[By Wang Dongjie]

Innovation is an "ecosystem" of many inter-connected and complex parts that must function well together and grow organically if the whole system is to work well. Accordingly, China's 13th Five Year Plan (2016-2020) provides a comprehensive overview of components that must be put into place and goals that must be achieved if the nation is to successfully negotiate a very challenging period.

Importantly, and appropriately, the plan addresses a number of issues including social construction to reduce inequalities, strengthening the rule of law, improving the environment and achieving higher per capita income growth.

All of this will require a substantial and sustained growth rate below the 8 percent of the past decade but up to the "new normal" of approximately 6.5 percent. It will also require significant supply-side structural economic reform.

For example, China should fully implement bankruptcy/insolvency reforms allowing inefficient firms (public or private) to fail and be wound up rather than propped up as in the past.

The rule of law must also be promoted with reduced administrative interference in normal market forces. In terms of competition law, China must promote a level playing field between state-owned enterprises and their private counterparts, both domestic and foreign.

Monetary policy and tax reforms are part of the mix to align economic incentives with the new policy directions articulated in the Plan. Good corporate governance, accountability and transparency in both the private and public sectors are vital. Capital markets must be open to greater participation by private equity participants who through merger and acquisitioncan provide the leadership, capital investment and efficient governance to further advance national economic development.

A significant component of China's growth must also be consumer driven. In this regard, China must continue its amazing innovation of new business models providing both domestic and international competitive advantages in e-commerce.