SOCIALIST MARKET ECONOMY
Shen Pengfei, a 29-year-old resident of Shangrao County in east China's Jiangxi Province, is used to seeing supermarket shelves spilling over with merchandise. As a young person accustomed to carrying around cash, he can barely comprehend the way goods used to be purchased in China.
His mother Chen Guolan, now 56 years old, bitterly recalls the grain and clothing coupons that she and her countrymen had to use in the old days.
Chen, a retired saleswoman, said that coupons were part of daily life in the years of China's planned economy, when shortages of goods made life difficult. China imposed a state monopoly on the purchase and sale of goods during the shortages; everybody had to use a combination of cash and coupons to purchase daily necessities. Long lines in front of stores were commonplace.
"In the old days, there were food coupons to buy beans, salt and meat; clothing coupons to buy fabric and cotton, and other coupons for soap, matches, coal and gas," said Chen, who still keeps hundreds of the coupons.
The country's planned economy worked for some time, but its flaws created obstacles for China's development. The mixed functions of government and enterprises, egalitarianism in distribution, and other problems resulted in low industrial efficiency, low agricultural output and stagnant living standards.
China officially abolished grain coupons in 1993, a milestone in its shift from being a planned economy to being a market economy.
"Considering the situation at that time, going with a market-oriented economic system was necessary to reform the economic system," said Ma Zhihui, head of the economics research institute of the Jiangxi Provincial Academy of Social Sciences.
The CPC explicitly stated that it would create a socialist market economy at its 14th National Congress in October 1992. Observers believe this reflected the CPC's flexibility and innovation at the time.
In dogmatic views of communism, market economies are considered to be specific to capitalism. Even discussing market economics was taboo at one time.
However, when late Chinese leader Deng Xiaoping conducted an inspection tour of south China in 1992, he said "planned economies are not equivalent to socialism, because there is also planning under capitalism. Market economies are not equivalent to capitalism, because there are markets under socialism as well. Planning and marketing are both economic means."
Deng, who is widely regarded as the chief architect of China's period of reform and opening-up, greatly boosted efforts for the reformation of China's economic system with his remarks. However, the creation of a market economy under China's existing socialist structure was an arduous task.
"There were no examples to follow. The CPC was learning and exploring during the process. It combined foreign experiences that were absorbed in the early days with China's condition at the time. Through continuous reforms and improvement, it found a path suited to China's national condition and development," said Ding Yuanzhu, deputy director of the Department of Policy-Making Consultation of the Chinese Academy of Governance.
A main feature of the country's socialist market economy is the joint impact of the government and the market itself. In socialist market economies, the government uses macro-level control mechanisms to restrain the spontaneity and blindness of the market. This feature allowed China to withstand the 1997 Asian financial crisis and the 2008 global financial crisis, Ding said.
"The facts have shown that it is a path of success," said Zhang Liqun, a research fellow specializing macro-economics at the Development Research Center of the State Council, China's Cabinet.
The creation of a socialist market economy had an incredible effect on the country's development. China's GDP ballooned from 2.4 trillion yuan in 1992 to 39.8 trillion yuan in 2010. China's international status and the living standard of its people improved accordingly.
However, some economic experts have said that market-oriented reforms in some key areas have yet to be completed. They say that the CPC needs greater wisdom and a broader vision in order to allow the country to continue to develop in the face of complicated international situations.
"The root cause of some of the problems that China now faces is the inadequacy of market-based reforms, which has left systemic problems unsolved. It is important to improve the way these reforms are designed, including market system reforms," Ding said.
In the past, various social and economic systems in China were reformed from bottom to top. However, today's grassroots-level governments might lack the momentum to make reforms in this fashion, Zhang Liqun said.
He said that reforms in taxation, income distribution and the relationship between the government and the market can only come from the top.
Zhang is also concerned about the success of the transformation of China's economic development pattern.
"If the transformation fails, China's development will slow down. Social conflicts will sharpen, creating less room for development," he said.
Chang Xiuze, a researcher at the Macroeconomics Institute of the National Development and Reform Commission, said the transformation of China's development will depend on the reform of its economic system and mechanisms.
After three decades of experience in reform, Chinese authorities are aware of the defects of traditional economic systems and how to reform them. Recently proposed reforms will penetrate deeper and become institutionalized as the CPC vows to push forward reform in all areas with "greater resolution and courage" over the next five years.
Experts believe that the CPC has the ability to draw on collective wisdom in the face of challenges, adapt to changes and implement its decisions with efficiency. Despite the challenges facing it, the CPC will advance its reforms by using a practical, flexible and open-minded style of governance.
Zhang Liqun said the country's socialist market economy is not a fixed mode pursued by the CPC. "It is a path of reform that is meant to keep pace with the times. Deep-rooted problems will be solved through reforms when the time comes," Zhang said.
"The success of the socialist market economy is an important contribution to the world. It was made by the Chinese people under the CPC's leadership," said Prof. Xie Chuntao in the book "Why and How the CPC Works in China."
