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.
Sino-Soviet split
The Sino-Soviet split allowed only written communications between the quarreling socialist countries; thus, the PRC and the USSR supported their geopolitical actions with formal statements of ideology concerning the true road to world communism, that is the general line of the party. In June 1963, the PRC published "The Chinese Communist Party's Proposal Concerning the General Line of the International Communist Movement", to which the USSR replied with the "Open Letter of the Communist Party of the Soviet Union". In 1964, as a theoretician of Communism, Chairman Mao said that, in light of their differences of interpretation of Orthodox Marxism, a counter-revolution in the USSR had re-established capitalism; consequently, the USSR and then the Warsaw Pact countries broke relations with the People's Republic of China .