Socialist market economy
The socialist market economy is seen by the Communist Party of China as an early stage in the development of socialism (this stage is variously called the "primary" or "preliminary" stage of socialism), where public ownership coexists alongside a diverse range of non-public forms of ownership. The Communist Party of China maintains that despite the co-existence of private capitalists and entrepreneurs with public and collective enterprise, China is not a capitalist country because the party retains control over the direction of the country, maintaining its course of socialist development. Proponents of this economic model distinguish it from market socialism as market socialists believe that economic planning is unattainable, undesirable or ineffective and thus view the market as an integral part of socialism whereas proponents of the socialist market economy view markets as a temporary phase in development of a fully planned economy.
History of the Communist Party of China
Following the death of Mao Zedong in 1976, however, the CPC under the leadership of Deng Xiaoping moved towards "Socialism with Chinese characteristics" and instituted Chinese economic reform. In reversing some of Mao's "extreme-leftist" policies, Deng argued that a socialist country and the market economy model were not mutually exclusive. While asserting the political power of the Party itself, the change in policy generated significant economic growth. The ideology itself, however, came into conflict on both sides of the spectrum with Maoists as well as progressive liberals, culminating with other social factors to cause the 1989 Tiananmen Square Protests. Deng's vision for economic success and a new socialist market model became entrenched in the Party constitution in 1997 as "Deng Xiaoping Theory".