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.
Socialism with Chinese characteristics
At the 13th National Congress, acting General Secretary Zhao Ziyang on behalf of the 12th Central Committee delivered the report "Advance Along the Road of Socialism with Chinese characteristics". He wrote that China was a socialist society, but that socialism in China was in its primary stage, a Chinese peculiarity which was due to the undeveloped state of the country's productive forces. During this phase of development, Zhao recommended introducing a planned commodity economy on the basis of public ownership. The main failure of the communist right according to Zhao was that they failed to acknowledge that China could reach socialism by bypassing capitalism. The main failure of the communist left was that they held the "utopian position" that China could bypass the primary stage of socialism in which the productive forces are to be modernized.