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.
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.