Rewards and risks in China's Five-Year Plan

Michael Spence, a Nobel prize winner in economics, told Xinhua while the biggest challenge is to keep growth in the neighborhood of 6.5 and 7 percent before 2020, the completion of structural changes and supporting reforms are more important.

While it remains to be seen how China will balance growth and reforms, investors are excited by a new wave of opportunities brought by the country's yearning for quality growth.

Supply-side reform, innovation, technological upgrades, market competition, more efficient state-owned enterprises and low fossil-fuel dependency have all been given pride of place in the latest five-year plan.

China's expenditure on research and development in the next five years will be 2.5 percent of the GDP, up from 2 percent last year. This increased investment will support sophisticated projects such as deep space exploration and robotics.

China's emphasis on innovation-driven growth has particularly cheered other innovative economies.

"The United Kingdom offers a mature, proven system that promotes innovation and our two countries can take cooperation to a new level," Jeff Astle, executive director of the China-Britain Business Council (CBBC), told Xinhua.

A report on the "Made in China 2025" initiative for British companies to work with Chinese companies will be released at a CBBC forum on innovation later this month in the port city of Tianjin.

Chen Qihua, vice president of Caterpillar Inc and chairman of Caterpillar China, said the higher premium China has placed on innovation, smart manufacturing and energy saving means more collaboration opportunities for the company.

"We are optimistic about China from a long-term perspective," Chen said.

Given the inherent hit-or-miss nature of innovation, however, patience is also advised.

"Innovation doesn't work the way low-cost manufacturing does," Kuhn said. "Innovation cannot be legislated. An innovation-based economy must accept failure as a necessary part of the process."

"The most effective and robust policy to facilitate China's transition is greater competition," he said.