Matthew Johnson
Xi Jinping has elevated Command Innovation to the core logic of the People’s Republic of China’s economy—superseding traditional growth drivers by fusing “self-reliant” strategic-industrial planning with direct financial control. This engineered system gives Beijing new leverage over how capital is deployed and who controls innovation, but its success depends on whether these channels can deliver real breakthroughs without succumbing to misallocation or political drag.
A phased strategy since 2018 has steadily rewired the PRC’s capital system, starting with crisis-induced self-reliance goals and then consolidating fragmented tools into a unified framework targeting strategic tech sectors. Each stage has pushed the Party closer to treating capital not just as a market input but as an instrument of national power, aligned with its broader geopolitical ambitions.
In 2025, this model has shifted from design to rapid consolidation and deployment: top-level directives from Xi and Vice Premier Ding Xuexiang have activated new funding mechanisms, re-lending tools, national venture funds, and innovation-focused bond pilots. All of it operates according to explicit political metrics and with direct Party oversight.
Implementation is now accelerating at the meso level: scoring systems for small and medium-sized enterprises (SMEs), risk-sharing guarantees, revamped capital market rules, and digital supply chain plans are embedding “command innovation” deep into everyday financial practice. Foreign capital flows are being brought under the same umbrella of Party-defined priorities and meso-level controls.
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