This is the million dollar question that has been asked about China's economic and trade system all the time. Last week, China's WTO Ambassador Dr. Zhang Xiangchen gave the following reply at the General Council meeting,
"Back in 1992, when China announced that it would build a socialist market economy, right in the Room W, a question was posed to a Chinese delegate, that is, what is a socialist market economy? I clearly remember this delegate replying that the socialist market economy was the market economy under the leadership of the Chinese Communist Party. 26 years passed since then, we have never changed our position. "
nterestingly, this is quite different from the official explanation given by the Chinese government during its accession negotiation, which noted in an Apr 1988 submission to the GATT titled "THE PROGRESS AND OBJECTIVE OF CHINA'S ECONOMIC STRUCTURAL REFORM" that
"The term "planned commodity economy" means socialist commodity economy. It may be translated into "socialist market economy". The crucial difference between a socialist market economy and a capitalist market economy lies in the difference of ownership. Public ownership plays a predominant role in China while private ownership serves as a foundation for capitalist countries. However, in terms of economic mechanisms such economic principles as comparative advantage, supply and demand relationship and market competition must be observed in developing market economy regardless of different social and economic systems. In short, the new system of socialist commodity economy China pursues is the one in which "the state regulates the market and the market orientates enterprises" by integrating both forms of regulations through planning and the market so as to ensure the predominant role of public ownership. By the so called "the state regulates the market and the market orientates enterprises", it denotes that the state regulates the total supply and demand of the society and the equilibrium between them through industrial policies, economic means like taxation and monetary instrument, legal means and necessary administrative means, so as to create a favourable economic environment for competition among enterprises guide them towards correct management decisions."
According to the Chinese constitution, public ownership is defined as "ownership by the whole people and collective ownership by the working people". That apparently is quite different from Party leadership, as the Party, though the largest in the world with 90 million members, only accounts for about 6% of the whole population. As a counter-argument, one could point to para. 2 of Art. 1 of the Constitution, which notes that "the leadership of the Communist Party of China is most fundamental characteristics of Socialism with Chinese characteristics", and deducts that,
- Socialism = Party leadership
- Socialist market economy = market economy with Party leadership.
The problem with this logic is that, according to Art. 11 of the Constitution, non-public economies such as sole-proprietorship and private economies are also important components of the Socialist market economy, but it would be quite odd to suggest that the Communist Party also leads such non-public economies, as the CPC constitution states that its ultimate aim is achieving Communism, which according to the Communist Manifesto "may be summed up in the single sentence: Abolition of private property."
Am I missing something here?
