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.
Primary stage of socialism
While the CPC pursued non-orthodox economic policies, it believed the party would be able to safeguard China's goal of socialist development by transforming Marxism into a dominant value system. This was reflected by the introduction of the term "socialist spiritual civilization", a concept introduced in 1981 and mentioned in the Political Report to the 13th National Congress. The main function of socialist spiritual civilization was to check against the dangers of ideological retreat in the party's effort to progress toward socialism. A CPC resolution in 1986 said, "we will be not able to guarantee the socialist direction of our modernization course, and our socialist society will lose its goals and ideals" if the party stopped upholding Marxist doctrine. However, because the material base, officially referred to as material civilization, created by the economic reforms did not conform with Marxist analysis of socialism, the CPC concluded that in the new era Marxism would be given the role as the dominant value system, which entailed that other value systems could be accepted but these systems could not negate Marxism.