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.
Communism
The People's Republic of China has reassessed many aspects of the Maoist legacy and along with Laos, Vietnam and to a lesser degree Cuba has decentralized state control of the economy in order to stimulate growth. Chinese economic reforms were started in 1978 under the leadership of Deng Xiaoping and since then China has managed to bring down the poverty rate from 53% in the Mao era to just 6% in 2001. These reforms are sometimes described by outside commentators as a regression to capitalism, but the communist parties describe it as a necessary adjustment to existing realities in the post-Soviet world in order to maximize industrial productive capacity. In these countries, the land is a universal public monopoly administered by the state, as are natural resources and vital industries and services. The public sector is the dominant sector in these economies and the state plays a central role in coordinating economic development.