Analysis
Despite the official designation of "socialism", analysts often describe the Chinese economy as a form of state capitalism.
One analysis carried out by the Global Studies Association at the DePaul University finds that the Chinese economy does not constitute a form of socialism when socialism is defined as a planned economy where production for use has replaced production for profit, or when it is defined as a system where the working-class is the dominant class, and when it is defined as self-management or workplace democracy. However, it also finds that capitalism is not the dominant mode of organization in the Chinese economy, suggesting it is a partially pre-capitalist, agrarian system where almost 50% of its population is engaged in agricultural work.
Other Marxist analyses point out that the current Chinese system contains capitalist commodity relations in production, dis-empowers the working class, contributing to a sharp increase in social inequality and the growing size and political power of a capitalist class. Classical Marxists believe a "socialist commodity economy" is contradictory. Other socialists believe the Chinese have embraced many elements of market capitalism, specifically commodity production, resulting in a full-blown capitalist economic system. Although many enterprises are nominally publicly-owned, the profits are retained by the enterprises and used to pay managers excessively high salaries rather than being distributed amongst the population.
Proponents of the socialist market economy compare it to the New Economic Policy in Soviet Russia that introduced market-oriented reforms while maintaining state-ownership of the 'commanding heights' of the economy. The reforms are justified through the belief that changing conditions necessitate new strategies for socialist development. According to Li Rongrong in 2003, chairman of the State-Owned Assets Supervision and Administration Commission of the State Council,
Public ownership, as the foundation of the socialist economic system, is a basic force of the state to guide and promote economic and social development and a major guarantee for realising the fundamental interests and the common prosperity of the majority of the people… The state owned economy has taken a dominant place in major trades that have a close bearing on the country’s economic lifeline and key areas, and has propped-up, guided and brought along the development of the entire socio-economy. The influence and control capacity of SOEs have further increased. State owned economy has played an irreplaceable role in China’s socialist modernisation drive.Read more about this topic: Socialist Market Economy
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