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.
Communist Party of China
Deng did not believe that the fundamental difference between the capitalist mode of production and the socialist mode of production was central planning versus free markets. He said, "A planned economy is not the definition of socialism, because there is planning under capitalism; the market economy happens under socialism, too. Planning and market forces are both ways of controlling economic activity". Jiang Zemin supported Deng's thinking, and stated in a party gathering that it did not matter if a certain mechanism was capitalist or socialist, because the only thing that mattered was whether it worked. It was at this gathering that Jiang Zemin introduced the term socialist market economy, which replaced Chen Yun's "planned socialist market economy". In his report to the 14th National Congress Jiang Zemin told the delegates that the socialist state would "let market forces play a basic role in resource allocation." At the 15th National Congress, the party line was changed to "make market forces further play their role in resource allocation"; this line continued until the 3rd Plenary Session of the 18th Central Committee, when it was amended to "let market forces play a "decisive" role in resource allocation." Despite this, the 3rd Plenary Session of the 18th Central Committee upheld the creed "Maintain the dominance of the public sector and strengthen the economic vitality of the State-owned economy."