The "National Medium- and Long-Term Educational Reform and Development Guideline (2010-20)" (hereafter abbreviated as the "Guideline") posits that the development of education must be driven by reform and innovation. It devotes six chapters to mapping out the targets, tasks, and major policy measures for reforming the educational system. Focusing on the reform of the talent-fostering institutions, the "Guideline" is intended to offer a holistic institutional design for developing a modern school system, renewing the school operating system, and upgrading the government's governance system. This paper explores the rationale and theoretical foundation for such a design, revolving around three issues--the construction of a modern school system, reforming the school operating system, and reforming the administrative system. It analyzes the structural issues targeted by such institutional design, as well as the basic assumptions and main discussions [that took place] during the "Guideline's" drafting process, and offers a brief description of implementation strategies for structural reform.