areas, which have long been “hampered” by land quota constraints, are about to see a glimmer of hope.

Each region has fixed land approval quotas, but these often result in a situation where “projects wait for land.” This is particularly true in cities with rapid economic growth, where project demand exceeds land supply, creating a shortage.

To address this imbalance in resource allocation, land from small and medium-sized cities will be allocated to support developed provinces and municipalities. This approach allows cities with high demand to secure more land quotas, ensuring the implementation of major projects, while small and medium-sized cities can monetize their resources through land sales.

In addition, intensive land use remains a top priority in investment promotion efforts. Pilot cities are required to implement a lease-to-own system with term-based land transfers that include land use quotas, creating a mechanism to drive efficient land utilization and promote the effective allocation of industrial land.

Furthermore, measures such as lawful negotiated reclamation, agreed-upon land swaps, and incentive-based fees and penalties are encouraged to facilitate the clearance and release of low-efficiency urban land.

This indicates that pilot cities are being granted certain authorities to independently establish standards for low-efficiency land and implement incentive and penalty measures to facilitate the vacating and clearance of such land.

03 Henan’s New Approach to Investment Promotion

On January 14, Henan Province released the “14th Five-Year Plan for Investment Promotion and Industrial Transfer.” Whether in terms of reshaping spatial layout or planning key industries, this represents a complete overhaul of Henan’s investment promotion methods and mechanisms.

Among the innovative investment attraction methods, capital-driven investment has been elevated to the most critical position. To a certain extent, 2022 will mark the inaugural year of capital-driven investment in Henan.

Another innovative approach involves placing greater emphasis on “enclave” investment promotion. Unlike in the past, this initiative prioritizes innovation, R&D, and technology incubation.

It is worth noting that Henan will utilize the “Rural Revitalization Industrial Platform” as a key vehicle for investment promotion, establishing platforms such as “Returnee Entrepreneurship Industrial Parks” combined with “Township-Specific Industrial Parks,” as well as “Modern Agricultural Industrial Parks” and “Agricultural Industry Powerhouse Towns.”

Having weathered the dual challenges of floods and the pandemic, Henan must scientifically grasp the principles of investment promotion and industrial relocation, seizing opportunities amid crises and forging new paths amidst shifting circumstances.

In industrial development, the province will not only focus on cultivating local advantages in key segments of industrial and supply chains but also, building on increased innovation in end-products, encourage eligible enterprises to expand into the mid- and upstream segments of the industrial chain. Labor-intensive, technology-intensive, and energy-intensive industries will be addressed with tailored policies rather than blanket encouragement.

04 Shandong Unveils Latest Plan for "Specialized, Refined, Unique, and Innovative" SMEs

Shandong Province has introduced a plan for fostering “Specialized, Refined, Unique, and Innovative” (SRUI) small and medium-sized enterprises (SMEs), proposing to include more than 20,000 innovative SMEs in the cultivation pool by 2025; to newly cultivate and certify 4,000 provincial-level SRUI SMEs, bringing the cumulative total to approximately 10,000.

The province will also cultivate a group of angel investors and venture capital institutions, promote the establishment of angel investment funds with diverse models, and support the stable and healthy growth of micro and small enterprises in the seed and startup stages.

As a major industrial province, Shandong saw 23, 124, and 221 enterprises listed in the three batches of national-level "Specialized, Refined, Unique, and Innovative" "Little Giant" enterprises announced between 2019 and 2021, respectively, marking a doubling of the number of enterprises.

This clearly demonstrates that Shandong Province places great importance on fostering "Specialized, Refined, Unique, and Innovative" SMEs. Among these, the development of "Specialized, Refined, Unique, and Innovative" SMEs centered on innovation is Shandong’s next strategic direction. In addition to formulating targeted support policies, it is essential to improve the full-lifecycle cultivation mechanism for SMEs.

With the continuous support of these policies, capital is beginning to shift “from the virtual to the real,” moving away from crowded sectors such as the internet and e-commerce toward the manufacturing sector, which had previously received less attention. This shift aims to provide financing channels for “Specialized, Refined, Unique, and Innovative” enterprises, thereby reducing their reliance on bank loans and fiscal subsidies.

It is important to recognize that large enterprises were not born large; they grew step by step. Virtually all high-profile large enterprises have built their success by adhering to the "Specialized, Refined, Unique, and Innovative" approach.

Conclusion

Looking back at these policy initiatives, it is clear that streamlining administration and delegating authority, stimulating local efforts to attract investment, encouraging innovative models, and promoting scientific, standardized, and orderly investment promotion have become the dominant themes.