Editing Socialist market economy

Lenin's NEP, introduced in the early 1920s, was a strategic retreat from the more rigid [[war communism]], aiming to revive the economy by allowing some degree of private enterprise and market dynamics, especially in agriculture. This policy was crucial in rebuilding Russia's economy by encouraging small-scale trade and farming, which helped stabilize the nation and modernize its agricultural sector. Lenin believed that incorporating market strategies did not compromise the socialist nature of the state but was a necessary tactic to develop the country's productive forces.<ref>{{Citation|author=Vladimir Lenin|year=1922|title=Role and functions of the trade unions under the New Economic Policy|quote=The New Economic Policy introduces a number of important changes in the position of the proletariat and, consequently, in that of the trade unions. The great bulk of the means of production in industry and the transport system remains in the hands of the proletarian state. This, together with the nationalization of the land, shows that the New Economic Policy does not change the nature of the workers’ state, although it does substantially alter the methods and forms of socialist development for it permits of economic rivalry between socialism, which is now being built, and capitalism, which is trying to revive by supplying the needs of the vast masses of the peasantry through the medium of the market.

Changes in the forms of socialist development are necessary because the Communist Party and the Soviet government are now adopting special methods to implement the general policy of transition from capitalism to socialism and in many respects are operating differently from the way they operated before [...] In particular, a free market and capitalism, both subject to state control, are now being permitted and are developing; on the other hand, the socialized state enterprises are being put on what is called a profit basis, i. e., they are being reorganized on commercial lines [...]}}</ref>

The underlying philosophy for both Lenin and Deng was based on [[Marxism|Marxist]] principles, acknowledging that socialism could incorporate elements of capitalism pragmatically during its developmental phase.<ref>{{Citation|author=Vladimir Lenin|year=1918|title="Left-wing" childishness|quote=Socialism is inconceivable without large-scale capitalist engineering based on the latest discoveries of modern science. It is inconceivable without planned state organisation, which keeps tens of millions of people to the strictest observance of a unified standard in production and distribution. We Marxists have always spoken of this, and it is not worth while wasting two seconds talking to people who do not understand even this (anarchists and a good half of the Left Socialist-Revolutionaries).}}</ref> [[Karl Marx|Marx]] himself noted that the lower stages of communism would necessarily carry remnants of the capitalist society from which it emerged, necessitating a period during which individual contributions and remunerations would be aligned with one's work.<ref>{{Citation|author=Karl Marx|year=1875|title=Critique of the Gotha Program|quote=What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges. Accordingly, the individual producer receives back from society – after the deductions have been made – exactly what he gives to it. [...]

But these defects are inevitable in the first phase of communist society as it is when it has just emerged after prolonged birth pangs from capitalist society. Right can never be higher than the economic structure of society and its cultural development conditioned thereby.}}</ref> Engels further supported this view, recognizing the gradual transformation required in transitioning from capitalist to communist societies, contingent upon the maturation of productive forces.<ref>{{Citation|author=Friedrich Engels|year=1847|title=The principles of communism|quote=Will it be possible for private property to be abolished at one stroke?

No, no more than existing forces of production can at one stroke be multiplied to the extent necessary for the creation of a communal society.

In all probability, the proletarian revolution will transform existing society gradually and will be able to abolish private property only when the means of production are available in sufficient quantity.}}</ref>

The [[New Democratic Revolution|Chinese revolution of 1949]] marked a pivotal moment in global communist history, with the [[Communist Party of China]] (CPC), led by [[Mao Zedong]], initiating widespread socialist reforms across a nation previously marred by dynastic rule and imperial subjugation from both Europe and Japan. The initial decades under communist rule saw significant strides in economic development and infrastructure, with industry growth from 1951 to 1975 averaging 82.5%, and agriculture's share in the economy dropping significantly. Life expectancy dramatically increased from 35 years in 1949 to 63 years by 1976, reflecting substantial social improvements.<ref>{{Citation|author=Mobo Gao|year=2008|title=The battle for China's past: Mao and the Cultural Revolution|page=81|quote=The Chinese people made a revolution led by the CCP, the most important leader of which was Mao, a revolution in which Chang’s parents participated, a revolution from which Chang herself benefited. It was due to this revolution that the average life expectancy of the majority Chinese rose from 35 in 1949 to 63 by 1975 (Bergaglio 2006) in a space of less than 30 years. It was a revolution that brought unity and stability to a country that had been plagued by civil wars and foreign invasions, and a revolution that laid the foundation for China to become the equal of the great global powers. It was a revolution that carried out land reform, promoted women’s status, improved popular literacy, and eventually transformed Chinese society beyond recognition (Selden et al 1991, Selden, 1971, Selden and Eggleston 1979, Selden 1988).|publisher=Pluto Press|isbn=9780745327808|lg=http://libgen.rs/book/index.php?md5=F3B2B6834C81EF8F7315CB42A5FB7A29}}</ref>

Despite these gains, China faced critical challenges, including underdeveloped [[productive forces]] and vulnerability to natural disasters, exacerbated by the [[Sino-Soviet split]] which isolated China from much of the socialist bloc. [[Deng Xiaoping]], emerging as a key leader after Mao's death, diagnosed these issues in a 1979 speech, emphasizing China's struggle with its large population and limited arable land, which hindered sufficient production for basic needs.<ref>{{Citation|author=Deng Xiaoping|year=1979|title=Uphold the Four Cardinal Principles|quote=First, we are starting from a weak base. The damage inflicted over a long period by the forces of imperialism, feudalism and bureaucrat-capitalism reduced China to a state of poverty and backwardness. However, since the founding of the People’s Republic we have achieved signal successes in economic construction, established a fairly comprehensive industrial system and trained a body of technical personnel. From Liberation to last year, the average annual rate of growth in our industry and agriculture was fairly high by world standards. Nonetheless, because of our low starting point, China is still one of the world’s poor countries. [...]

Second, we have a large population but not enough arable land. Of China’s population of more than 900 million, 80 per cent are peasants. While there are advantages to having a large population, there are disadvantages as well. When production is insufficiently developed, it poses serious problems with regard to food, education and employment. We must greatly increase our efforts in family planning; but even if the population does not grow for a number of years, we will still have a population problem for a certain period. Our vast territory and rich natural resources are big assets. But many of these resources have not yet been surveyed and exploited, so they do not constitute actual means of production. Despite China’s vast territory, the amount of arable land is limited, and neither this fact nor the fact that we have a large, mostly peasant population can be easily changed. This is a distinctive characteristic which we must take into account in carrying out our modernization programme.}}</ref>

After a party struggle against the [[Gang of Four]], the [[Central Committee of the Communist Party of China]] led by Deng Xiaoping began implementing policies of [[Reform and Opening Up|opening the economy]] to foreign [[capital]], in an effort to [[Four Modernizations|modernize the Chinese economy]].<ref>{{Citation|author=Deng Xiaoping|year=1979|title=We can develop a market economy under socialism|title-url=https://dengxiaopingworks.wordpress.com/2013/02/25/we-can-develop-a-market-economy-under-socialism/|quote=Modernization does represent a great new revolution. The aim of our revolution is to liberate and expand the productive forces. Without expanding the productive forces, making our country prosperous and powerful, and improving the living standards of the people, our revolution is just empty talk. We oppose the old society and the old system because they oppressed the people and fettered the productive forces. We are clear about this problem now. The Gang of Four said it was better to be poor under socialism than to be rich under capitalism. This is absurd.

Of course, we do not want capitalism, but neither do we want to be poor under socialism. What we want is socialism in which the productive forces are developed and the country is prosperous and powerful. We believe that socialism is superior to capitalism. This superiority should be demonstrated in that socialism provides more favourable conditions for expanding the productive forces than capitalism does. This superiority should have become evident, but owing to our differing understanding of it, the development of the productive forces has been delayed, especially during the past ten-year period up to 1976. In the early 1960s, China was behind the developed countries, but the gap was not as wide as it is now. Over the past 11 or 12 years, from the end of the 1960s through the 1970s, the gap has widened because other countries have been vigorously developing their economies, science and technology, with the rate of development no longer being calculated in terms of years, not even in terms of months, but in terms of days. For a fairly long period of time since the founding of the People’s Republic, we have been isolated from the rest of the world. For many years this isolation was not attributable to us; on the contrary, the international anti-Chinese and anti-socialist forces confined us to a state of isolation. However, in the 1960s when opportunities to increase contact and cooperation with other countries presented themselves to us, we isolated ourselves. At last, we have learned to make use of favourable international conditions.|series=Selected Works of Deng Xiaoping}}</ref> To achieve these goals, the Chinese government introduced market reforms through [[Special Economic Zones]] which were established in a few coastal regions that were allowed foreign investment, export-oriented industries, and decollectivized trade.<ref>{{Citation|author=Deng Xiaoping|year=1984|title=Make a success of Special Economic Zones and open more cities to the outside world|title-url=https://dengxiaopingworks.wordpress.com/2013/03/08/make-a-success-of-special-economic-zones-and-open-more-cities-to-the-outside-world/|quote=A special economic zone is a medium for introducing technology, management and knowledge. It is also a window for our foreign policy. Through the special economic zones we can import foreign technology, obtain knowledge and learn management, which is also a kind of knowledge. As the base for our open policy, these zones will not only benefit our economy and train people but enhance our nation’s influence in the world. Public order in Shenzhen is reportedly better than before, and people who slipped off to Hong Kong have begun to return. One reason is that there are more job opportunities and people’s incomes and living standards are rising, all of which proves that, in the final analysis, ethical progress is based on material progress.|series=Deng Xiaoping Selected Works}}</ref>

While simultaneously upholding the socialist path (according to Deng Xiaoping), upholding socialist public ownership, public land ownership and rejecting economic polarization. Common prosperity and the abolition of poverty/improving material quality of life, were also the two major decisive factors in why the socialist market economy was implemented.<ref>{{Citation|author=Deng Xiaoping|year=1985|title=Bourgeois liberalization means taking the capitalist road|title-url=https://dengxiaopingworks.wordpress.com/2013/03/18/bourgeois-liberalization-means-taking-the-capitalist-road/|quote=One of the features distinguishing socialism from capitalism is that socialism means common prosperity, not polarization of income. The wealth created belongs first to the state and second to the people; it is therefore impossible for a new bourgeoisie to emerge. The amount that goes to the state will be spent for the benefit of the people, a small portion being used to strengthen national defence and the rest to develop the economy, education and science and to raise the people’s living standards and cultural level.}}</ref>

[[Reform and Opening Up|China's economic reforms]] were ideologically justified on the basis that the main issue facing [[socialism]] in the country was the underdevelopment of [[productive forces]].<ref>{{Citation|author=Deng Xiaoping|year=1980|title=To build socialism we must first develop the productive forces|title-url=https://dengxiaopingworks.wordpress.com/2013/02/25/to-build-socialism-we-must-first-develop-the-productive-forces/|quote=Revolution means carrying out class struggle, but it does not merely mean that. The development of the productive forces is also a kind of revolution — a very important one. It is the most fundamental revolution from the viewpoint of historical development. [...]

Over the past 30 years since the founding of the People’s Republic, we have laid the basic socialist foundation in agriculture, industry, and other areas. But we have a major problem, that is, we have wasted some time and our productive forces have developed too slowly. All revolution is designed to remove obstacles to the development of the productive forces.}}</ref> The reforms posited that as long as the state avoided bourgeois liberalization,<ref>{{Citation|author=Deng Xiaoping|year=1986|title=Take a clear-cut stand against bourgeois liberalization|title-url=https://dengxiaopingworks.wordpress.com/2013/03/18/take-a-clear-cut-stand-against-bourgeois-liberalization/|quote=The struggle against bourgeois liberalization will last for at least 20 years. Democracy can develop only gradually, and we cannot copy Western systems. If we did, that would only make a mess of everything. Our socialist construction can only be carried out under leadership, in an orderly way and in an environment of stability and unity. That’s why I place such emphasis on the need for high ideals and strict discipline. Bourgeois liberalization would plunge the country into turmoil once more. Bourgeois liberalization means rejection of the Party’s leadership; there would be no centre around which to unite our one billion people, and the Party itself would lose all power to fight. [...]

The struggle against bourgeois liberalization is indispensable. We should not be afraid that people abroad will say we are damaging our reputation. We must take our own road and build a socialism adapted to conditions in China — that is the only way China can have a future. We must show foreigners that China’s political situation is stable. If our country were plunged into disorder and our nation reduced to a heap of loose sand, how could we ever accomplish anything? The reason the imperialists were able to bully us in the past was precisely that we were a heap of loose sand.}}</ref> the [[Bourgeoisie|capitalist class]] would remain subordinate due to its own underdevelopment and the prevailing [[dictatorship of the proletariat]].<ref>{{Citation|author=Deng Xiaoping|year=1985|title=Reform is the only way for China to develop its productive forces|title-url=https://dengxiaopingworks.wordpress.com/2013/03/18/reform-is-the-only-way-for-china-to-developed-its-productive-forces/|quote=In the course of reform it is very important for us to maintain our socialist orientation. We are trying to achieve modernization in industry, agriculture, national defence and science and technology. [...] Socialism has two major requirements. First, its economy must be dominated by public ownership, and second, there must be no polarization.

Public ownership may consist of both ownership by the entire people and ownership by the collective. [...] At the same time, we allow a small private sector to develop, we absorb foreign capital and introduce advanced technology, we encourage Chinese and foreign enterprises to establish joint and cooperative ventures and we even encourage foreigners to set up wholly owned factories in China. [...]

As to the requirement that there must be no polarization, we have given much thought to this question in the course of formulating and implementing our policies. If there is polarization, the reform will have been a failure. Is it possible that a new bourgeoisie will emerge? A handful of bourgeois elements may appear, but they will not form a class.}}</ref> Deng Xiaoping emphasized the need to learn managerial skills and advanced technology from capitalist enterprises, which he believed would bolster the socialist economy without undermining it.<ref>{{Citation|author=Deng Xiaoping|year=1985|title=Reform is the only way for China to develop its productive forces|title-url=https://dengxiaopingworks.wordpress.com/2013/03/18/reform-is-the-only-way-for-china-to-developed-its-productive-forces/|quote=From such ventures workers get wages and the state collects taxes, and part of the income of the joint and cooperative ventures goes to the socialist sector. An even more important aspect of all these ventures is that from them we can learn managerial skills and advanced technology that will help us develop our socialist economy. This cannot and will not undermine the socialist economy. [...]}}</ref> Similarly, [[Vladimir Lenin]] advocated for learning economic management from capitalists, even if it meant to coexist with [[exploitation]], as a necessary step towards building a socialist republic.<ref>{{Citation|author=Vladimir Lenin|year=1921|title=The New Economic Policy and the tasks of the political education departments|quote=Get down to business, all of you! You will have capitalists beside you, including foreign capitalists, concessionaires and leaseholders. They will squeeze profits out of you amounting to hundreds per cent; they will enrich themselves, operating alongside of you. Let them. Meanwhile you will learn from them the business of running the economy, and only when you do that will you be able to build up a communist republic. Since we must necessarily learn quickly, any slackness in this respect is a serious crime. And we must undergo this training, this severe, stern and sometimes even cruel training, because we have no other way out.

You must remember that our Soviet land is impoverished after many years of trial and suffering, and has no socialist France or socialist England as neighbours which could help us with their highly developed technology and their highly developed industry. Bear that in mind! We must remember that at present all their highly developed technology and their highly developed industry belong to the capitalists, who are fighting us.}}</ref>  

[[Deng Xiaoping]] emphasized that socialism's superiority should enable [[Socialist state|socialist countries]] to outpace capitalist ones in economic growth, improving living standards and national strength.<ref>{{Citation|author=Deng Xiaoping|year=1980|title=To build socialism we must first develop the productive forces|title-url=https://dengxiaopingworks.wordpress.com/2013/02/25/to-build-socialism-we-must-first-develop-the-productive-forces/|quote=Since socialism is superior to capitalism, socialist countries should be able to develop their economies more rapidly than capitalist countries, improving their people’s living standards gradually and becoming more powerful.}}</ref> Likewise, [[Zhou Enlai]]'s concept of the [[Four Modernizations]], proposed as early as 1963, focused on the essential modernization of agriculture, industry, national defense, and science to build a robust socialist state.<ref>{{Citation|author=Zhou Enlai|year=1963|title=The key to building a powerful socialist country is to modernize science and technology}}</ref>

Zhou Enlai emphasized that the primary objective of socialism was to improve the material welfare and cultural life of the people, arguing that without establishing modern industries, agriculture, communications, transport, and defense, China could not overcome its economic backwardness or achieve its revolutionary goals. This focus reflects the idea that a socialist economy's fundamental aim is to fulfill the material and cultural needs of the population.<ref>{{Citation|author=Zhou Enlai|year=1954|title=Turning China into a powerful, modern, socialist, industrialized country|quote=The fundamental aim of this great people's revolution of ours is to liberate the productive forces of our country from the oppression of imperialism, feudalism, and bureaucrat-capitalism and, eventually, from the shackles of capitalism and the limitations of small-scale production. That will make it possible for the economy to advance rapidly and according to plan along the road to socialism, thus improving the people's material welfare and cultural life and strengthening the nation's independence and security. China's economy has been very backward. Unless we establish powerful, modern industry, modern agriculture, modern communications and transport, and a modern national defense, we shall neither shake off backwardness and poverty nor attain our revolutionary goals.}}</ref> [[Karl Marx]] held a similar view, arguing that real liberation requires substantial improvements in material conditions and productive forces.<ref>{{Citation|author=Karl Marx|year=1845|title=The German ideology|quote=We shall, of course, not take the trouble to enlighten our wise philosophers by explaining to them that the “liberation” of man is not advanced a single step by reducing philosophy, theology, substance and all the trash to “self-consciousness” and by liberating man from the domination of these phrases, which have never held him in thrall. Nor will we explain to them that it is only possible to achieve real liberation in the real world and by employing real means, that slavery cannot be abolished without the steam-engine and the mule and spinning-jenny, serfdom cannot be abolished without improved agriculture, and that, in general, people cannot be liberated as long as they are unable to obtain food and drink, housing and clothing in adequate quality and quantity. “Liberation” is an historical and not a mental act, and it is brought about by historical conditions, the development of industry, commerce, agriculture, the conditions of intercourse}}</ref>

In China, despite significant economic reforms initiated in 1976, public ownership has maintained a dominant role in shaping the economy, as outlined within the constitution of the country.<ref>{{Citation|year=2018|title=Constitution of the People's Republic of China|title-url=https://english.www.gov.cn/archive/lawsregulations/201911/20/content_WS5ed8856ec6d0b3f0e9499913.html|quote='''Article 6''' The foundation of the socialist economic system of the People’s Republic of China is socialist public ownership of the means of production, that is, ownership by the whole people and collective ownership by the working people. The system of socialist public ownership has eradicated the system of exploitation of man by man, and practices the principle of “from each according to his ability, to each according to his work.”

In the primary stage of socialism, the state shall uphold a fundamental economic system under which public ownership is the mainstay and diverse forms of ownership develop together, and shall uphold an income distribution system under which distribution according to work is the mainstay, while multiple forms of distribution exist alongside it.

'''Article 7''' The state sector of the economy, that is, the sector of the socialist economy under ownership by the whole people, shall be the leading force in the economy. The state shall ensure the consolidation and development of the state sector of the economy.}}</ref>

=== Land ownership ===

In 1956, private property was abolished in China, and this policy has remained in effect.<ref>{{Citation|author=Chao Zhou|year=2021|title=Tracing agricultural land transfer in China: some legal and policy issues|quote=In 1956, the model regulations on the advanced Agricultural Producer Cooperatives were adopted. The policy required peasants to surrender land to collectives, and private ownership of land became “illegal”. This was the first official document stating the notion of collectively owned land. [...] By 1958, all land was either state (urban) or collectively (rural) owned. This dual type of land ownership structure remains to the present. [...]

The rural reforms that began in 1978 from bottom to top opened a new era of public ownership and private management of rural land in China. [...] Under the HRS, land ownership and use rights in land were separated: land was owned by the collective (the village), while operating rights on individual pieces of land were given to individual peasant households. [...]

The Third Plenary Session of the 18th Central Committee of the CPC was held in November 2013. At that meeting, the central government initiated the policy of “Accelerating the building of a new type of agricultural operation system.” [...] This is the first time in a central policy that farmers are encouraged to transfer their land management rights while keeping the contractual right. The collective still has the property right, farmers have the contractual right and, in addition, farmers are now allowed to transfer their land use right [...]|doi=10.3390/land10010058}}</ref> During the early 1980s, the process of de-collectivization of farmland occurred, yet the establishment of private property rights was deliberately avoided to prevent the emergence of a landlord class, with public ownership serving as a significant buffer against the social inequalities that can arise from market reforms.<ref>{{Citation|author=Peter Nolan|year=1995|title=China's rise, Russia's fall: politics, economics and planning in the transition from Stalinism|page=191|quote=Farmland was 'de-collectivised' in the early 1980s. This was not followed by the establishment of private property rights in land. Because the CCP wished to prevent the emergence of a landlord class, it did not permit the purchase and sale of farmland. Still in 1994, the Party 'adhered to the collective ownership of famland'. The village community remained the owner, controlling the terms on which land was contracted out and operated by peasant households. It endeavoured to ensure that farm households had equal access to farmland, while the village government obtained part of the Ricardian rents from the land to use for community purposes. [...] Farmland was not distributed via a free market auction, which would have helped to produce a locally unequal out- come. Rather the massively dominant form was distribution of land contracts on a locally equal per capita basis. This huge 'land reform', affecting over 800 million people, was a remarkably orderly process. It was not a disorganised land grab in which strong members of villages squeezed out the weak.|publisher=Palgrave Macmillan|isbn=9780333622643|lg=http://libgen.rs/book/index.php?md5=D7CA67989174164480DC79B03BB6C6E9}}</ref><ref>{{Citation|author=Peter Nolan|year=1995|title=China's rise, Russia's fall: politics, economics and planning in the transition from Stalinism|page=200|quote=The egalitarian land reform in the 1980s tended greatly to increase socio-economic stability. It provided equality of access to the use rights for the most important asset in China's villages. This provided security to the weakest members of the village since in the last resort land could be sublet. The relative equality in local access to farmland was a major reason for the fact that the Gini coefficient of rural household income distribution remained so low. It made public action easier to implement since villagers shared a common position in respect to the principal means of production. It provided a hugely egalitarian underpinning to rural, and indeed national, income distribution.|publisher=Palgrave Macmillan|isbn=9780333622643|lg=http://libgen.rs/book/index.php?md5=D7CA67989174164480DC79B03BB6C6E9}}</ref>

The land tenure system in China after these reforms distinctly separated individual user rights from collective ownership rights. Individual households could use the land, but the village collective retained control over significant decisions like land allocation, leasing, and selling, as well as the right to claim rent income. The village collective was responsible for managing land contracts and providing essential services to peasants, which included access to farm inputs, technology, education, and healthcare.<ref>{{Citation|author=Paul Bowles & Xiao-yuan Dong|year=1994|title=Current successes and future challenges in China’s economic reforms|page=63, 64|quote=The distinguishing feature of China’s land-tenure system in the post-reform period is the separation of individual user rights from other ownership rights which remain ‘collective’. The right to use village land is granted to individual households. However, the village collective retains other rights associated with ownership. Specifically, the village collective, as the delegated owner, has the right to allocate land among its members, the right to lease land to outsiders or sell land to the state, and the right to claim rent income from the land. This system can therefore be regarded as two-tier ownership with use rights vested in individual households and other rights vested in the village collective. [...]

Thus, under the [household responsibility system], peasant households are the basic units of farm production, while the village collective takes charge of managing land contracts, maintaining irrigation systems, and providing peasants with equitable access to farm inputs, technologies, information, credit, and the services of farm machinery, product processing, marketing, primary education and health care. The new form of village collective organization overcomes the main drawbacks of the commune system, while preserving the principal merits of economic organizations characterized by public ownership of the means of production.|pdf=https://shared.prolewiki.org/uploads/2/23/Current_Successes_and_Future_Challenges_in_China%27s_Economic_Reforms.pdf|publisher=New Left Review}}</ref>

The effectiveness of these reforms was evident in significant reductions in undernourishment in China, which saw a decrease of 96 million undernourished people from 1990-92 to 2012, contributing to 91 percent of the total reduction in undernourished people in China and Vietnam combined.<ref>{{Citation|author=FAO|year=2012|title=Framing hunger, a response to the state of food insecurity in the world|page=1|quote=In fact, advancement in reducing hunger by just two countries, China (-96 million) and Viet Nam (-24 million), amounts to 91 percent of the net numerical reduction in undernourished people since 1990-92.}}</ref> The Food and Agriculture Organization (FAO) and other scholars have highlighted that these land reforms were critical to improving food security in China, with the equitable access to land playing a major role in mitigating hunger and enhancing socioeconomic stability.<ref>{{Citation|author=FAO|year=2012|title=Framing hunger, a response to the state of food insecurity in the world|page=14|quote=In understanding the progress of China and Viet Nam, experts cite egalitarian land reform as a key. In both countries, small holders secured access to land through state policies. SOFI12 also notes the “situation of relatively equal access to farmland and human capital” in China, and the fact that “land distribution in Viet Nam is relatively equal” as important in these two countries’ striking progress against hunger.}}</ref>

Despite predictions from Western experts in the 1990s that China was moving away from its [[Planned economy|planned economic system]],<ref>{{Citation|author=Barry Naughton|year=1996|title=Growing out of the plan: Chinese economic reform, 1978–1993|publisher=Cambridge University Press|isbn=9780511664335|lg=http://libgen.rs/book/index.php?md5=4CEEBFCDFF274BC0E11AD2AA804DEA7A}}</ref> centralized economic planning remains a core feature of the country's governance. The U.S. Congressional Economic and Security Review in 2015 highlighted that Soviet-style, top-down planning still defines China's economic and political strategy.<ref>{{Citation|author=U.S.-China Economic and Security Review Commission|year=2015|title=2015 report to congress|page=140|quote=Soviet-style, top-down planning remains a hallmark of China’s economic and political system. Five-Year Plans (FYP) continue to guide China’s economic policy by outlining the Chinese government’s priorities and signaling to central and local officials and industries the areas for future government support. The FYPs are followed by a cascade of sub-plans at the national, ministerial, provincial, and county level that attempt to translate these priorities into region or industry-specific targets, policy strategies, and evaluation mechanisms.|pdf=https://news.usni.org/wp-content/uploads/2015/11/2015-Annual-Report-to-Congress.pdf}}</ref> This is evident through the continuation of the Five-Year Plans (FYP), which set the government's priorities and guide regional and industry-specific policy strategies across all levels of government.

While there has been a transformation in the planning processes since 1993, incorporating market forces and decentralizing decision-making, the state bureaucracy still retains significant control over economic directions, ensuring that the Communist Party maintains political authority.<ref>{{Citation|author=Sebastian Heilmann & Oliver Melton|year=2013|title=The reinvention of development planning in China, 1993–2012|page=581|quote=Contrary to this widely shared focus, [...] a “demise of the plan” has not taken place in China. From 1993 on, development planning has been fundamentally transformed in terms of function, content, process, and methods. It has provided room for market forces and the decentralization of decision-making authority, while preserving the state bureaucracy’s ability to influence the economy and ensuring that the party has retained political control even as it has abandoned many of its former powers.|doi=10.1177/0097700413497551|series=Modern China|volume=39, no. 6}}</ref> China’s economic planning extends beyond mere policy outlines, involving extensive control over the allocation of resources, with a significant portion of goods and services being produced by state-owned enterprises managed by the State-owned Assets Supervision and Administration Commission (SASAC) or local government equivalents.<ref>{{Citation|author=Alicia García-Herrero|year=2021|title=China’s economic planning: how does it work?|title-url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3786531|quote=In the Chinese case (even more so in the Soviet case though) , the central government goes beyond planning and allocation of credit (surely the case as the vast majority of banks are control by the central or local governments). In fact a relevant share of goods and services are produced by state-owned companies, control by the central government, namely by the State-owned Assets Supervision and Administration Commission (SASAC) or by local government through their local SASACs. [...]

China’s economic planning originates from the former Soviet Union but has remained key for policy making until today. The key instrument for medium-term planning is the five-year plan, which started in 1953 until today. The rationale of this five-years head economic planning is to offers specific top-down targets for every actor to strive for.|publisher=Alternatives économiques|series=L'économie politique|volume=2021/1, no. 89}}</ref> These enterprises play a critical role in fulfilling the objectives set out in the Five-Year Plans.

China’s approach to planning also encompasses a wide array of specific plans under categories such as "comprehensive plans," "special plans," and "macro-regional plans."<ref>{{Citation|author=Sebastian Heilmann & Oliver Melton|year=2013|title=The reinvention of development planning in China, 1993–2012|page=586,590|quote=Beyond the most prominent five-year plan outlines for national and local governments, there are three distinct types of sub-plans that are released in successive waves throughout the planning period. This national triple structure of comprehensive plans 总体规划, special plans 专项规划 and macro-regional plans 区域规划 is then replicated in a complex, interlocking web of development programs at the provincial, municipal, and county levels.|doi=10.1177/0097700413497551|series=Modern China|volume=39, no. 6}}</ref> These cover diverse areas from regional industrialization strategies like the Western Development Program<ref>{{Citation|author=Communist Party of China|year=2006|title=Guidelines of the Eleventh Five-Year Plan for national economic and social development|chapter=Implement the Overall Regional Development Strategy|section=Push Forward the Western Development|pdf=https://policy.asiapacificenergy.org/sites/default/files/11th%20Five-Year%20Plan%20%282006-2010%29%20for%20National%20Economic%20and%20Social%20Development%20%28EN%29.pdf}}</ref> to technological advancements in the Pearl River Delta, and sector-specific plans for industries such as pharmaceuticals, food processing, chemicals, cement and so on.

 According to the book, ''The Logic of Economic Reform in China''  the following states that (units in Yuan/RMB):<blockquote>For the perspective of overall development of the state-owned enterprises, operating income of state-owned and state-held enterprises (excluding financial enterprises) increased from 10.73 trillion to 39.25 trillion with the annual increase of 17.6% from 2003 to 2011; total assets and owner’s equity were 85.37 trillion and 29.17 trillion, respectively 4.3 times and 3.5 times compared with those in 2003.<ref name=":21">[https://books.google.com.hk/books?id=rnT_CgAAQBAJ&pg=PA196&lpg=PA196&dq=Huang+Qunhui+(2013)+How+to+actively+develop+mixed-ownership+economy+in+New+Era.+Administration+Reform,+Dec+2013&source=bl&ots=WbA8hJmYTr&sig=ACfU3U34LWt5hyrz8GqLl5U5tcvwdrodpA&hl=en&sa=X&ved=2ahUKEwj35dS5q6CAAxWIAt4KHRhHBTIQ6AF6BAgcEAM#v=onepage&q=Huang%20Qunhui%20(2013)%20How%20to%20actively%20develop%20mixed-ownership%20economy%20in%20New%20Era.%20Administration%20Reform%2C%20Dec%202013&f=false The Logic of Economic reform in China - Xiaojing Zhang, Xin Chang] - Page 177</ref></blockquote>As of 2019 (latest data), the public capital stock of the PRC was roughly around 167.47% of GDP. The USA had 59.49%. India had 59.44%, Russia had 63.31% and the Nordic countries only had an average of 64.85%. Taiwan has 66.27%, France 68.53% and Germany has 44.33%. The country in the global north with the highest public capital stock second only to the PRC was Japan at 120.54%. The average for countries in the OECD (excluding Japan as it is nearly triple the average and is a outlier), 57.92% of GDP.<ref>[https://data.imf.org/?sk=1ce8a55f-cfa7-4bc0-bce2-256ee65ac0e4 IMF, Investment and Capital Stock (Dataset) Indicator, General Government Capital Stock.]</ref>  

As of 2019, the ratio of public capital stock to private capital stock (measured in% of GDP is as follows), 0.87:1, 1 being private stock, 0.87 as public stock for China. For the USA it was 0.34:1, India had 0.40:1, Russia had 0.35:1, Nordic countries had an average of 0.31:1. Taiwan had 0.45:1, France had 0.31:1 and Germany had 0.20:1. For Japan, it was 0.50. The average for countries in the OECD (excluding Japan) is, 0.30:1.<ref>[https://data.imf.org/?sk=1ce8a55f-cfa7-4bc0-bce2-256ee65ac0e4 IMF Data, Investment and Capital Stock Dataset. Indicator (private capital stock)]</ref>

A 2008 article stated that , total assets of Non-financial SOEs in China were $6 trillion, or 133% of Chinese GDP, whereas the corresponding numbers for France, a developed country known for its outsized state control in the economy, were $686 billion and 28%, respectively.<ref>China's 'State Capitalism' Sparks a Global Backlash by

Another 2013 study found that, in the largest developing economies, total assets held by the state sector as a% of GDP, China had by far the largest. With Non financial state assets being 176% of GDP, for Brazil it was 51%, India it was 75%, Indonesia it was 19%, Russia it was 64% and South Africa it was 3%.<ref>[https://www.elibrary.imf.org/display/book/9781513539942/ch11.xml Modernizing China, Investing in Soft Infrastructure. Chapter 11 - IMF]</ref>In comparison, in 2015, Italian, Korean, Saudi Arabian and Norway's state owned assets did not reach more than 25% of GDP.<ref>[https://www.elibrary.imf.org/view/journals/002/2021/012/article-A002-en.xml People’s Republic of China: Selected Issues, Volume 2021, issue 12] - IMF</ref> In 2016, for SOEs in developing European economies, the number did not exceed 100% of GDP, the median being around roughly 40%.<ref>[https://www.ebrd.com/what-we-do/economic-research-and-data/cse-economists/economic-performance-soes-in-emerging-economies.html Economic performance of state-owned enterprises in emerging economies, A cross country study] - European Bank for Reconstruction and Development</ref>

And in 2021, out of total asset ownership, 60% are held by SOEs. And in terms of SOE revenue accounts for 70% of GDP. In foundational and security-related sectors such as energy, infrastructure, public utilities and finance, SOEs enjoy a market share of a combined total of over 70 percent.<ref>[https://archive.ph/44ZmP#selection-403.68-403.79 '''SOE reforms key to smooth recovery''' -  2023-04-10] by ChinaDaily</ref> In 2022, The largest 500 private enterprises held 41.64 trillion yuan worth of assets (34.40% of GDP)<ref>[https://www.xinhuanet.com/energy/20220907/79f0e58b387f4e7c903a51be2a8fc3b6/c.html The top 500 Chinese private enterprises in 2022 released a total operating income of 38.32 trillion yuan] - Xinhua.net</ref> In 2022, the total assets of CSOEs amounted to 109.4 trillion yuan which is 90.4% of GDP. Total non financial SOEs had assets of 339.5 trillion yuan, which amounts to 280.5% of GDP. Total assets of SOEs amounted to 608% of GDP.<ref>[https://mp.weixin.qq.com/s/nvBGqtx7MuPB8RTC9XT6jA State Council Comprehensive Report on State-owned Asset Management in 2022] - SASAC</ref>

There is a great deal of evidence that governmental control of investment remains substantial, that governemnt guided investment mechanisms, state controlled banking system and dominant state owned enterprises are still a 'holdover' from the "Mao era economic system". The way these investments are conducted almost perfectly match investments conducted under the "Mao era economic system".<ref>China's Great Economic Transformation, by Loren Brandt and Thomas G. Rawski, p353</ref>

  In the University paper, ''The Rise of the Investor State: State Capital in the Chinese Economy'' by Hao Chen and Meg Rithmere discusses how state shareholders can influence the private sector. With the overall ownership of assets within investment firms in 2017 being 80.9% central state owned, 13.7% local state owned and only 4.67% being truly private. The top 20 shareholders within investment firms also finds that shareholders of a private origin are the lowest percentage of roughly around 500 or so registed private investment shareholders. With more than 2,000 central SOE shareholders, more than 1,000 big 4 bank shareholders, roughly 500 for both local SOE and "Other" shareholders respectively and around 700 pension funds. So roughly around 10.8% of all shareholders of investment firms are of a private orientation

 

The paper also goes on to state:<ref>[https://link.springer.com/article/10.1007/s12116-020-09308-3 The Rise of the Investor State: State Capital in the Chinese Economy] - Hao Chen and Meg Rithmire</ref><blockquote>"The state’s role as owner of firms has narrowed to include a set of large, national champion firms at the central level, but the deployment of state capital has morphed form rather than abated. As we have shown, the state invests broadly in the private sector in a number of forms, a fact that complicates the “state versus private” dichotomy that has dominated the study of China’s political economy during the reform era. Further, the deployment of state capital into the wider economy has accompanied a change in the structure of the state; hundreds of shareholding firms, large and small and owned by local and central levels of the state, now interface extensively with private firms, can intervene with ease in stock markets, and appear to constitute new agents in the execution of the CCP’s overall economic policy."</blockquote>The study goes onto mention Minsheng group which is on paper the largest "private" investment fund but while being of a hybrid ownership (being legally classified as a joint stock limited company). The largest controlling ownership is held by Dajia Life Insurance which is on paper a joint-stock limited company, holding 17.84% of the total shares (the second largest share is less than 5%)<ref>[https://ir.cmbc.com.cn/media/cftelmok/2021-annual-report-en.pdf China Minsheng Bank Annual Report, 2021], page 403</ref> Reports from China Minsheng itself states that Dajia Life Insurance is 98.23% owned by a Chinese SOE (China Insurance Security Fund), thus despite it being the "largest private equity investment company", the controlling shareholder remains squarely in the hands of a SOE.<ref>[https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0131/2023013101076.pdf CONTINUING CONNECTED TRANSACTIONS BUSINESS COOPERATION FRAMEWORK AGREEMENT FOR AGENCY SALES OF FINANCIAL PRODUCTS WITH DAJIA LIFE INSURANCE CO., LTD. - China Minsheng Bank 2023]</ref>

 

The sentiment of Chinese firm control through investment funds  is elaborated in an article by the Economist, which states:<ref>[https://archive.ph/mcIQv#selection-601.0-604.0 The rise of China’s VC-industrial complex] - The Economist</ref><blockquote>"Between 2015 and 2021 around 2,000 so-called “government guidance funds” collectively raised almost $1trn. Although the pace of fundraising has slowed since its peak in 2016, not least to allow the vehicles to deploy their copious dry powder, the government’s role has been entrenched. Last year the state (including local governments) accounted for one-third of all capital raised in Chinese limited partnerships, making it by far the country’s biggest source of venture capital (<small>vc</small>) and private equity...

The same economist article also finds that in 2018 Shandong set up the New Growth Drivers Fund. Since then the vehicle has launched more than 270 sub-funds and its cash has found its way into at least 1,000 provincial companies. An analysis on 50 of these sub-funds reveals that about half are dominated by state capital with little private-sector co-investment. Many of the remaining limited partners are other guidance funds, state-run firms or various government-linked entities.

 

Another university paper states the exact same findings, stating in their conclusion regarding Government Guided Investment Funds in China that,<ref>[https://discovery.ucl.ac.uk/id/eprint/10099247/1/State-led%20financialization-20200524%20-%20submission.pdf State-led financialisation: the case of the government-guided investment fund]</ref><blockquote>"Drawing on the case of the GGIF, this paper explores how state-led financialisation has taken place in the Chinese context. This study shows the crucial roles of the central government, local governments and state-owned enterprises in the spread of this financialised policy. Despite market-oriented reform, the use of the GGIF “is not for the market but for using market means to solve problems in development. State-led financialisation in China has not resulted in the decreasing role of the state as what happened in many Western economies...  

 

One way the CPC maintains ownership over the market sector is through the use of the CPC being the majority shareholder. This is elborated on in the following article. In a May 2009, Derrick Scissors of the Heritage Foundation explains this issue  rest in an article called “Liberalization in Reverse.” He writes:<blockquote>"Examining what companies are truly private is important because privatization is often confused with the spreading out of shareholding and the sale of minority stakes. In China, 100 percent state ownership is often diluted by the division of ownership into shares, some of which are made available to nonstate actors, such as foreign companies or other private investors. Nearly two-thirds of the state-owned enterprises and subsidiaries in China have undertaken such changes, leading some foreign observers to relabel these firms as “nonstate” or even “private.” But this reclassification is incorrect. The sale of stock does nothing by itself to alter state control: dozens of enterprises are no less state controlled simply because they are listed on foreign stock exchanges. As a practical matter, three-quarters of the roughly 1,500 companies listed as domestic stocks are still state owned. "<ref name=":4">[https://www.heritage.org/global-politics/commentary/liberalization-reverse Derek Scissors, Ph.D. “Liberalization in Reverse,” May 4, 2009, Published by The Heritage Foundation]</ref></blockquote>The same thing can be found in the text, ''The Business of Governing Business in China: Institutions and Norms of the Emerging Regulatory State'', where Margaret Pearson finds that China continues to comit to state ownership, with of course, the listings on stock exchnges still retains a large scale of public ownership. The present focus is to improve state owned assets, not to denationalize them.<ref>The Business of Governing Business in China: Institutions and Norms of the Emerging Regulatory State

, Vol. 57, No. 2 (Jan., 2005), p304</ref>

 

In the book, ''China's Great Economic Transformation'' by Loren Brandt and Thomas G. Rawski found that between 1990 to 2003, only 6.97% could be considered "private", while the rest were very clearly in state hands. These companies are allowed to have acces to private revenue, but their control rights are strongly within the hands of the state and should therefore be considered state firms.<ref>''China's Great Economic Transformation'' by Loren Brandt and Thomas G. Rawski, p355</ref>

  A 1997 study found that, although individual shareholding constituted 30 percent of the outstanding shares, on average individual shareholders occupied less than 0.3 percent of the seats on the boards of 154 companies, whereas on average the state was overrepresented on the boards. On average, the state retained 50 percent of the seats even though its equity shares amounted to 30 percent.<ref>Xu, Xiaonian, and Yan Wang. 1997. “Ownership Structure, Corporate Governance, and Corporate Performance.”</ref> It is also worth noting that Chinese shares are peculiar animals quite different from those in the capitalist world. Chinese shares do not entitle the owner to a share of a company’s assets.<ref>Will Hutton: The writing on the Wall , 2007</ref> Thus, even if 100 percent of the shares in a Chinese company were privately owned, the share owners could not move the machines out of the factories and sell them, as they still belong to the state. No wonder Stephen Green of the Royal Institute of International affairs comments:<blockquote>“The stock market has been used to support national industrial policy, to subsidise SOE restructuring, not to allow private companies to raise capital."<ref>[https://archive.ph/B5kSb#selection-863.68-863.133 Economist: 18 March, 2004]</ref></blockquote>While the so-called ‘privatization’ process of allows some private ownership, whether domestic or foreign, Scissors makes clear that this is a far cry from real privatization, as occurs in the United States and other capitalist countries. The state, headed by the CPC, retains a majority stake in the company and guides the company’s path. More striking are the industries that remain firmly under state control, which are those industries most essential to the welfare of the Chinese masses. Scissors continues:<blockquote>"No matter their shareholding structure, all national corporations in the sectors that make up the core of the Chinese economy are required by law to be owned or controlled by the state. These sectors include power generation and distribution; oil, coal, petrochemicals, and natural gas; telecommunications; armaments; Aviation and shipping; machinery and automobile production; information technologies; construction; and the production of iron, steel, and nonferrous metals. The railroads, grain distribution, and insurance are also dominated by the state, even if no official edict says so."<ref name=":4" /></blockquote>The same sentiment is echoed in a study, which finds that out of the 1,381 listed companies, 65.9% of their shares are non-tradeable. Over half of the shares are owned by the government, with the remainder owned by SOEs or State Investment funds. This means that despite on the surface being private entities, the majority of the listed companies are state owned. With little influence from the private shareholders who may be sitting on the board. Listed firms also do not pay dividends on state owned shares.:<ref name=":10">[https://www.researchgate.net/publication/5223340_Perspectives_on_China's_outward_foreign_direct_investment Perspectives on China's outward foreign direct investment] - Journal of International Business Studies (2008) 39, 337–350. doi:10.1057/palgrave.jibs.8400366</ref>  

Interestingly enough, another study also finds that the "privatization" doesn't tend to cause lay offs and still maintains high levels of job preservation, contrary to popular belief that "privatization" always leads to a loss of jobs and decline in employment, with mass lay offs.<blockquote>"Both anecdotal evidence and our statistical analysis show that the Chinese government has made job preservation an important pre-condition for privatization. As a result, there was no accelerated layoff of surplus labor after privatization, even though the surplus labor problem was severe in both pre-privatization SOEs and post-privatization SOEs."<ref>[https://www.sciencedirect.com/science/article/abs/pii/S0147596708000723 How does privatization work in China?] - Chong-En Bai, Jiangyong Lu, Zhigang Tao</ref></blockquote>A research report published in 2009 stated that,<ref>[https://digitalcommons.osgoode.yorku.ca/cgi/viewcontent.cgi?referer=&httpsredir=1&article=1156&context=clpe Non-Tradable Share Reform in China: Marching Towards the Berle and Means Corporation?] - Horace W. H. Yeung</ref><blockquote>The privatization campaign in China is clearly one with “Chinese characteristics”. In contrast to those in Russia and Eastern Europe, there has not been any transfer of control from the state to the private hands.  The Chinese government has introduced a special mechanism to prevent the loss of state control when companies go public. A distinct feature that separates China’s stock market from those in other countries is the creation of state shares and legal person shares, which both carry significant constraints on tradability. These shares are generally state-owned or state controlled. On the other hand, tradable shares are composed of A, B and H shares... A typical public company has about one-third of its shares in each category of state, legal person and tradable shares. By holding two-thirds of most companies’ shares, the state can ensure that it still has the power to direct and influence the activities of the companies...

The basis of the socialist economic system of the People's Republic of China is the socialist public ownership of the means of production. It appears that even if the shares owned by the state can now be traded on the market, these shares will still be tightly hold by the state for an indefinite period. Indeed, only 10 per cent of these shares have actually gone to the hands of private investors so far</blockquote>In a statement made by the ''Business insider''  it also found that truly private or free floating shares in the stock market was the lowest in Asia, accounting for 30% in 2010. Meaning the other 70% of shares are held up to the discretion of the state or in the hand of the state itself. Which matches previous findings that state that around 2/3 of shares either directly through state ownership or indirectly through legal person shares.<ref>[https://www.businessinsider.com/heres-why-chinese-stocks-are-a-state-controlled-facade-2010-6 Here's Why Chinese Stock Markets Remain A State-Controlled Facade]</ref>The view that the stock market in China is state dominated is echoed in a 2014 research paper which the abstract states the following:<ref>[https://onlinelibrary.wiley.com/doi/abs/10.1111/jacf.12075 Journal of Applied Corporate Finance, Volume 26, Issue 3, Was Deng Xiaoping Right? An Overview of China's Equity Markets, Carl .E Walter, 21st of October 2014]</ref><blockquote>The combination of state monopolies with Wall Street expertise and international capital has led to the creation of national companies that represent little more than the incorporation of China's old Soviet-style industrial ministries. As for the markets, the government's determination to prevent real privatization has produced separate classes of shares that are defined almost entirely by one thing: the shareholder's relationship to the government.</blockquote>And in the conclusion of the research paper, it states the following: <ref>Journal of Applied Corporate Finance, Volume 26, Issue 3, page 18, Was Deng Xiaoping Right? An Overview of China's Equity Markets, Carl .E Walter, 21st of October 2014</ref><blockquote>China’s domestic market is rife with moral hazard. Beijing plays every role from issuer, to underwriter, to regulator, to controlling investor and manager of the exchanges. Efforts to simplify domestic arrangements—the old share classes have been eliminated—have served only to conceal the fact that the state in its many guises still owns nearly two-thirds of domestically listed company shares. </blockquote>A comment by a Chinese Law scholar in an article published in 2017 came to the same conclusions. He noted that despite so called "privatization" of former SOE's, the Party state remains dedicated to ensuring control over these supposedly "privatize" entities:<ref>[https://repository.law.umich.edu/cgi/viewcontent.cgi?article=3021&context=articles China 's 'Corporatization without Privatization' and the Late 19th Century Roots of a Stubborn Path Dependency] - Nicholas Howson, page 11</ref><blockquote>To the present day, the PRC Party State remains absolutely committed to retaining control over converted enterprises in the broadest range of sectors-not just the usual suspects for state control (e.g., defense and national security, power generation, extractive industries, and key infrastructure), but also non-national security and non-key infrastructure sectors that are extremely profitable for central or local Party State insiders, especially when financed by largely passive and information-deprived public investors, Chinese and foreign

Moreover, Sinopec Shanghai Petrochemical Company Limited would benefit from well advertised preferences critical to its commercial success, preferences relating to regulatory breaks, supply or other inputs, availability or pricing, or exclusive access to certain markets at preferred (higher) prices, importantly preferences delivered not just by other Sinopec Group affiliates but even by other Party State-controlled competitors...</blockquote>No capitalist country in the history of the world has ever had state control over all of these industries. In countries like the United States or France, certain industries like railroads and health insurance may have state ownership, but it falls drastically short of dominating the industry. In essence, we can see that there is no "true privatization" in a sense of the word and there remains a state control pervasive through the overwhelming majority of firms.  

Of course, there is also an additional way that the CPC maintains control of the private sector. It is through the use of it's social credit score and social credit system. How the social credit system does this according to the The “Planning Outline for the Establishment of a Social Credit System (2014-2020)” issued by the CPC states that:<blockquote>"must have advancing the establishment of creditworthiness in government affairs, commerce and society and establishment of judicial credibility as its primary content; must have advancing the establishment of a culture of creditworthiness and establishing mechanisms to encourage trustworthiness and punish untrustworthiness as key points; must by supported by advancing the establishment of industry and region specific credit, and developing credit services markets; must have raising the entire society’s awareness and levels of creditworthiness, and improving the economic and social operating environment as its goals; and must put people first, to form an environment across all society in which trustworthiness is honored and untrustworthiness is shameful, and make honesty and trustworthiness the entire populations' conscientious behavioral norm."<ref>[https://archive.ph/Z0H0W#selection-851.0-851.124 State Council Notice concerning Issuance of the Planning Outline for the Establishment of a Social Credit System (2014-2020)] - Translated by ChinaLawBlog</ref> </blockquote>What is credit worthiness?It is being able to comply on financial agreements and willingness to pay debts. And to ensure that in the context of the social credit score, to ensure companies enact on their promises. The score is used to regulate the private sector and continue to clamp down on potential exploitative behaviour that may be undergone. The score is given to private firms and there are real punishments and draw backs for those who do not comply or fail to achieve a high score<blockquote>"The National Development and Reform Commission (NDRC) is pushing ahead with social credit-based supervision of all commercial entities from large firms to small, independently owned and operated business, prompting complaints over corporate privacy and heavy handed government intervention. The social credit rating will include court rulings, tax records, environmental protection issues, government licensing, product quality, work safety and administrative punishments by market regulators.

Owing to hypercompetition between Chinese companies, which spilled into overseas markets, the prices of solar panels fell worldwide by about 50% in 2009 and 2010, driving higher-cost Western producers into the red. Germany’s Q-Cells, an industry pioneer, slid from an operating profit of 16% of sales in 2008 to an operating loss of 60% of sales the following year. China now exports 95% of its solar panels, and Chinese companies such as Suntech, Yingli, and JA Solar control half of the German market and a third of the U.S. market.</blockquote>What is worse for many foreign companies is that they are being out-competed in China by Chinese state companies. As independent private companies, present day state companies might not stand achance, but as part of a planned economy and with the backing of cheap credit from the state banks, they are doing well. Ningbo Bird and TCL, two state-owned mobile phone producers, have overtaken both Motorola and Nokia in China, despite China being Motorola’s second largest market(and Motorola being the biggest foreign company in China). Procter & Gamble had a good start totheir shampoo sales, but were soon undercut by Chinese rivals. P & G’s market share dropped from over 50 percent in 1998 to 30 percent in 2002. Whirlpools’ Chinese adventure ended up with the mending production of their own brands in China, instead a Chinese state-owned company, Kelon,outsourced to them.

Far from abandoning Chinese workers in the pursuit of modernization, the CPC announced the Draft Labor Contract Law in 2006 to protect the rights of workers employed by foreign corporations by ensuring severance pay and outlawing the non-contract labor that makes sweatshops possible. Viciously opposed by Wal-Mart and other Western companies, “foreign corporations are attacking the legislation not because it provides workers too little protection but because it provides them too much.” <ref>[https://fpif.org/labor_rights_in_china/ Jeremy Brecher, Tim Costello, Brendan Smith, “Labor Rights in China,”] December 19, 2006, Published by Foreign Policy in Focus</ref> Nevertheless, the Draft Labor Contract Law, which “required employers to contribute to their employees’ social security accounts and set wage standards for workers on probation and overtime,” was enacted in January 2008. <ref>''Xinhua,'' “New labor contract law changes employment landscape,” January 2, 2008, Published in ''People’s Daily Online''</ref> In 2008, the number of migrant workers suffering from wage arrears was roughly 4%<ref>'''[https://www.gov.cn/xinwen/2019-12/15/content_5461359.htm A multi-pronged approach to eliminate the “stubborn problem” of wage arrears for migrant workers] - Xinhua.net'''</ref>

Among migrant construction workers in 2013, 1.8 per cent suffered from wage arrears compared to 0.9 per cent in the manufacturing sector. In 2014, it fell to 1.4 per cent in construction and 0.6 per cent in manufacturing. While wage arrears remains an issue, it is a gradually declining and miniscule issue that affects less than 2% of the total rural migrant working population in those industries, therefore the issue of underpaying or refusing to pay migrant workers at all is an overexaggerated issue that is blown out of proportion.<ref>[https://www.cambridge.org/core/services/aop-cambridge-core/content/view/6279F3FC81641FBBB45AFD9A415B8591/S0305741022000807a.pdf/div-class-title-working-without-wages-network-structure-and-migrant-construction-workers-protests-in-china-div.pdf Working without Wages: Network Structure and Migrant Construction Workers’ Protests in China] - By Haitao Wei and Cheris Shun-Ching Chan</ref>

In the book, A New Deal for China's workers (released in 2016) states that,<ref>[https://dokumen.pub/qdownload/a-new-deal-for-chinas-workers-2016017881-9780674971394.html Conclusion, Page 220 - <small>A New Deal for China’s Workers? 2016017881, 9780674971394</small>]</ref><blockquote>"In enacting the LCL, and in doubling down on its employment protections by restricting the use of labor dispatch, China is swimming against both a modest liberalizing current in parts of the developed world and deeper trends toward declining job tenure, splintering of work organizations, outsourcing of production, and contingent work arrangements.  The continuing slide from long-term employment within integrated firms toward a “gig” economy, though celebrated by some, has potentially dire consequences for workers who risk losing the entire panoply of rights, protections, and benefits that twentieth-century reforms had attached to the employment relationship. But China is seeking to defy that trend, and to shore up job security and stability."</blockquote>Since 2013, the total proportion of migrant workers who are owed wages has been below 1%, but there are fluctuations from year to year. From 2013 to 2015, the proportions of migrant workers who were owed wages were 1%, 0.76% and 0.99% respectively. The number of migrant workers in 2016 who were owed wages was 2,369,000 out of 281,710,000, which is 0.84% of the total rural migrant population. In 2016 in the manufacturing, construction, wholesale and retail, transportation, warehousing and postal industries were 0.6%, 1.8%, 0.2% and 0.4% respectively.<ref>'''[http://cn.chinagate.cn/news/2017-04/30/content_40721463_5.htm 2016 Migrant Workers Monitoring Survey Report - NBS]'''</ref>

 

In 2018, there were a total of 1,110,175 people involved in labor disputes. The number 1 cause being labor renumeration/wage arrears. Number 1 reason for case settlement was agreed upon increase in wage, and the number 1 way this was administered was legal order to make required adjustment. Out of 894,053 cases of labor issues,  93,823 were won by employers.<ref>Zhongguo Laodong Tongji Nianjian 2019 [China Labor Statistical Yearbook 2019] p 343 - 344</ref>

From a period of 2008 to 2019, the average late wage payment/wage arrears rate is 1.29%, with the highest of 4% in 2008 and the lowest rate of 0.5% in 2012.<ref>[https://www.statista.com/statistics/235248/proportion-of-late-wage-payments-to-migrant-workers-in-china/ Proportion of late wage payments to migrant workers in China from 2008 to 2018 -] NBS</ref> In 2020, there were a total of 1,283,491 people involved in labor disputes, which is around 0.16% of the entire employed population of China . The number 1 cause being labor renumeration/wage arrears. Out of 1,100,681 cases, 112,053 were won by employers. The number 1 way this was enforced was legal order to make required adjustment.<ref>Zhongguo Laodong Tongji Nianjian 2021 [China Labor Statistical Yearbook 2021] p 362 - 364</ref>