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)
Mao's social and cultural programs, including collectivization, were most popular in the early 1950s. However, China's strained relations with new Soviet leader Nikita Khrushchev and newfound contradictions between the Chinese and Soviet schools of communism seeded a novel and radical drive to reform China's economic system in its entirety. This split developed after Stalin's death in 1953 when new Soviet leader Nikita Khrushchev denounced him. The "secret speech" in 1956 stunned the communist world. China rejected de-Stalinization and in fact displayed large Stalin portraits at the May Day celebrations that year. Mao declared that despite some faults, Stalin had basically been a good, well-meaning Marxist. He felt that the Soviets were not treating China as an equal partner. Cultural differences also contributed to friction between the two communist giants. Khrushchev's idea of peaceful competition with the United States rather than overt hostility did not resonate well with Beijing. Mao said that "Do you think the capitalists will put down their butcher knife and become Buddhas?"