The Fourth Plenary Session of the 20th Central Committee of the Communist Party of China clearly stated that “high-quality development is the fundamental principle of the new era”. As some regions in China are confronted with the challenges of population loss, industrial shrinkage, and the bottleneck of the traditional extensive development model, it is urgent to explore pathways for their high-quality development. The theory of smart shrinkage and that of endogenous development provide a four-dimensional endogenous dynamic analysis framework, covering human, institutional, industrial and social capitals.To solve problems such as insufficient innovation momentum, a single industrial structure, poor governance coordination and weak collective action, shrinking regions must establish mechanisms for talent revitalization, industrial resilience, governance adjustment and network reconstruction, and actively explore effective pathways to break through the closed cycle and integrate into coordinated regional development.