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
Despite admitting that globalization developed through the capitalist system, the party's leaders and theorists argue that globalization is not intrinsically capitalist, the reason being that, if globalization were purely capitalist, it would exclude an alternate socialist form of modernity. Globalization, as with the market economy, therefore does not have one specific class character (either socialist or capitalist) according to the party. The instance that globalization is not fixed in nature, comes from Deng's insistence that China can pursue socialist modernization by incorporating elements of capitalism. Because of this there is considerable optimism within the CCP that despite the current capitalist dominance of globalization, globalization can be turned into a vehicle supporting socialism. This event will occur through capitalism's own contradictions. These contradictions are, according to party theorist Yue Yi from the Academy of Social Sciences, "that between private ownership of the means of production and socialised production. This contradiction has manifested itself globally as the following contradictions; the contradiction between planned and regulated national economies and the unplanned and unregulated world economy; the contradiction between well-organized and scientifically managed Transnational Corporations (TNCs) and a blindly expanding and chaotic world market; the contradiction between the unlimited increase of productive capacity and the limited world market; and the contradiction between sovereign states and TNCs." It was these contradictions, argues Yue Yi, that led to the dot-com bubble of the 1990s, that has caused unbalanced development and polarization, and widened the gap between rich and poor. These contradictions will lead to the inevitable demise of capitalism and the resultant dominance of socialism.