Socialist market economy
사회주의 시장경제
The official term for the economic system of the People's Republic of China. It was formulated on 12 October 1992, when Jiang Zemin declared at the CPC's 14th Congress that the goal of economic reform was to build a "socialist market economy system", and entered the constitution in 1993. With public ownership and state enterprises predominant, the market is to play the decisive role in allocating resources while the party and government play their role better, in the current official wording. It replaced the "planned commodity economy" of 1984 and rested on the argument of Deng Xiaoping's 1992 southern tour that a planned economy is not the same as socialism and a market economy not the same as capitalism.
In depth
From planned commodity economy to market economy
The 1984 Decision on the Reform of the Economic Structure defined China's economy as a planned commodity economy, not a market economy regulated wholly by the market. In 1988 Zhao Ziyang said that commodity economy and market economy were the same thing, and that the detour was only because some could not accept the term market economy. After reform stalled following 1989, Deng Xiaoping said on his southern tour in 1992 that "a market economy is not the same as capitalism; socialism has markets too. A planned economy is not the same as socialism; capitalism has planning too." That October the 14th Congress changed the goal of reform to a socialist market economy system.
Liu Guoguang, vice-president of the Chinese Academy of Social Sciences, distinguished at the time between commodity economy, which refers to the exchange of products, and market economy, which refers to the allocation of resources: replacing "planned commodity economy" with "market economy" meant shifting resource allocation from mainly administrative planning to mainly the market. On 29 March 1993 the first session of the 8th National People's Congress wrote it into the constitution.