## 5 Cultural-Institutional Country Profile Analysis
### China: State-Centric, Top-Down, but Flexible Hybrid Orchestration  
China's strategic approach to digital technology innovation is grounded in a cultural-institutional framework that [PERSON] and [PERSON] describe as a _Collectivist-Flexible_ type. This model combines a collectivist ethos with a flexible and adaptable governance, resulting in a state-centric, top-down, yet system-focused approach to execution. In the digital landscape, centralized state orchestration goes together with pragmatism and responsiveness. State institutions act as both coordinators and drivers of innovation, setting broad national objectives, designing policies, and ensuring their implementation through institutional networks. Thus, China's hybrid innovation model combines state-led initiatives with private sector participation, fostering regulated competition in an environment of government support [27]. In contrast to the American model, where innovation is driven mainly by private-sector actors with limited state intervention, China's approach emphasizes strong state coordination, hierarchical execution, long-term planning, and policy implementation. China's state institutions tightly orchestrate the digital innovation ecosystem through a mix of state-owned enterprises, partially privatized firms with growing state ownership, and nominally private companies operating within clear policy boundaries. While this structure allows for some market competition, it is reinforced through state instruments, including subsidies, regulatory incentives, and public procurement to advance national strategic objectives. A key feature of China's approach is the Chinese government's growing recognition of the private sector's role in driving innovation and its proactive approach. For example, in July 2001, President [PERSON] declared that the party should formally accept private business owners [102]. Since then, policies have deliberately blurred the lines between the state and private sectors to foster domestic technology commercial champions. \"From 2000 to 2019, the share of private firms receiving investments from state-owned enterprises or heavily reliant on state capital more than doubled, to 35% of all registered capital\" [103; 104]. This practice has expanded China's digital ecosystem while preserving strong state oversight and control [27; 105]. Several policy frameworks exemplify this model: (a) The Made in China 2025 strategy identified digital technologies, particularly AI, semiconductors, and smart manufacturing, as national priorities; (b) China's 2017 AI Strategy, the world's first dedicated national AI plan, frames AI leadership as a state objective, with state institutions playing a central role in resource allocation and direction [106]; (c) [PERSON]'s 2020 economic strategy, known as the \"dual circulation strategy\", emphasized bolstering China's domestic market (internal circulation) while maintaining some external ties. This strategy sought autonomy in critical sectors to boost resilience and self-reliance in an increasingly uncertain global environment [107]. By generating domestic demand for IT solutions and regulating foreign market access, this strategy enabled the growth of domestic commercial competitors. China's success in building digital innovation power is also rooted in its ability to generate and harness vast big-data resources, a critical foundation for AI innovation. China's large population and rapid digitalization, driven by government initiatives, have created an unparalleled data environment. Chinese state institutions have capitalized on this advantage by maintaining relatively loose regulations on data collection and use comparedto other countries. This permissive approach enables firms to experiment and scale rapidly, giving China's ecosystem a competitive advantage in data-driven innovation [108]. China's posture in digital power must be viewed in light of its historical shift from industrialization to technological leadership over recent decades.