Market Socialism Revisited: The Case of Chinese State-Owned Enterprises

Abstract

This article explores the relevance of the Chinese experience of a socialist market economy (SME) to the idea and viability of market socialism (MS). It starts by reviewing the defining characteristics of MS as well as the key policy challenges in the transition from state socialism to market socialism and the debates around them. This is followed by an examination of the formulation of an SME by the Chinese Communist Party (CCP) and the actual implementation of an SME in China. Focusing on reform of the state industrial sector, especially through gufenzhi (shareholding) reform and stock market listing, the article then analyzes this experience in terms of the policy measures implemented and their impact on the sector and beyond. It concludes that the Chinese SME not only falls short of the aspiration of MS in terms of equality, but also suffers from a fundamental contradiction between the attempt to maintain the dominance of public ownership, which is integral to both MS and the SME, and the need to develop a full-fledged competitive market economy. The implications of these findings are discussed in the conclusion.