Socialist Market Economy Flashcards
(11 cards)
What is the Socialist Market Economy?
A blend of socialist state control and market-driven economic policies. Introduced in 1993 as part of post-Tiananmen economic reforms. Key sectors (banking, energy) remain state-controlled, but private businesses are allowed.
What was Deng Xiaoping’s Southern Tour (1992)?
Deng traveled to Shanghai and Guangdong to rally support for market reforms. Bypassed party opposition in Beijing to push economic liberalization. Ensured the 14th Party Congress (1993) embraced the Socialist Market Economy.
How did post-1993 reforms differ from 1980s reforms?
1980s Reform (Phase 1): Experimental, gradual, focused on marginal changes. 1990s Reform (Phase 2): Systematic, built a full market economy framework. Shift from ‘growing out of the plan’ to fully replacing the planned economy.
What key economic policies were introduced after 1993?
✅ SOE restructuring – Some privatization and downsizing of inefficient State-Owned Enterprises.
✅ Tax reforms (1994) – Created a tax-sharing system to strengthen central control.
✅ Privatization of TVEs – Many Township & Village Enterprises were sold off.
What role did the private sector play after 1993?
The CCP officially embraced private businesses as part of the economy. 1997: 15th Party Congress declared private ownership ‘an important component’ of China’s economy. 1999: Constitution amended to recognize the non-public sector (private businesses).
What was the impact of fiscal reforms in 1994?
Shift from fiscal decentralization (‘eating in separate kitchens’) to recentralization. Abolished special local tax deals, strengthening national economic policies.
What were the major outcomes of post-1993 reforms?
Faster economic growth than in the 1980s. Rise of the private sector – More businesses, foreign investment. Higher income inequality – Gap between urban and rural areas widened. Decline of TVEs – Many rural enterprises shut down.
What’s still ‘socialist’ about China’s market economy?
State-Owned Enterprises (SOEs) still dominate major industries. Local governments control land acquisition and protect local businesses. The CCP still intervenes in employment and economic planning.
What is ‘Let People Get Rich First’?
Deng Xiaoping’s slogan advocating gradual economic reform, meaning that some regions and individuals would become wealthy before others, with the idea that their success would eventually lift the entire country’s economy. This justified income inequality as a necessary step toward modernization.
What is fiscal decentralization?
📌 Fiscal Decentralization – When the central government gives local governments more control over taxation and spending. This allows local authorities to make independent financial decisions based on their regional needs.
This policy, introduced in the 1980s, encouraged regional economic growth but also led to corruption, tax disparities, and local protectionism.
What is Shock Therapy
Shock therapy is a rapid transition from a planned economy to a market economy, involving sudden privatization, deregulation, and removal of state controls. It was most notably applied in Russia (1991) and Eastern Europe after the collapse of the Soviet Union.
