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.
Criticism of capitalism
In mainland China, differences in terminology sometimes confuse and complicate discussions of Chinese economic reform. Under Marxist ideology, capitalism refers to a stage of history in which there is a class system in which the proletariat is exploited by the bourgeoisie. Officially, according to the Chinese governments stateideology, China is currently in the primary stage of socialism. However, because of Deng Xiaoping and subsequent leaders' Chinese economic reforms, instituting pragmatism within policy, China has undertaken policies that are commonly considered capitalistic, including employing wage labor, increasing unemployment to motivate those who are still working, transforming state owned enterprises into joint stock companies and encouraging the growth of the joint venture and private capitalist sectors. A contrary Marxist view would describe China as just another variant of capitalism (state capitalism), much like the former Soviet Union, which was also claiming to be operating on principals of socialism. This is echoed by what Mao Zedong termed "capitalist roaders", who he argued existed within the ruling party structures and would try to restore the bourgeoisie and thus their class interests to power reflected in new policies while only keeping the outer appearance of socialism for legitimacy purposes. Deng Xiaoping was identified as one of these "capitalist roaders" during the Cultural Revolution, when he was placed under house arrest.