Socialist Market Economy

Introduction

• China's economic system features a significant role for the State and the CCP, guided by the doctrine of the socialist market economy.

• Basic features include: Dominant State-ownership, extensive economic planning, interventionist industrial policies, and the use of various tools to pursue Party objectives.

Legal Framework

• Defined by the Constitution and CCP Constitution's General Program.

• Essential laws, plans, and regulations further define the status and conduct of economic actors.

The Constitution

• Since the PRC's founding, four constitutions have been enacted, reflecting the CCP's changing political objectives.

• The current Constitution, promulgated in 1982 and amended in 2018, introduced the concept of the socialist market economy in 1993.

• Key elements:

  • China is in the primary stage of socialism, modernizing along the road of Chinese-style socialism.

  • Guided by the CCP and Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory, etc.

  • Adherence to people’s democratic dictatorship and the socialist road.

  • Perseverance in reform, opening to the outside world, and improving socialist institutions.

  • Developing the socialist market economy to transform China into a prosperous country.

• Article 6: Socialist public ownership is the basis, with diverse forms of ownership and distribution coexisting.

• Article 15: The State practices the socialist market economy, strengthening legislation and macro-regulation.

• Article 7: The State-owned economy is the leading force.

• Article 11: Non-public sectors are an important component, protected, encouraged, and supervised by the State.

• The Constitution assigns an interventionist role to the State, with the CCP retaining the power to interfere.

Constitution of the Communist Party of China

• The General Program reaffirms the socialist market economy and the CCP's leading role.

• The CCP leads the development of the socialist market economy in both the public and non-public sectors.

• The roles of the State and Party are indistinguishable, with key policy initiatives stemming from the CCP.

• The 14th Five Year Plan explicitly lists the leading role of the CCP as the first guiding principle.

• The CCP persists in its total leadership, refining institutional mechanisms.

Laws, Plans, and Regulations

• Key legislation reflects the Constitution on the socialist market economy.

The Civil Code

• The 2020 Civil Code affirms the central place of the socialist market economy.

• Article 1: Protects rights, regulates civil-law relations, maintains order, and promotes socialist values.

• Article 206: Upholds socialist economic systems and protects equal rights of all market participants.

Company Law

• Article 1: Standardizes company activities, protects rights, and promotes the socialist market economy.

• Criminal record for disrupting the socialist market economy disqualifies individuals from holding company positions.

Law on the State-Owned Assets of Enterprises

• Article 1: Safeguards the basic economic system, expands the State-owned sector, and promotes the socialist market economy.

• The legal framework sets out the State and CCP's control over SOEs.

The 18th, 19th and 20th Party Congress

• In 2013, the 18th Party Congress announced a comprehensive reform program.

• The 3rd Plenum Decision focused on balancing the government and market roles.

• It reaffirmed public ownership as dominant and strengthened the Party's leadership.

• The 19th Party Congress in 2017 further emphasized the Party's leadership.

• President Xi's report reiterated the Party's leadership and the State's role in shaping public and non-public sectors.

• The 20th Party Congress in 2022 consolidated President Xi’s power and emphasized CCP dominance, focusing on socialist modernization and technological self-reliance.

• The Chinese economic model, characterized by the Party's dominance, is projected as superior to Western models.

14th FYP

• Confirms adherence to the socialist market economy, guided by Marxism-Leninism and Xi Jinping Thought.

• Aims to refine the socialist market economy and complete a high-standard market system.

• The State invokes the role of markets but maintains an active role, with the CCP's leadership remaining central.

Basic Features of the Socialist Market Economy

General Features of Economic Policy

• Before 1978, China had a closed, state-planned economy.

• The move to a socialist market economy created a hybrid system.

• China's state capitalism supports local industries with financial aid.

• China's success owes much to the Maoist era's strong party-state.

• The model promotes SOEs but supports emerging industries regardless of ownership.

• China uses industrial policies to achieve economic goals.

• The government focuses on upgrading the economy and technological self-reliance, emphasizing 'dual circulation'.

• The 'common prosperity' policy reinforces the political leadership of China’s economic development.