New plan forges competitive advantage for country

The global landscape is undergoing a profound transformation. Competition between countries no longer depends solely on single technologies or standout products, but increasingly tests the coherence and functioning of whole institutional systems. In this context, the upcoming China's 15th Five-Year Plan (2026-30) matters less as a checklist of new goals and more as a turning point in the country's development paradigm: from relying on individual policy levers to consciously engineering an internally coherent and highly efficient system of governance and markets. The ability of that system to connect the country's institutions has emerged as a decisive competitive advantage for China.

For decades, China's development strategies relied on matching each goal with a discrete policy: to spur innovation, launch a fund; to boost industry, provide subsidies; to balance regions, implement transfer payments. This approach, effective in a simpler era, is now showing its limits. Today, China faces intertwined, high-stakes challenges — technological self-reliance, resilient supply chains, data as a factor of production, and shifting demographics.

Take, for example, the persistent "valley of death" in science and innovation. China produces top-tier research and patents, yet many breakthroughs falter before reaching industrial application. The bottleneck rarely lies with scientists or entrepreneurs. Rather, it exists in the relay zones that connect them — a sequence of finance, pilot-scale commercialization, market entry and talent mobility. Each link operates with its own logic, but the chain struggles to deliver results end-to-end. This is the essence of competition in the "systemic era": success is determined not by the strongest single element, but by the efficiency and cohesion of the entire system.

There are several examples across the globe. The United States' advantage is not simply Silicon Valley or Wall Street; it is a decades-long evolution in which basic research, venture capital, public markets and established firms learned to convert scientific breakthroughs into scaled businesses. Europe's competitive edge derives from regulatory leadership: rigorous green standards that pull research, supply chains and industrial upgrades into alignment. Their strengths flow from institutional "chemistry" — a seamless orchestration that turns policy into performance.

China's 15th Five-Year Plan may emphasize precisely this systemic perspective, targeting the reinforcement of critical institutional linkages to enhance coordinated action. This approach manifests across several dimensions.

First, integrating technology, industry and finance. Future industries, particularly cutting-edge technologies, rely on patient capital with long-term horizons. The plan stresses the inclusivity and adaptability of capital market institutions and reforms financial structures to channel resources efficiently into technological innovation.

Second, deepening regional cooperation to achieve shared benefits. Beyond traditional support programs or simple coordination, the plan aims to dissolve the barriers impeding a unified national market. New mechanisms for planning alignment, cost-sharing, and benefit distribution will encourage the orderly flow of productive resources across regions, unlocking the full potential of major regional strategies.

Third, strengthening the institutional foundations for market-based allocation of data as a factor of production. Data's value is realized only within a secure, clear and operational framework. The plan envisions a nationwide, open and secure data market supported by rules on property rights, transactions, profit allocation and governance.

Fourth, aligning population dynamics, education and industrial needs. Demographic shifts demand agility in human capital development. Education -especially vocational and higher education — must resonate with industrial transformation. By advancing industry-education integration and dynamically adjusting curricula, China can convert demographic pressures into talent advantages that propel industrial upgrading.

The success of these reforms hinges on a deeper evolution in governance philosophy. Institutional coupling requires officials to transcend narrow, short-term interests and embrace a systemic perspective and collaborative ethos. Cross-departmental and cross-regional coordination, coupled with performance evaluation that rewards synergy, ensure that reforms act in concert rather than counterbalance each other.

In short, China's 15th Five-Year Plan will signal an evolution toward higher-order development logic. Its core ambition is to reduce internal transaction costs and amplify the aggregate benefits of institutional synergy. In an era where systemic efficiency defines competitive advantage, this high-level institutional coupling represents China's most durable source of strength — a foundation that enables the nation to navigate future challenges with confidence and maintain its strategic initiative.

The author is an associate research fellow at Chongyang Institute for Financial Studies, Renmin University of China.

The views don't necessarily reflect those of China Daily.

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