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.
Socialism with Chinese characteristics
The term entered common usage during the era of Deng Xiaoping and was largely associated with Deng's overall program of adopting elements of market economics as a means to foster growth using foreign investment and to increase productivity (especially in the countryside where 80% of China's population lived) while the Communist Party of China retained both its formal commitment to achieve communism and its monopoly on political power. In the party's official narrative, socialism with Chinese characteristics is Marxism–Leninism adapted to Chinese conditions and a product of scientific socialism. The theory stipulated that China was in the primary stage of socialism due to its relatively low level of material wealth and needed to engage in economic growth before it pursued a more egalitarian form of socialism, which in turn would lead to a communist society described in Marxist orthodoxy.