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.
Ideology of the Communist Party of China
The term "socialism with Chinese characteristics" was added to the General Program of the party's constitution at the 12th National Congress, without a definition of the term. At the 13th National Congress, held in 1987, Zhao Ziyang, the CCP General Secretary, claimed that socialism with Chinese characteristics was the "integration of the fundamental tenets of Marxism with the modernization drive in China" and was "scientific socialism rooted in the realities of present-day China". By this time the CCP believed that China was in the primary stage of socialism, and therefore needed market relations to develop into a socialist society. Two years earlier, Su had tried to internationalize the term "primary stage of socialism" by claiming that socialism contained three different production phases. China was currently in the first phase, while the Soviet Union and the remaining Eastern Bloc countries were in the second phase. Because China was in the primary stage of socialism, Zhao argued that in "[China] for a long time to come, we shall develop various sectors of the economy, always ensuring the dominant position of the public sector". Further, some individuals should be allowed to become rich "before the objective of common prosperity [pure communism] is achieved". Lastly, during the primary stage of socialism, planning would no longer be the primary means of organization of the economy. Upon hearing this remark, Chen Yun, a cautious reformer and the second-most powerful politician in China, walked out of the meeting.