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Market Socialism

Updated on February 9, 2012

What is this market?

Market Socialism is a concept used by China to define its economic system in transition from a planned economy to a market economy. Although this economic transition has been started yet in the government of Mao Zedong, the concept of "market socialism" has been used only in the mid-1980s and widespread only in the 1990s. Today Cuba states adopt this model, while China claims to have a typical market economy, although regulated by the state. Theoretically, the so-called market socialism is to a market economy where regulation, guidance and initiative of the state outweighs the private sector.

Economic planning: government centralizes all the planning of investment and market regulation, allowing the free private enterprise in areas that it considers relevant. Very similar to the developmental model of capitalism politically biased.

Ownership of the means of production, the government remains the majority owner of companies, factories and industries considered strategic, although in most cases as majority shareholder and not as a sole proprietor (typical state-owned). Land ownership remains the prerogative of the state, which gives farmers legally use (preventing them from selling these properties). The financial system continues to be controlled directly by the state which is a major shareholder, often a majority, the majority of banks and financial institutions.

Unlike the Soviet Union tried to make the political transition to a liberal democratic regime simultaneously to the economic transition to market capitalism, China has been making economic reforms at a pace much faster than political reforms. The government remains politically controlled by the Communist Party, because even with the permission of operation of other parties, these are insignificant. The Chinese Communist Party controls the pace and speed of economic liberalization, ensuring high rates of economic growth, without much political friction. The long-term policy priority of the party is not to implement a process of rapid opening to a democratic regime, something which is considered high risk. The strategy has been to maintain the territorial integrity and defense of Chinese reunification of China, which has guided the logic of "one country, two systems" (for Hong Kong and Macau), and directs the processes of political opening slowly and to allow the gradual rapprochement with Taiwan.

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