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.
Chinese social structure
In a speech made shortly after the communist's victory in 1949, Mao Zedong claimed that Chinese society had four distinct social classes; this is often cited as the reason why the Chinese flag has four small stars on it. In his On the People's Democratic Dictatorship speech he defined the Chinese people as consisting of four social classes, also referred to in Asian cultures as the four occupations (士農工商) shi, nong, gong, shang ("the working class, the peasantry, the urban petty bourgeoisie and the national bourgeoisie". Mao made the claim that these classes had been unified by the revolution, but severe class stratification still existed in post 1949 China, especially when comparing the rights ordinary citizen to the extreme privileges afforded to the elites of the Communist party.