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In his report to the 17th Chinese Communist Party conference, President Hujintao spoke of combining the socialist system with the market economy. What is the socialist economic system? And what is the market economy? The basic economic system is determined by production relations, especially by the ownership of means of production. In our primary stage of socialism this means that public ownership is dominant, while different economic sectors develop side by side, assuring the construction of an all-round welloff society and the realization of socialist modernization in China.
The market economy is only an economic mechanism used by the government to achieve certain socialist goals that can be restricted by it if it fails to achieve them - the Chinese government enjoys more macroeconomic control of the economy than any capitalist social democracy ever has. In fact, the production and circulation of commodities exist in very different economic systems.
Prof. Yang writes that "capitalism consists of a market economy with private ownership and a correlated system of distribution." So he regards the market economy as a main feature of capitalism. Yet, he also treats the market economy as an independent economic system and puts it on the same level with socialism when he says: "The theory and practice of the socialist market economy, fundamentally surmounting the limitations of capitalism, combine the superiority of the economic system of socialism with the advantages of the market economy." This is obviously self-contradictory and leads to many misunderstandings about our economic system.
The socialist economic system at its primary stage is explicidy stipulated in Article 6 of the Constitution. "The basis of the socialist economic system of the People's Republic of China is socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people. ... In the primary stage of socialism, the state upholds the basic economic system with public ownership remaining dominant and diverse forms of ownership developing side by side." In other words, the state, Party and people uphold socialist production relations, adjust mechanisms like the market to the situation and guarantee against a capitalist restoration.
It is fanciful to think, as both ultra-leftists and social democrats do, that because we use the market mechanism and have...