Innovation creates dual engines for growth and prosperity

The Third Five-Year Plan for Economic and Social Development of the Macao Special Administrative Region (2026-30) marks a significant shift in its alignment with the national 15th Five-Year Plan (2026-30).

It is a strategic step by Macao to integrate into the country's overall development. Similarly, Hong Kong's first five-year plan, also closely aligned with the national 15th Five-Year Plan, is expected to be released soon. This synchronization of local and national plans constitutes an innovation of the "one country, two systems" principle and adheres to the Basic Laws of the two SARs.

The "one country, two systems" principle was essentially meant to allow Hong Kong, Macao and Taiwan to not follow the socialist system but pursue economic and social development in their own way.

The Ninth Five-Year Plan for National Economic and Social Development (1996-2000) explicitly stated that after China resumed the exercise of sovereignty over Hong Kong and Macao, the two regions would maintain their existing systems and enjoy financial autonomy.

The plan also highlighted the mutual benefits of economic engagement between the regions and the mainland, contributing to stability and prosperity. This dualism — distinct but interconnected — has been a consistent theme in subsequent five-year plans, reinforcing the enduring principle of "one country, two systems".

Since their return to the motherland, Hong Kong and Macao have enjoyed unprecedented autonomy, with their development plans independently crafted and implemented. National five-year plans offer support and cooperation, but do not set targets for Macao and Hong Kong.

The SARs manage their own economic and social affairs, retaining separate statistical and economic identities. This autonomy, enshrined in the Basic Laws, has empowered both SARs to thrive. Since the handovers, both governments have lived up to the Central Government's trust and expectations and diligently fulfilled their responsibilities by boosting the SARs' development and maintaining prosperity and stability.

As China rises to become a global economic powerhouse, its contribution to global economic development has surged, surpassing even that of the United States. China accounts for almost 30 percent of global economic growth.

It is the world's second-largest economy and the major trading partner of more than 160 countries and regions. It also has a superlarge market of 1.4 billion people and the world's largest foreign exchange reserves. Many economies want to hitch a ride on China's growth, because aligning with China means aligning with the future.

Macao and Hong Kong maintain separate economic systems, but their development is closely intertwined with the mainland. Aligning their development plans with the national five-year plans is a strategic choice to gain from the phenomenal potential of the mainland under the "one country, two systems" principle. By coordinating with the mainland, particularly within the Guangdong-Hong Kong-Macao Greater Bay Area framework, the two SARs enhance their connectivity both locally and globally. This makes them super connectors that excel both internally and externally.

In the past, the stereotypical view was that under socialism, the government directed economic and social development, while capitalism allowed market forces to prevail and society to develop freely.

But China amended its Constitution in 1993 to establish a socialist market economy with a more visionary and flexible approach. In recent years, it has placed greater emphasis on promoting the interplay between an efficient market and a well-functioning government.

On the other hand, capitalist countries, especially developed Western countries, have abandoned the original laissez-faire capitalism and steadily increased government intervention in market operations.

They also interfere in different aspects of corporate production, supply and sales by overstretching the notion of national security. This has significantly disrupted the global market, with some sectors already fragmented.

In today's world, no government leaves economic and social development entirely to the whims of the market. The simultaneous use of the visible hand and the invisible hand is now the norm.

To have the two systems learning from and complementing each other is the right way forward. Socialism freed its thinking long ago and embraced market mechanisms. Capitalism should also free its thinking and experiment with planning.

Capitalism is deeply entrenched in Macao and Hong Kong, yet it adapts to local contexts within the broader Chinese framework. Historically, both SARs operated with minimal government intervention in economic affairs.

However, challenges such as Macao's overdependence on gaming and Hong Kong's need for economic transformation necessitated a balanced approach, leveraging both government guidance and market mechanisms.

An important feature of Macao's Third Five-Year Plan is the consistent vision of coordination between development and security. Both are given equal emphasis. The same is true of Hong Kong's consultation document.

With the full implementation of the five-year plans, the two SARs, just like the country as a whole, are poised to achieve the twin miracles of rapid economic growth and long-term social stability.

It should be emphasized that the five-year plans formulated by the Hong Kong and Macao SARs remain distinctly capitalist in nature. That does not alter the fundamental character of the two SARs.

At the national level, China remains firmly committed to the socialist market economy. The "one country, two systems" principle remains the basic state policy of the country, and all institutional arrangements set forth in the Basic Laws remain unchanged.

We are confident that the move will not only bring vigor and vitality to economic and social development in Macao and Hong Kong but also complement the implementation of the national 15th Five-Year Plan and contribute to the rejuvenation of the Chinese nation.

Wang Zhenmin is director of the Tsinghua University Institute for Governance Studies (IGS); and Zheng Shendi is an assistant research fellow at the IGS.

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

If you have a specific expertise, or would like to share your thought about our stories, then send us your writings at opinion@chinadaily.com.cn, and comment@chinadaily.com.cn.