China’s socialist economy politics and culture

China’s socialist economy


Since 1978, along with the dismantling of the planned economy system and the deepening of the reform of the economic system, commodity, capital, labor service and technology markets have appeared one after the other in China. Now China has transformed its planned economy system into an initial socialist market economy system. As a result the regulatory function of the market has been strengthened tremendously.

Capital Market

Since the reform and opening began, China has continuously expanded the capital market by improving the credit and loan mechanism, and developing stock and state debt markets. At the beginning of the 1980s, the reform of the credit and loan mechanism, beginning with "unified plan, multi-level control, connection of deposits with loans, and being responsible for making up differences" developed in accordance with the ratio between assets and debts, and eliminating the limits for the sizes of loans. In order to match this important change, new measures have been adopted, such as re-granting loans, re-discounting, reserve fund rates and making market business public, thus standardizing and strengthening the control and adjustment of the credit and loan market. At the same time, the stock market grew from nothing to become a large-scale stock market, symbolized by the Shanghai and Shenzhen stock exchanges.

Commodity Market

In order to extend the regulatory function of the market, the state has gradually reduced the categories of products for planned production, eliminated the restriction that enterprises were only allowed to engage in production but not in business operation, and abolished the practice of the state fixing commodity prices. As a result, the rights of enterprises to purchase, produce and sell have been extended. Enterprises may organize and establish wholesale markets and trading centers; the wholesale and retail commercial...