Socialist market economy
The socialist market economy (SME) is the economic system and model of economic development employed in the People's Republic of China. The system is based on the predominance of public ownership and state-owned enterprises within a market economy. The term "socialist market economy" was first used during the 14th National Congress of the Communist Party of China in 1992 to describe the goal of China's economic reforms. Originating in the Chinese economic reforms initiated in 1978 that integrated China into the global market economy, the socialist market economy represents a preliminary or "primary stage" of developing socialism. Despite this, many Western commentators have described the system as a form of state capitalism.
History of the People's Republic of China (1949–1976)
China became almost totally cut off from the outside world in the late 1960s and only retained diplomatic relations with a few countries. The United States was denounced for imperialism, Britain for colonialism, Japan for militarism, and the Soviet Union for revisionism. Most of the communist world was stunned and horrified by the Cultural Revolution. This led to China dividing fellow communist nations into three groups. Cuba, Romania, North Korea, and North Vietnam were classified as "mostly socialist with a few mistakes". The USSR, Mongolia, Poland, Czechoslovakia, Bulgaria, East Germany, Hungary, and Yugoslavia were classified as revisionists who pursued a false socialism. China itself and Albania were seen as the only true socialist countries in the world.