China 2098: The Sun Rises Just the Same (中国2098:太阳照常升起), 2019-2022. Credit: Fan Wennan.

Socialism 3.0: The Practice and Prospects of Socialism in China

Longway Foundation

The Beijing Longway Economic and Social Research Foundation (北京修远经济与社会研究基金会, Běijīng xiū yuǎn jīngjì yǔ shèhuì yánjiū jījīn huì) was founded in 2009 with the following purpose: to study the crisis of cultural continuity in modern China and promote cultural confidence and cultural autonomy in Chinese society. The foundation’s research explores how changes in China’s social structure have shaped the country’s cultural development and led to the rise of new social classes with distinct cultural and political orientations.

Longway Foundation‘Socialism 3.0: The Practice and Prospect of Socialism in China’ (社会主义3.0——中国社会主义的现实与未来) was written collectively by a group of researchers at the Longway Foundation (修远基金), and originally published in Wenhua Zongheng (文化纵横), issue no. 2 (April 2015).

We Need to Talk About Socialism

Today, the concept of socialism is at the centre of fierce ideological battles, with supporters and opponents arguing vehemently with each other. These debates often remain at the level of ideas, with participants tending to put forward their conceptions of socialism based upon selective historical narratives and theoretical doctrines, while ignoring the reality that socialism is a historical process that has advanced alongside industrialisation. Over the course of several centuries, socialism has emerged as an alternative path of development to overcome the crisis of capitalist industrialisation, a path characterised by a pursuit of greater political and economic equality, and an exploration of the ideal of a community in ethics and culture. Socialism not only gave rise to states such as the Soviet Union and China, but also had a significant impact on the social democratic policies in Western Europe. However, with the collapse of the Soviet Union in the late twentieth century, the world socialist movement suffered a major setback, and the forms of the socialist state and the socialist mode of production required systematic reflection and revitalisation. Today, as the traditional capitalist welfare states have been dismantled or are facing multiple crises and the forms of material production undergo complex transformations, it is necessary to revisit and reassess the fundamental ideas and practice of socialism to activate its political dynamism.

As the global socialist movement waned, China’s socialist system underwent a self-transformation through reform and opening up. However, despite its achievements, it cannot be denied that socialism with Chinese characteristics faces serious challenges today.[1] In China, there are doubts about the meaning of socialism and whether it is still necessary or even possible. This presents a dilemma for China – on the one hand, as a socialist country, we cannot avoid discussing socialism; on the other hand, we cannot get bogged down in conceptual disputes. Instead of becoming consumed by ideological battles, we should view socialism as an ongoing process and continuous effort to create a fairer and more just society in the face of the opportunities and challenges brought about by changes in production since the beginning of industrialisation.

Today’s discussions on socialism and the future forms that it may take, must place socialism in the context of existing historical processes, in the context of industrialised mass production, as illuminated by Karl Marx, and analyse the complex interaction between the ideal of equality and the material realities of production. In the case of China, the country’s socialist path must be examined in the context of its historical trajectory since the twentieth century – analysing the complex process through which socialism, as a foreign political concept, has been integrated with China’s political traditions as well as evaluating the lessons learned from China’s experiments in socialist construction – to grasp the reality and necessity of socialism. Furthermore, amid the increasingly complex changes in the forms of material production and the international political-economic structure, it is necessary to explore the changes in patterns of social organisation, factors of production, and the division of labour, that have been brought about by globalisation and the new industrial landscape, to determine the future direction of socialism.

Only on this basis can we effectively face the political and economic conditions in this time of great change, understand the political resources offered by socialism, and contemplate the path for China’s future development.

This article will trace the historical evolution and future direction of Chinese socialism. The authors describe the socialist practice during the Mao Zedong (毛泽东) era of 1949 to 1976 as China’s ‘Socialism 1.0’ and the subsequent exploration of the socialist market economy since the beginning of reform and opening up in 1978 as ‘Socialism 2.0’. Finally, amid the current period of global political and economic upheaval, the authors argue that China needs to develop a ‘Socialism 3.0’ to guide its future course that learns from and builds upon Socialism 1.0 and 2.0.

Socialism 1.0

1. The historical encounter between socialism and China’s rising consciousness of national salvation.[2] China’s choice of the socialist path was not accidental. At the end of the nineteenth century, all major non-Western civilisations faced comprehensive challenges from the West. Through the advances of industrialisation, Western modern military forces were able to thoroughly defeat the fragile military backbone that was required to maintain order in these traditional agricultural empires. For the elites in these civilisations, this prompted anxiety and frustration, as they felt that their cultures had been superseded or destroyed; civilisational states such as China lost their sense of cultural superiority over the ‘barbarians’, or the neighbouring states and minority ethnicities. The West’s ‘hard ships and sharp canons’ (坚船利炮, jiānchuán lìpào) imposed on the world ‘major changes unseen in three thousand years’ (三千年未见之大变局, sānqiānnián wèijiàn zhī dàbiànjú ), forcing Chinese politicians and intellectuals to respond.[3] Driven by the powerful material force of their industrialisation, the ‘advanced’ countries, led by the United Kingdom, continued to expand outward, shaping a new international order and new ‘rules of the game’. The transformation of the world order rendered all preceding conventions unviable.

Confronted by the Western powers that were armed by industrialisation, China had to determine how it could quickly industrialise to catch up with the West and protect itself. As Chinese politicians and intellectuals painstakingly explored a path for the country’s industrialisation during the late nineteenth and early twentieth centuries, the Western-led expansion of capitalism gradually moved from the phase of free trade to that of imperialism. The harsh logic of capitalism, wherein the weak are preyed upon by the strong, grew increasingly prominent. Within European countries, class conflict between labour and capital intensified, and social resistance movements surged, a dynamic which had a profound impact on China’s intellectual class at the time. The outbreak of the First World War prompted many Chinese scholars to reflect deeply on the inner dilemmas of Western civilisation. For the revolutionaries and thinkers of modern China, there were two aspects to this engagement: on the one hand, they sought to learn from the West to achieve their goals of modernisation and national prosperity; on the other hand, they remained vigilant to the poverty and inequality brought about by capitalist industrialisation. Figures such as the intellectual Yan Fu (严复) and leader of the 1911 revolution Dr. Sun Yat-sen (孙中山, Sūn Zhōngshān),[4] were able to gain a broader vision for China’s development because they had ‘opened their eyes to see the world’ (开眼看世界, kāiyǎn kàn shìjiè) and they recognised the historical trends of progress and change; however, their intellectual and ideological foundations, laid in their youth, were deeply influenced by traditional Chinese culture, including the ancient Confucian ideal of ‘Great Unity’ (大同, dàtóng).[5]

Thus, while learning from the West, Chinese thinkers also identified flaws in Western industrial civilisation and the possibility of constructing a social system that surpassed it. In particular, the rapid growth achieved by the Soviet Union’s socialist industrialisation in a short period of time was viewed as a realistic pathway for China to follow to catch up with the West. After the concept of socialism was introduced into China in the early twentieth century, many Chinese intellectuals found its foundational ideal of equality to be more in line with traditional Chinese ideals than Western liberalism. During this period, socialism had a strong appeal in China because it was not merely a set of lofty communal values, but a concrete example of a system that was capable of achieving industrialisation; both Western European social democracy and the Soviet Union’s state socialism had shown that they could develop a modern mode of production and achieve industrialisation.

In the 1920s and 1930s, after the disillusioning failure of the Great Revolution (1924–1927), Chinese intellectuals fervently discussed and debated socialist theory.[6] Importantly, the evolutionary view of history imported from the Soviet Union – that human society proceeded from ‘primitive’ society, to slave society, to feudal society, to capitalist society, and finally to socialist and communist society – began to be consciously applied to the historical development of Chinese civilisation. This revolution in the conception of history became the premise of the eventual political revolution.

The task of catching up with the West eventually fell into the hands of the Chinese communists, who were strongly influenced by the October Revolution of 1917; this influence was not limited to Vladimir Lenin’s advanced organisational model of the vanguard party, but also in the practical example and specific methods that a backward country could utilise to pursue industrialisation. Thus, a profound integration took place in China, between the desire for industrialisation (driven by the growing consciousness of national salvation) and the plan to build a socialist state.

2. Mao Zedong’s socialist ideas and practice: the first attempt to adapt socialism to the Chinese context. During the late 1930s, Mao Zedong began to explore how to integrate China’s revolutionary and industrial aims with the historical trend of socialism in the world. In his works, The Chinese Revolution and the Chinese Communist Party (中国革命与中国共产党, Zhōngguó gémìng yǔ Zhōngguó Gòngchǎndǎng, 1939) and On New Democracy (新民主主义论, Xīn mínzhǔ zhǔyì lùn, 1940), Mao argued that China at that time was a semi-colonial and semi-feudal society and that the Communist Party of China (CPC) was the party to lead the socialist revolution.[7] In Mao’s conception, the plan for China’s future development could be divided into two stages: first, the New Democratic stage, followed by the socialist stage, which would be reached only after the full development of New Democracy.[8] Starting with the theory of historical stages of development developed by Joseph Stalin and others, Mao incorporated Lenin’s writings on imperialism and colonialism and ultimately constructed a historical view of the development of modern China: after passing through ‘primitive’, slave, and feudal societies, the country had entered a semi-feudal and semi-colonial stage, that it needed to transcend through a stage of democratic revolution, which was divided into the Old and New Democratic phases. This view of history served as the benchmark for the CPC to formulate and evaluate its policies: those policies which were deemed ahead of the historical schedule, so to speak, were considered left-leaning, while those lagging behind were deemed right-leaning.

Guided by this view of history, the generation of Chinese communists led by Mao pursued socialist industrialisation and socialist equality, two goals with a complex and even contradictory relationship.

The CPC now took up the responsibility for the country’s industrial development, following the failed efforts during the late nineteenth and early twentieth centuries such as the Self-Strengthening Movement (1861–1895).[9] The party’s historical and socialist perspective on the question of industrialisation carried a stronger sense of equality, which generally transcended the consciousness of national salvation. After the founding of the People’s Republic of China (PRC) in 1949, the CPC’s model of industrialisation prioritised the development of heavy industry, which was considered necessary in latecomer countries that sought to catch up the development ladder and had been advocated since the Self-Strengthening Movement. This view was expounded upon in The Party’s General Line for the Transition Period (过渡时期总路线, Guòdù shíqí zǒnglùxiàn), a directive issued in 1953, in which Mao emphasised the need to concentrate efforts on developing heavy industry to establish the foundation for the nation’s industrial and defence modernisation.[10]

The developmental strategy of prioritising heavy industry and ‘becoming stronger before getting richer’ (先强后富, xiānqiáng hòufù), is, in a way, inevitable for latecomer countries to adopt. However, industrialisation entails an extremely high cost, requiring the accumulation of a huge amount of capital; if sources of investment cannot be obtained and resources cannot be plundered externally, investments in heavy industry often need to be extracted from domestic rural areas. In the early years of the PRC, the only way to advance industrialisation was to re-concentrate the distributed land and increase the centralised management and distribution of agricultural surplus through the people’s commune movement. In addition to agricultural taxes, an instrument called the ‘state monopoly for purchasing and marketing’ (统购统销, tǒnggòu tǒngxiāo) redirected agricultural surplus to industry and cities. Industrialisation also required a large number of highly skilled workers, making it necessary to pour massive amounts of resources into building a modern education system – popularising primary and secondary education, developing institutions of higher education, and increasing the educated population from tens or hundreds of thousands to tens of millions. Therefore, facing the urgent need for industrialisation, China quickly ended its New Democratic phase and entered the initial stage of socialism. In 1953, the CPC adopted the general line of ‘one transformation and three reforms’ (一化三改, yīhuà sāngǎi), through which Socialism 1.0 was gradually established in the country, guided by the following political-economic principles: public ownership of means of production, the planned economy, and distribution according to work.[11] Similar to the Soviet model, this was an efficient system of accumulation in the early stages of China’s industrialisation.

As the process of socialist industrialisation advanced, however, a contradiction between industrialisation and the goal of socialist equality became increasingly evident. The state-led industrialisation model that prioritised heavy industry inevitably required a large number of government officials, corporate executives, and professionals, with the numbers required expanding alongside industrialisation. As a result, the means of production became concentrated in the hands of the managers rather than the workers, leading to a tendency toward bureaucratisation. By the late 1950s, Mao realised that, as long as production continued to develop in this manner, it would continuously generate a managerial class within the system, managers with their own self-interests who would amass control of government and enterprise affairs and use their power to undermine public ownership. In other words, this bureaucratic class would use its position to manage the economy, offloading the costs of industrialisation onto ordinary people, especially the peasantry, while enjoying the benefits of industrialisation themselves.

Faced with this dilemma, Mao explored a new model of industrialisation that ‘allowed the people to manage the production processes directly’ through the campaign called ‘grasp revolution, promote production’ (抓革命促生产, zhuā gémìng cù shēngchǎn), which sought to make the otherwise contradicting goals of industrialisation and equality complementary to each other. In his comments on Stalin’s Economic Problems of Socialism in the USSR (1951), Mao pointed out that the socialist transformation of ownership of the means of production would not inevitably result in labour occupying a leading position within production.[12] For Mao, public ownership of the means of production would not guarantee that China developed in a socialist direction, in which the working people ran their country, and so adjustments and experiments were needed at the level of cultural and political leadership – namely, it was necessary to break with the bourgeois legal regime. To this end, Mao pushed for a series of initiatives during subsequent decades, strengthening the guidance and supervision over cadres at the political level and conducting various experimental measures aimed at addressing this problem, including criticising the rank-based wage system, sending large numbers of cadres to engage in manual labour in the countryside and factories, commending policies which reorganised the division of labour, launching socialist education campaigns, and so on. Mao also proposed that the economy should ‘walk on two legs’ (两条腿走路, liǎngtiáotuǐ zǒulù), meaning that economic development could not rely solely on a state-led model and it was also necessary to conduct mass mobilisations to counteract the drawbacks that arose from this model’s reliance on technocrats to implement the directives of the centrally planned economy. This was exemplified by the emergence of policies that reorganised and disrupted the division of labour, such as the Angang Constitution (鞍钢宪法, Āngāng xiànfǎ) in 1960 and its practice of ‘two participations and one reform’ (两参一改, liǎngcān yīgǎi), commended by Mao.[13] These efforts reflect Mao’s ongoing concern with ensuring that the country’s industrialisation proceeded in a socialist direction, his efforts to correct the imbalances brought about by industrialisation, and commitment to the idea of equality.

Overall, between the founding of the PRC in 1949 and the start of reform and opening up in the late 1970s, China gradually transformed into an industrialised country. During this time, China’s social structure remained relatively equal and social divisions were not so pronounced. However, although the development model of ‘becoming stronger before getting richer’ helped the country to achieve industrialisation, the population generally remained in poverty; the contradictions between the state-led model of industrialisation and the objective of equality became increasingly prominent in Mao’s era. On top of this, driven by the country’s century-long wave of radical thinking, Mao attempted to resolve these problems with the Great Leap Forward (1958–1962) and the Cultural Revolution (1966–1976), but both ultimately failed. Subsequent generations have continued to grapple with these twin pursuits of Chinese socialism, industrialisation and equality.

3. The internal dilemmas of Socialism 1.0. Since Marx, socialist theory has had the following core aims: to overcome capitalist private ownership and disorderly competition through public ownership and the planned economy, to eliminate exploitation, and to implement distribution according to work. However, for both the state-led socialist path initiated by Lenin and the social democratic path pursued in Western Europe, substantial adjustments to socialist theory were required. The socialism envisioned by Marx was supposed to be achieved in the developed capitalist countries, where the accumulation of social capital had reached a considerable degree, thus providing the conditions for a planned economy and distribution according to work. However, neither the Soviet Union nor China were developed capitalist countries, and so the first step in these countries was to determine how to quickly accumulate capital to lay the foundation for public ownership. By the beginning of the twentieth century, the centre-periphery structure of world capitalism had taken shape, which meant that socialist countries would not be able to rely on the world market to quickly accumulate capital. As a result, socialist countries often had to experiment with and, at times, rapidly overhaul their economic policies; a dynamic that was on display in the Soviet Union. During the civil war, Lenin’s ‘war communism’ – characterised by near total nationalisation of the economy and compulsory requisitioning of food products from the peasantry – was implemented from 1918 to 1921 in response to the state of emergency and the need to maintain political power. After the civil war ended, faced with the urgent need to increase productivity, Lenin had to make a number of radical changes (and, to some extent, compromises), implementing the New Economic Policy (1921–1928) and permitting the development of capitalism and a market economy, under state control. Meanwhile, Stalin took another, more costly approach, replacing the market with an organised bureaucratic system to undertake the heavy responsibility of planning and distribution.

In China, the initial stage of industrialisation was based, to a large degree, on the deprivation of the rural areas; one of the functions of the rural commune movement was to direct agricultural surplus towards industrialisation. Compared with the Soviet Union, however, China did not completely transfer the cost of industrial capital accumulation onto the rural areas. Mao, along with other leaders, called for the whole country to ‘tighten their belts’, that is, for the whole population to share in the cost of capital accumulation. Objectively speaking, in both the Soviet Union and China, the planned economy played a positive role precisely in the initial stage of industrialisation. During this stage, the economic and social structures were relatively simple, and thus it was possible for the state to formulate planned arrangements for production, exchange, distribution, and consumption. However, once industrialisation began to move beyond the initial stage, the industrial division of labour became increasingly complex and the production chain extended, leading to a rapid decline in the efficiency of planning, a ‘clogging of the pipes’ throughout the economic system, and an information crisis where there was insufficient feedback to make appropriate policy adjustments.

Although Mao had hoped that the prioritisation of people’s participation in the management of production would further the realisation of Marx’s conception of workers’ control of the means of production, these efforts met profound difficulties in reality. As industrialisation proceeds, the division of labour intensifies, not only in terms of industrial labour, but also the positions and functions of managers and scientific researchers. In addition, as industrialisation creates increasingly complex production, consumption, and distribution processes, the amount of information generated rapidly increases in comparison to agricultural society, requiring an organised bureaucratic system for information management. This bureaucratic system, as articulated by Max Weber and others, is necessary not only within production units but for the society as a whole. In this sense, in times of peaceful development, one of the collateral consequences of industrialisation is that a vanguard political party can rapidly divide into increasingly sophisticated bureaucratic components and into different political groupings. Mao hoped that this problem could be addressed by replacing the bureaucratic system with the people’s self-organisation. His confidence may have come from the CPC’s experience of the people’s war; through the practice of the mass line, the party was able to realise powerful social mobilisations and dynamic political processes that integrated the vanguard party with the people. Mao wanted to revive the organisational model of the people’s war during industrialisation to drive national development forward; however, this organisational model had been successfully implemented during a specific historical context, in which there was a strong popular sense of urgency due to the Chinese civil war (1927–1937; 1945–1949) and the War of Resistance Against Japanese Aggression (1937–1945). Following the victory of the revolution and the initiation of national construction, this sense of urgency gradually faded away. Furthermore, the conditions during the era of Socialism 1.0 were not conducive to help the people deal with the complexities of the country’s development, while the party’s and government’s bureaucratic systems distorted and disintegrated the self-organisation of the masses, whether deliberately or inadvertently. Therefore, Mao’s aims were in practice very difficult to realise.

Another problem that could not be solved at the time was to adjust the system of high accumulation during the early days of the PRC. After completing the initial stage of industrial accumulation, the next challenge facing a socialist state is to promote a stable cycle for expanded reproduction. This involves two tasks; first, it is necessary to adjust the proportion of accumulation and consumption reasonably, conduct fiscal and financial policy reforms, and generate sustainable power for economic growth. However, during Socialism 1.0, China’s fiscal and financial policies were relatively conservative, leading to insufficient money supply, which suppressed the expansion of consumption and thus resulted in a lack of motivation for industrial upgrading. Second, it is necessary to solve the problem of integrating the national economy into the international economic system. The modern system of mass industrial production depends upon inputs of resources and products that span borders and regions. It is difficult to sustain economic growth when relying solely on domestic investment and consumption; an effective economic cycle must be established through international trade to maintain vitality. As early as the 1930s, the Soviet Union attempted to attract capital and technology from the United States, which was in the midst of an economic crisis at the time and had an objective demand for capital output and industrial output. These conditions were favourable to promoting cooperation and the high-speed development of the Soviet economy. Subsequently, the Soviet Union committed to building the socialist camp, not only for political and security reasons but also to establish an economic cycle between the socialist countries. After the revolution in 1949, China joined the socialist camp and received a significant amount of Soviet capital and technical support, especially after the Korean War (1950–1953) (known in China as the War to Resist US Aggression and Aid Korea [抗美援朝战争, Kànɡměi yuáncháo zhànzhēnɡ]). This support enabled China’s basic industrialisation to proceed smoothly, however, the Soviet-led economic system also produced its own imbalances between countries. Eventually, Mao and the party’s leadership chose to break away from the Soviet system, as it broke away from the capitalist world economic system in 1949, which resulted in China’s economy being relatively closed for a long time.

In general, the vision of Socialism 1.0 can be summarised as follows: under public ownership, workers collectively managed the means of production, producing for their own material and spiritual well-being rather than for profit. In fact, the planned economy and system of public ownership created a system of accumulation in which the costs were shared by the people as a whole and completed basic industrialisation in a relatively short period of time. However, this economic structure also had some inherent limitations, related to the sustainability of internal development and difficulties in connecting with the external economic cycle. In the end, the mode of production and organisational capacity of China during Socialism 1.0 were not sufficient to truly realise the socialist ideals of equality and cooperation. This was the challenge facing Deng Xiaoping (邓小平) and other leaders, who would lead China into its next phase of socialism.

Socialism 2.0

1. The political economy of Socialism 2.0. Having experienced and participated in the construction of Socialism 1.0, Deng Xiaoping had a clear understanding of its problems. In contrast to Mao’s emphasis on the idealistic goals of ‘fighting selfishness and criticising revisionism’ (斗私批修, dòusī pīxiū), ‘being just and selfless’ (大公无私, dàgōng wúsī) and ‘serving the people’ (为人民服务, wèi rénmín fúwù), Deng Xiaoping was more inclined to a realistic stance, due to his lengthy involvement in frontline economic work. This orientation was on display during a 1979 meeting with foreign guests, when Deng stated that it was wrong to think that a market economy could only exist under capitalism, contending that socialism could also adopt a market economy and learn things from capitalist countries, such as business management methods.[14] Deng’s strategy was to gradually transform the planned economy into a tool for macroeconomic regulation, to install the mechanism of a market economy, and to try to make the market economy compatible with public ownership and distribution according to work. This approach differed significantly from Socialism 1.0, in which the planned economy was an institutional foundation that was interrelated with public ownership and distribution according to work. In 1984, the Decision of the Central Committee of the Communist Party of China on Reform of the Economic Structure was passed at the Third Plenary Session of the Twelfth CPC Central Committee, the first breakthrough in the impasse between the planned economy and the commodity economy.[15] Deng spoke highly of this decision, saying that it was a political economic framework that combined the basic principles of Marxism with China’s socialist practice.

Changes to the country’s basic economic system inevitably raised questions regarding the meaning and interpretation of socialism, namely what were its key elements and features? Although it was necessary on a theoretical level to clarify how these reforms were consistent with socialism, Deng proposed that the party should set aside theoretical debates, and instead focus on setting specific goals and mapping out the trajectory for the country’s new developmental direction. Therefore, in promoting economic reform, Deng made adjustments to the theory of historical stages of development that was adopted during the period of Socialism 1.0. In 1987, the thirteenth CPC National Congress proposed the idea that China, due to its historical underdevelopment, was in the ‘primary stage of socialism’ (社会主义初级阶段, shèhuì zhǔyì chūjí jiēduàn) in which the principle task was to develop the productive forces and set out a three-step economic development strategy to achieve a relatively good standard of life for the people and realise socialist modernisation by the centenary of the revolution.[16] Subsequently, in 1992, the fourteenth CPC National Congress declared that China’s reform aimed to establish a socialist market economic system, which was indeed a change from the classical conception of socialism, by no longer insisting that a fully planned economy was necessary to ensure public ownership and distribution according to work. Corresponding adjustments were made to the theory of historical stages of development, gradually clarifying that it was necessary to build a socialist market economy during the primary stage of socialism. Together, these theoretical developments formed the basis of socialism with Chinese characteristics.

2. The challenges of Socialism 2.0. During the reform and opening up period, China’s industry has grown rapidly, due to the activation of domestic demand and access to foreign investment by joining the global market. With the support of domestic and international economic circulation, industrialisation has embarked on a sustained process of sovereign development and high-speed growth, moving past the phase of industrial accumulation and entering the stage of industrial upgrading.

According to Deng, in the socialist market economy, the market was only a means to realise the socialist vision of building a ‘moderately prosperous society’ (小康社会, xiǎokāng shèhuì) and attaining the ‘common prosperity’ (共同富裕, gòngtóng fùyù). However, with the rapid development of the market economy, this vision faced increasing problems.

First, Deng’s theoretical framework lacked the support of a compelling historical narrative, namely, it did not identify a clear path by which China’s socialist development would proceed, creating a weakness in the party’s new ideological paradigm. The socialist theory of Deng’s era added a new segment to the historical narrative outlined by Mao in On New Democracy, inserting the primary stage of socialism into the proposed transition of socialism to communism. However, this formulation of the primary stage of socialism failed to answer two critical questions: is there an advanced stage of socialism that follows the primary stage? And how will this path ultimately lead to communism? At that time, the party neither had the ability nor the resources to answer these questions and could only postpone the issue by not arguing over it.

Second, Socialism 2.0 also faced severe difficulties in terms of the basic economic system. The central concern with the theory of the socialist market economy was whether the market economy and socialism could be compatible with each other. Socialism, as a form of ownership, is characterised by collective and public ownership, whereas the market, theoretically, allocates resources, with the types of products and scales of production for different enterprises being based on the price signals determined by the forces of supply and demand. Therefore, in theory, various forms of ownership should be compatible with the market. Proponents of the socialist market economy contended that socialism could develop a market economy in place of the planned economy, while retaining the two basic elements of socialism: public ownership and distribution according to work. However, in practice, the market economy began to dissolve these two socialist principles. During the late 1980s, China’s commercial sector gradually privatised and, after 1992, a large amount of foreign investment poured into the country, and private ownership of production began to expand. In 1997, the CPC adopted the policy of ‘grasping the large and letting the small go’ (抓大放小, zhuādà fàngxiǎo), focusing on maintaining state control over the largest and most strategically important state-owned enterprises (SOEs), such as energy and banking, while relaxing control over smaller, non-strategic SOEs, such as light industry; reforms under this policy resulted in the basic privatisation of county-level state-owned enterprises (SOEs), a large loss of state-owned assets, the exposure of the working class to market forces, and the detachment of the party from its class base. At the same time, there was a shift from the principle of distribution according to work to distribution according to other factors, such as capital, land, and technology, that, due to their scarcity, often occupied a more advantageous position in market transactions than labour. The extreme prioritisation of economic efficiency magnified and abused the advantages of these other factors over labour. This would inevitably compress the proportion of surplus distributed among labour, leading to an increasing separation between workers and the means of production as well as a continuous deterioration of living conditions for workers (the latter trend being exacerbated by inadequate public services). If the cost of the first thirty years of industrialisation was evenly distributed among the whole population through the powerful will of the state, then the cost of the market-oriented reform of the following thirty years was borne more by ordinary people.

Socialism 3.0: Towards the Future

For China, both the practice of Socialism 1.0 in the first three decades following the revolution and that of Socialism 2.0 in the subsequent three decades demonstrate how socialist ideals and beliefs have been integrated with the country’s realities. This integration makes it irrational for China to pursue any radical departure from its socialist path. However, the challenge that China faces lies in the fact that there is no external model to draw upon to adjust Socialism 2.0. As the international political-economic landscape has evolved and the forms of production have undergone transformations, both the Western European path of social democracy and the US path of completely disavowing socialism have descended into crises due to their inherent contradictions. Therefore, the reform of China’s socialist path needs to be based on its own practice.

Focusing on China’s own practice does not mean separating the country from the external world. On the contrary, the fundamental reality of contemporary China is its profound integration with the external world. As such, discussions of socialism in China must take into account the background of global political and economic changes. Just as Marx made great efforts to analyse and understand the internal logic and operation of modern industrial capitalism in the mid-to-late nineteenth century, today it is necessary to deeply analyse and understand the internal logic and operation of the contemporary form of production and its transformation. Rational action can only be taken in accordance with the direction of this transformation, and at critical moments and junctures, relatively reasonable choices should be made based on the given historical conditions. For China, socialism cannot simply be limited to the governing manifesto of the ruling party, it should also be a concept and practical resource to rethink public participation and reshape a political community. Amidst the new world landscape and the rise of new forms of production, the new direction of socialism should be seriously considered.

The core tenets of Socialism 1.0 – the planned economy, public ownership, and distribution according to work – were built through reflection on and improvement of the mass production model. The basis of mass production is collective labour: workers gather in a common workplace and work with each other to operate the means of production to assemble and manufacture goods. The principles of Socialism 1.0 aimed to enable workers to control the means of production on the basis of collective labour in order to cast off the exploitation of the bourgeoisie, and improve the structure of work and the living conditions of the workers. Socialism 3.0 should explore new approaches to correct the abuses caused by capitalism’s dominant position in the global economy, with a focus on improving the living conditions of workers and increasing their control of the means of production, while acknowledging the necessity of a market economy. In China, it is necessary to limit the abuses of capital and to improve the status of labour in the production process, in line with the dynamics of industrialisation, and, ultimately, to build a more inclusive and fairer model of industrialisation. This goal obviously cannot be achieved by the spontaneous adjustment of the market and requires the state to ensure and maintain its leadership in the economic domain.

Since the beginning of the revolution, the Chinese state has exhibited a certain uniqueness, possessing multiple executive forces that penetrate the country’s economy, politics, and society. Even after the administrative reforms during Socialism 2.0, the state has continued to possess a certain economic initiative, not only in terms of its public policies but, importantly, the SOEs and the state-owned land system.

While undertaking such a daunting task, the country must also be vigilant of the further bureaucratisation that may arise from efforts to regulate production. To continue to lead the Chinese people, the CPC must effectively use its power and resources to restructure the relations of production and advance the interests of the working class, thereby winning the support of the people. In the era of Socialism 1.0, the CPC distributed the critical means of production – land – to the peasantry and generated the working class through industrialisation. As a result, the overall interests of the CPC and the people were aligned, and the party’s social foundation was solid. However, in the era of Socialism 2.0, the CPC introduced and developed the market economy and made efficiency the core principle to guide resource allocation, encouraging individuals to become rich. This approach catered to the ‘ever-growing material and cultural needs of the people’ (人民群众日益增长的物质文化需求, rénmín qúnzhòng rìyì zēngzhǎng de wùzhì wénhuà xūqiú) but also laid the groundwork for a serious crisis. Today, if the CPC seeks to rebuild its social foundation, it cannot merely make adjustments to its social welfare policies, it must also regenerate its class foundation by broadly improving the living conditions of the working class, achieving a more balanced distribution of income across the country, and raising the position of labour in the industrial system as well as limiting the abuses of capital.

In addition to the economic and social fields, it must also be recognised that the values and ideals inherent in socialism are an important resource for China as a political and cultural community. The reason why socialist ideas were rapidly accepted and spread in modern China is not only because they are closely related to the traditional Chinese ideal of ‘Great Unity’ (even today, many Chinese people derive their understanding of socialism from this cultural concept), but also due to the successful adaptation of the socialist narrative of historical stages of development to the Chinese context by Mao and others. It is precisely in this narrative that people’s acceptance of socialism achieved the unity of cognition and belief.

In a socialist country, the historical materialist narrative of development is both informative and enlightening. It can be said that this historical narrative plays a role in maintaining public faith in the political system and the trajectory of national development in non-religious countries like China, just as the Christian tradition plays a strong political role in the liberal democracies of the United States, Europe, and other Western countries. For a large country such as China, it is necessary to develop a common set of values and ideals that are reflected in real political and economic processes, rather than mere ideological propaganda. Under ever-changing historical conditions, China must mobilise its own cultural traditions and ideals to reshape and revitalise its common values to ensure the survival of the country and guide it in the correct direction.


Deng Xiaoping. ‘In Everything We Do We Must Proceed From the Realities of the Primary Stage of Socialism’. In Selected Works of Deng Xiaoping, Vol. 3. Beijing: Foreign Languages Press, 1994.

Deng Xiaoping. ‘We Can Develop a Market Economy Under Socialism’. In Selected Works of Deng Xiaoping, Vol. 2. Beijing: Foreign Languages Press, 1994.

Mao Zedong. A Critique of Soviet Economics. Translated by Moss Roberts. New York: Monthly Review Press, 1977.

Mao Zedong. ‘On New Democracy’. In Selected Works of Mao Tse-tung, Vol. 2. Peking: Foreign Languages Press, 1965.

Mao Zedong. ‘The Chinese Revolution and the Chinese Communist Party’. In Selected Works of Mao Tse-tung, Vol. 2. Peking: Foreign Languages Press, 1965.

Mao Zedong. ‘The Party’s General Line for the Transition Period’. In Selected Works of Mao Tse-tung, Vol. 5. Peking: Foreign Languages Press, 1977.

Twelfth Central Committee of the Communist Party of China. ‘Decision of the Central Committee of the Communist Party of China on Reform of the Economic Structure’. Beijing Review 27, no. 44 (October 1984).

Author’s Notes

1. ‘Socialism with Chinese characteristics’ is a term that was first coined by Deng Xiaoping (邓小平) in 1982, in the early stages of reform and opening up, that emphasised that socialism in China had to be tailored to the country’s conditions.

2. After the first Opium War (1839–1842), China gradually fell into the status of a semi-colonial, semi-feudal state controlled by foreign powers. The period of more than 100 years from the mid-nineteenth century until the establishment the socialist revolution in 1949 is referred to as China’s ‘century of humiliation’ (百年国耻, bǎinián guóchǐ). The series of revolutionary movements during this period that struggled against imperialist invasion and in pursuit of Chinese national liberation and independence are collectively referred to as the Movement for National Salvation (救国运动 jiùguó yùndòng) due to their significance in ‘saving’ the Chinese nation when it was on the brink of survival.

3. ‘Major changes unseen in three thousand years’ was a phrase used by Lin Hongzhang (李鸿章), a political leader during the late Qing dynasty who advocated for China’s industrial and military modernisation, to describe the global geopolitical shifts taking place in the nineteenth century.

4. Translator’s note: the pinyin translation of Dr. Sun Yat-sen’s name has been included here as his English name does not correspond to his Chinese name, unlike, for example, Yan Fu.

5. ‘Great Unity’ is a utopian concept in traditional Chinese philosophy related to all of humanity living in a harmonious community. The term dates back several thousand years, first appearing in the ancient Confucian text Book of Rites (礼记, Lǐjì), and remains an influential political ideal.

6. In the early 1920s, under the manipulation of imperialist powers, China remained in a state of warlordism and fragmentation. Warlords of all sizes plundered and oppressed the people in their ruling areas, leading to an economic depression and widespread suffering. In response to the common aspiration of the Chinese people to overthrow imperialism and bring an end to the rule of the warlords, the Communist Party of China actively promoted cooperation with the Nationalist Party of China, or Kuomintang, to establish a revolutionary united front. After the formation of the first united front between the two parties, the pace of the Chinese revolution accelerated, and a revolutionary movement against imperialism and feudal warlords erupted from 1924 to 1927, commonly known as the ‘Great Revolution’ or the ‘National Revolution’.

7. Mao Zedong, ‘The Chinese Revolution and the Chinese Communist Party’, in Selected Works of Mao Tse-tung, Vol. 2 (Peking: Foreign Languages Press, 1965) ; Mao Zedong, ‘On New Democracy’, in Selected Works of Mao Tse-tung, Vol. 2 (Peking: Foreign Languages Press, 1965) .

8. New Democracy, or the New Democratic Revolution, is a concept developed by Mao Zedong that referred to a phase of China’s revolutionary transformation. During this stage, the Communist Party would lead a united front of the working class, peasantry, petty bourgeoisie, and national bourgeoisie, allowing for a limited development of national capitalism to overthrow feudalism and secure national independence.

9. The Self-Strengthening Movement (1861–1895) was a series of institutional reforms launched during the late Qing dynasty period that sought to modernise China’s economy and military.

10. Mao Zedong, ‘The Party’s General Line for the Transition Period’, in Selected Works of Mao Tse-tung, Vol. 5 (Peking: Foreign Languages Press, 1977).

11. ‘One transformation and three reforms’ was the general line adopted by the CPC during the transition to socialism; ‘one transformation’ refers to the country’s socialist industrialisation, while ‘three reforms’ refers to the socialist transformation of agriculture, handicraft industry, and capitalist industry and commerce.

12. Mao Zedong, A Critique of Soviet Economics, trans. Moss Roberts (New York: Monthly Review Press, 1977).

13. ‘Two participations and one reform’ refers to the practices of Angang, or Anshan, Steel (now known as Ansteel Group) in 1960; ‘two participations’ meant that the cadres should participate in labour while the workers should participate in management, while ‘one reform’ meant that unreasonable rules and regulations should be reformed.

14. Deng Xiaoping, ‘We Can Develop a Market Economy Under Socialism’, in Selected Works of Deng Xiaoping, Vol. 2 (Beijing: Foreign Languages Press, 1994).

15. Twelfth Central Committee of the Communist Party of China, ‘Decision of the Central Committee of the Communist Party of China on Reform of the Economic Structure’, Beijing Review 27, no. 44 (October 1984).

16. Deng Xiaoping, ‘In Everything We Do We Must Proceed From the Realities of the Primary Stage of Socialism’, in Selected Works of Deng Xiaoping, Vol. 3 (Beijing: Foreign Languages Press, 1994).