Every five years, amid the red banners, choreographed pageantry, and lofty speeches of its party congress, the Communist Party of Vietnam releases two staid policy documents: a political report and a socioeconomic development plan. Although infused with party rhetoric, these texts are more than ideological pronouncements. They define the governing agenda for the next five-year political cycle. In a system in which formal politics is opaque, these documents provide the clearest sense of what the leadership wants to do.

The latest documents, released at the party congress in January, reveal that Vietnam is headed in a new direction. The party is transforming the political model that has governed the country for the past four decades. The 2026 documents increase the party’s direct role in managing the country’s affairs while also embracing the private sector and sidelining state-owned enterprises. Vietnam’s leaders are betting that the country needs a new growth plan—one that marries centralized political control with private-sector-led development—in hopes of reaching the ambitious annual growth target of ten percent of GDP.

This reorientation comes at a precarious moment for Vietnam and its ruling Communist Party. Since market reforms began in the late 1980s, Vietnam has relied on a mix of small private firms, which manufacture low-cost goods mostly for the domestic market; multinational corporations that produce the bulk of Vietnam’s exports; and large state-owned enterprises, which are economically inefficient but that the party relies on to redistribute resources to poorer regions of the country. This hybrid model has increased incomes, reduced poverty, and integrated Vietnamese industry into global supply chains. But as Vietnam emerged from the COVID-19 pandemic in 2021, the limits of this arrangement were increasingly apparent. State-owned enterprises had failed to become globally competitive, and private firms lacked the capital to scale up, invest in technology, or compete abroad. This left Vietnam dependent on multinational corporations. An emerging consensus developed within the country’s leadership that the existing economic model would no longer sustain rapid growth and distribute its benefits.

Policymakers experimented with piecemeal efforts to address these weaknesses. They tried to restructure state-owned enterprises to make them more competitive, improve the business environment by streamlining regulations, and deepen capital markets by developing the corporate bond market and stock exchanges. But these reforms repeatedly stalled. Powerful bureaucratic and provincial interests slowed implementation because they benefited from and believed in the existing role of state-owned enterprises in Vietnam’s economy.

When To Lam took power as the general secretary of the Communist Party, in 2024, manyobservers feared that it would spell the end of Vietnam’s attempts at economic reform. They expected that Lam, who formerly led the Ministry of Public Security, would prioritize national security objectives over economic goals. Their fears seemed warranted when Lam set about consolidating power and authority. He also benefited from ongoing institutional changes that have strengthened party control over governance and from an anticorruption campaign that weakened political rivals and their patronage networks. Within 18 months, Lam had become the most powerful Vietnamese leader in four decades.

But as this year’s party congress made clear, Lam is using his newfound power in unexpected ways. Vietnam’s leadership is positioning itself to drive an economic transformation that promotes private businesses and diminishes the role of state-owned enterprises—a stark transformation of the country’s past approach to growth. It is a bold and risky gamble that could either unleash the country’s latent potential or leave it to face the risks of internal degradation that have befallen many highly centralized political regimes elsewhere. As it faces an increasingly uncertain global trade environment, Vietnam is betting that a new form of party-led capitalism will guide it forward.

For much of the post–Cold War era, Vietnam maintained a system of collective leadership designed to prevent any single politician from dominating the state. Vietnam divided political authority among four pillars: the general secretary of the Communist Party, the president, the prime minister, and the chair of the National Assembly. Power was also distributed among regional interests through voting blocs in the party’s Central Committee, its most important decision-making body, in which provinces held nearly half the seats. This system often moved slowly, but it proved very stable.

The system of collective leadership has been severely weakened. Lam entered January’s party congress in a dominant position, a result of........

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