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
On 5 May 1978, the article "Putting into Effect the Socialist Principle of Distribution According to Work" (贯彻执行按劳分配的社会主义原则) elaborated on the idea that China was still at the first stage of reaching pure communism and that it had not become a truly socialist society. The article was written by members in the State Council's Political Research Office led by economist Yu Guangyuan on the orders of Deng Xiaoping so as to "criticize and repudiate" the beliefs of the communist left. After reading it, Deng himself authored a brief memo saying that it was "well-written, and shows that the nature of distribution by labor is not capitalist, but socialist [...] [and] to implement this principle, many things are to be done, and many institutions to be revived. In all, this is to give incentives for us to do better". The term reappeared at the 6th plenum of the 11th Central Committee on 27 June 1981 in the document "Resolution on Certain Questions in the History of our Party since the Founding of the PRC". Hu Yaobang, the General Secretary of the Communist Party of China, used the term in his report to the 12th National Congress on 1 September 1982. It was not until the "Resolution Concerning the Guiding Principle in Building Socialist Spiritual Civilization" at the 6th plenum of the 12th Central Committee that the term was used in the defense of the economic reforms which were being introduced.