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.
History of the People's Republic of China (1949–1976)
Mao's social and cultural programs, including collectivization, were most popular in the early 1950s. However, China's strained relations with new Soviet leader Nikita Khrushchev and newfound contradictions between the Chinese and Soviet schools of communism seeded a novel and radical drive to reform China's economic system in its entirety. This split developed after Stalin's death in 1953 when new Soviet leader Nikita Khrushchev denounced him. The "secret speech" in 1956 stunned the communist world. China rejected de-Stalinization and in fact displayed large Stalin portraits at the May Day celebrations that year. Mao declared that despite some faults, Stalin had basically been a good, well-meaning Marxist. He felt that the Soviets were not treating China as an equal partner. Cultural differences also contributed to friction between the two communist giants. Khrushchev's idea of peaceful competition with the United States rather than overt hostility did not resonate well with Beijing. Mao said that "Do you think the capitalists will put down their butcher knife and become Buddhas?"