Establishing the Socialist Market Economy

Since reform and opening-up began, China’s economic reform had moved from a “planned economy supplemented by market regulation” to a “planned commodity economy.” Deng Xiaoping’s Southern Tour Talks removed the ideological constraint of treating the planned and market economies as questions of basic social system. In October 1992 the 14th National Congress of the Communist Party of China set the goal of economic reform as establishing a socialist market economy, with the market playing a basic role in allocating resources under state macroeconomic regulation. In March 1993 the first session of the Eighth National People’s Congress passed a constitutional amendment writing “the state practices a socialist market economy” into the Constitution. In November 1993 the Third Plenary Session of the 14th Central Committee adopted the Decision on Several Issues Concerning the Establishment of a Socialist Market Economy, outlining its basic framework, including a modern enterprise system, a unified and open market system, a macroeconomic regulation system and a social security system. In 1997 the 15th Congress stated that public ownership as the mainstay with diverse forms of ownership developing together is the basic economic system of the primary stage of socialism. By the end of the 20th century the socialist market economy had been initially established. In 2013 the Third Plenary Session of the 18th Central Committee called for the market to play the decisive role in allocating resources while the government plays its role better. Establishing the socialist market economy was a major breakthrough in China’s economic reform, greatly freeing and developing productive forces and driving sustained, rapid economic growth.