On Socialism in China

China claims to be a state in the process of building up socialism. For many, this is hard to believe due to its apparent capitalist characteristics. Why we still firmly argue that China, despite many mistakes, remains in a phase of socialist construction. A comprehensive overview of the history, development, theory, and practice of ‘socialism’ in China — and of historical materialism.

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According to an independent long-term study by Harvard’s “Ash Center research teams,” today “95.5 percent” of Chinese people are “either ‘relatively satisfied'” or “very satisfied” with the central government of the Communist Party of China (CPC) [1] – absurdly high numbers when considering that before the Chinese Revolution (1949), life expectancy was just 35 years, four out of five Chinese lived in extreme poverty, and only 15% of the Chinese were literate.

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The often-repeated criticism that the existence of numerous billionaires and luxury goods in China fundamentally contradicts socialism as conceived by Marx is shortsighted from a scientific perspective – it reduces the analysis of social relations to visible consumption phenomena and neglects the dialectical development of the relations of production and the role of the state as an economic actor.

Marx explicitly warned against judging social phenomena only on their surface rather than analyzing the internal laws of motion of society, because…

“The surface of economic phenomena is deceptive, and science must penetrate behind the appearances to discover the hidden laws of motion.” (Marx, Preface to “A Contribution to the Critique of Political Economy,” 1859)

The question of China’s political-economic character has been the subject of intensive debate within the international left for decades.

Critical voices hold that reform policies since 1978 marked a break with revolutionary socialism and initiated a capitalist development – this position points to the introduction of market elements, the legalization of private property, the supposed existence of capital export according to Lenin and foreign investments, as well as growing social inequality as signs of a systemic shift.

Such arguments, like those from the “Communist Party” (CPC), overlook the dialectical logic of historical materialism, according to which the development of productive forces (i.e., the totality of means of labor, human labor, and technical knowledge used to produce material goods) is a necessary prerequisite for transforming the relations of production.

The existence of class contradictions and social inequality is not evidence of the abandonment of socialism but an expression of the contradiction within a particular development.

Therefore, the question of China’s socialist character cannot be answered solely based on consumption indicators or an idealistic reading of Marxism.

The process of building “socialism with Chinese characteristics” is a historically dialectical process that includes the development of productive forces, overcoming social contradictions, and the continued role of the state as a central guiding force.
Analyzing this, often contradictory and partly flawed development cannot be done within “Maoist” or “Dengist” schemes — especially because the development of the People’s Republic of China is more than just the Mao Zedong and Deng Xiaoping eras.

Instead, this article provides a consistent, often sober analysis of China’s development from 1949 to 2025 — with an objective view of both successes and failures of each era.

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We will specifically address the following questions:

1. Why is the contradiction between productive forces and relations of production essential?
2. What role do market elements play in socialist construction?
3. What is the understanding of socialism in China?
4. Is China currently in the process of socialist construction?

Furthermore, we will examine some sharp critiques from opposition voices.
The best elaboration of the opposition view is found in “The Rule of Capital in China” by the CPC.
Although we do not agree with this analysis, we respect its scope and methodology.

Part 1: Lenin, Practical Foundation

The debate on the paths and methods of socialist construction is as old as real socialism itself. Repeatedly, socialist states — from Cuba’s market reforms in 2021, through Vietnam’s “Đổi Mới” policy from 1986, to Yugoslavia’s “socialist market economy” under Tito — have integrated market mechanisms into their development strategies in various ways, more or less successfully.

The most historically significant and theoretically concise example of such recourse to the law of value is Lenin’s “New Economic Policy” (NEP), introduced in 1921 after the end of War Communism in Soviet Russia.

Historical Context and “War Communism”

After the working population of the Soviet Union took over the state apparatus in 1918, reactionary monarchists, liberals, and nationalists, with massive support from imperialist powers (Britain, France, the United States, and Japan), organized the “White Army” to end the revolutionary restructuring — especially out of fear that the revolution might spread across exhausted Europe after the World War.

The backward, semi-feudal material conditions of the Soviet Union (or Tsarist Russia) were not developed enough at the time of the revolution to protect the new state from the most powerful imperialist forces — thus, the Council of People’s Commissars, under Lenin, decided to prioritize the supply of the newly founded “Red Army” as the top revolutionary goal.

This supply was achieved, among other means, through rationing and centralized distribution of food, forced grain deliveries to the state, and work obligations for certain peasant and working classes.
The coercive economy was initially welcomed by many workers and peasants, precisely because there was consensus that the revolutionary break with Tsarism must be defended:

“For most (…) workers in spring 1918, the prospect of economic and social unrest, and even further hardships, seemed less important than the greater revolutionary cause. (…) They were generally inclined to tolerate harsh measures and shortages as unavoidable in the context of the civil war and blockade.” (Rabinowitch, “The Bolsheviks in Power: The First Year of Soviet Rule in Petrograd,” 2008)

Conquering Victory

During the four years of the “civil war,” the “War Communism,” as Lenin later called the economic regime of that time, led to the victory of the Red Army over interventionist forces — at the cost of about one million soldiers.

What the “War Communism” brought, however, were massive economic and social tensions among the working classes, who had to make the greatest sacrifices for the victory of the Soviet revolution:

Industrial production fell to 20% of pre-war levels by the end of the civil war, and agriculture produced only 50% of the 1913 harvest — leading to famines, massive peasant uprisings, and almost complete economic collapse.

Grain quotas were temporarily increased to levels that many peasants could not meet without starving themselves — resulting in about 4.5 million deaths by hunger in regions like the Volga, Ukraine, and southern Russia.

Alongside the “War Communism,” foreign occupation of parts of the East (by Japan), the North (by Britain), and the Trans-Siberian Railway (by Czechoslovakia) contributed to the misery — each occupying power ruled militarily over the territories, destroying millions of hectares of grain (“scorched earth”) and exporting necessary resources to their home countries to undermine the revolutionary state’s support.

The Soviet Union itself was internationally completely isolated during the civil war — international recognition and partial trade only emerged towards the end of the conflict, once it was clear that the “Union of Soviet Socialist Republics” would remain.

The New Economic Policy (NEP)

After four years of civil war and given the massive material backwardness left by Tsarist Russia, the Bolsheviks faced a situation marked by hunger, poverty, and imperialist threats.

Lenin recognized that immediate transition to socialism was not feasible. The fundamental contradiction between underdeveloped productive forces and the socialist mode of production had to be addressed first — i.e., the means and capabilities used in production (labor power, tools, machinery, knowledge) were not at a level that could enable socialism as Marx described:

“(Only) after the all-around development of individuals and their productive forces has grown, and all the springs of cooperative wealth are flowing full, can the narrow bourgeois legal horizon be completely surpassed, and society proclaim: ‘From each according to his ability, to each according to his needs!'” (Marx, Critique of the Gotha Program, 1891)

As Lenin emphasized, the Russian economy at that time consisted of a variety of forms of production and ownership: from small-scale peasant production to patriarchal and semi-feudal structures, to private capitalism, state capitalism, and the first socialist approaches in the form of Soviet enterprises.

Capitalism as a developmental stage of feudal relations was thus not yet established:

“As long as we are not yet able to realize the immediate transition from small-scale enterprise to socialism, capitalism is, in a certain sense, unavoidable as an elementary product of small-scale enterprise and exchange, and insofar we must utilize capitalism (especially by guiding it into the course of state capitalism) as an intermediate link between small-scale enterprise and socialism, as a means, method, and procedure to increase productive forces.” (Lenin, On the Natural Tax, 1921)

Lenin thus describes the historical-materialist insight that capitalism, though a “evil” compared to socialism, is nevertheless an “elementary product” necessary for the development of productive forces of the societal order being transcended.

Similarly, he writes in “Left Radicalism”:

“Capitalism is an indispensable stage in the development of mankind’s material productive forces; socialism can only arise on the basis of capitalism.”

For Lenin, the recourse to market elements and the legalization of private property, profit-oriented labor, and foreign investments (concessions) were not capitulation to capitalism, but a “tactical retreat” to create the material foundations for socialism.

Thus, at the 10th Party Congress, the end of War Communism and the beginning of the “New Economic Policy” (NEP) were decided:

Lenin emphasized that the “transfer of state enterprises to the so-called economic management (…) is inevitable and inseparable from the New Economic Policy.”

Experts from the Tsarist era were reactivated to introduce modern management methods into the nationalized industry. In the second phase of the NEP, the state gradually withdrew from direct production and took on a regulatory role, reminiscent of modern social democracies.

Even Trotsky later wrote:

“But the new economic policy is not only a transition between city and countryside. It represents a necessary stage in the development of state industry. Between capitalism, where means of production are private property and all economic relations are regulated by the market, and full socialism, which involves a planned social economy, there are a series of transitional stages, and the NEP is actually one of these stages.” (Trotsky, “The New Economic Policy of Soviet Russia,” 1922)

Contradiction and Marks

The NEP led to a significant improvement in supply conditions and enabled the young Soviet Union to quickly overcome the food crisis — grain supplies doubled from 1921 to 1929[1] and hunger was temporarily pushed back.

At the same time, social contradictions intensified, as is inevitable in a market economy.

Many revolutionary cadres and class-conscious workers were uncertain whether this “tactical retreat” might pave the way back to capitalism. A witness expressed this concern as follows:

“We young communists grew up believing that money was finally gone for good. (…) If money returns, will the rich also come back?” (Kunzmann, Theory, System & Practice of Socialism in China, 2018)

Lenin himself reflected on this contradiction and noted that the Soviet state had interrupted the “osmosis of money and power”:

“The party reserves all power for itself, but leaves the money to the NEPman. (the capitalist tolerated under NEP, critique)”

This shows a central moment of the historically-materialist dialectic: The coexistence of elements of different modes of production is inevitable during transition, as long as the proletarian state retains political power and sets the strategic direction — an antagonistic state derived from the old state itself:

“What we are dealing with here is a communist society, not as it has developed on its own basis, but rather as it emerges from capitalist society, which in every respect, economically, morally, spiritually, still bears the marks of the old society from which it came.” (Marx, Critique of the Gotha Program, 1891)

This intermediate state, which we can understand as the socialist construction period in China, was described by Engels as a “half-state,” which is destined to “die out.”

Some cadres of the Soviet “right opposition,” such as Nikolai Bukharin (whom Lenin called “the greatest theorist of the party”), saw the NEP not only as an intermediate period but as a long-term necessity for developing productive forces.

Bukharin, who vehemently supported the continuation of the NEP after Lenin’s death in 1924, wrote the following about the necessity of capitalism as a transitional period:

“Our task now is undoubtedly to rebuild our economy — to put it on a new technical foundation. This primarily depends on whether we succeed in acquiring and utilizing capital — i.e., means to expand the productive base and to establish or build new enterprises, and in considerable scope, on a new technical foundation.” (Bukharin, “Building up Socialism,” 1926)

Furthermore, he quotes Soviet economist Pavel Maslov:

“It is enough to know the predominant type of enterprise in agriculture and handicrafts, and which sector of industry employs the most workers, to conclude that workers cannot produce socialism before capitalist production has created the material prerequisites for it. Even the revolution, powerful as it is in its creative force, cannot create new enterprises out of nothing on a new technical basis.” (ibid., p. 44)

Historical Context and Relevance

The situation of the Soviet communists was unique: they could not directly base themselves on Marx and Engels in many questions of socialist construction, because the situation in Russia was fundamentally different from industrialized Western Europe.

The end of the NEP in 1928 marked the transition to central planning methods, which became necessary in the face of looming imperialist aggression and the need for rapid development (explicitly) of heavy industry.

The NEP remains a milestone of Marxist theory and practice. It prevented the economic collapse of the young Soviet Union and created the material conditions for later defense against Hitler fascism.

Lenin described this course as “a step back to take two steps forward” — a strategy explicitly based on adapting historical materialism to semi-feudal material conditions and underdeveloped productive forces.

Socialism in the Northern Hemisphere would not need a construction period comparable to the NEP — because, unlike the agrarian Soviet Union of the 1920s or China of the 1940s (or 1970s), imperialist centers have highly developed productive forces, a sophisticated industrial infrastructure, and an abundance of capital — productive forces ready for the development of a higher society.

Marx’s analysis is not without reason: …

“A social formation never passes away before all its productive forces are developed enough for it; and new, higher relations of production never replace the old before the material conditions for them are matured within the old society itself.” (Marx, Critique of Political Economy, 1859)

Part 2: On the Law of Value

The debate on the Law of Value is probably one of the most controversial and central issues of the communist movement since its inception.

Regarding the Law of Value itself:

“The content of the ‘Law of Value’ is the degradation of productive labor into a mere quantitatively effective instrument for the creation of money, i.e., of units of private property separated from anything specific, and embodied as such in an abstract power of disposition; and as the dominant economic principle, such a law exists only because all productive labor of society is seized by property rights and used as a tool for the boundless increase of property: for the accumulation of capital.” (GegenStandpunkt, “The Value,” Issue 2-10)

Or more simply: Marx’s Law of Value states that the value of a commodity is determined by the socially necessary labor time required for its production. Under capitalism, work is considered productive mainly when it creates surplus value, i.e., profit for the capitalist.

Production under capitalism is thus not oriented toward human utility but toward the goal of increasing capital. Ownership of the means of production enables capitalists to make others’ labor work for them and to appropriate the surplus value created. In this way, work in capitalism primarily becomes a means of capital accumulation — not to satisfy societal needs but to endlessly grow capital.

The question of the role of the Law of Value in socialism (or socialist construction), i.e., how commodity production and price mechanisms should be handled, is one of the most central and most misunderstood problems of Marxist theory and practice — democratic management of production by the working class, as Marx envisioned, presupposes a significant centralization of economic planning.

Nonetheless, the historical experience of all socialist states shows that a socialist economy during the transition period cannot do without the Law of Value and market elements altogether.

The Law of Value in Socialism: Theory and Practice

The Law of Value remains effective in socialism initially as long as commodity production and division of labor persist.

As a core feature of capitalist society, the Law of Value during the transition remains like a “mole” — it is explicitly desired in the NEP, as Marx argued, so that socialism can suppress its validity, and socialist society’s task is to push back the Law of Value.

This means that in the transition, commodity production, monetary relations, and the Law of Value are not fully abolished but are transformed into new social forms.

How the Law of Value will be determined in the higher stage of communist society was described by Engels as follows:

“Society can simply calculate how many labor hours are embedded in a steam engine, a hectoliter of wheat from the last harvest, or in a hundred square meters of cloth of a certain quality. It cannot conceive of expressing the amounts of labor laid down in products in a relative, fluctuating, and inadequate measure — as was previously an emergency measure — but only in their natural, adequate, and absolute measure, that is, in time.” (Engels, “Anti-Dühring,” 1877)

Furthermore, Marx wrote:

“In a society based on common ownership of the means of production, producers do not exchange their products; nor does labor related to products appear as the value of these products, as a property they possess, because now, in contrast to capitalist society, individual labor exists directly as part of the total labor.” (Marx, Critique of the Gotha Program, 1891)

Historically, the Law of Value was recognized as a necessary element of economic regulation in all socialist states — from the Soviet Union, through East Germany, to China and Vietnam.

In East Germany, for example, the Law of Value was explicitly part of the “fundamental laws” of the socialist economy — state-owned enterprises operated as independent commodity producers, which was a continuation of the division of labor and commodity production as analyzed by Marx as a prerequisite for the Law of Value.

Stalin and Ulbricht, representatives of the Soviet model, emphasized the “objective necessity” of commodity-money relations in socialist production.
Stalin argued that “the scope of the Law of Value in our system is strictly limited and the Law of Value cannot play the role of regulator of production” — yet, the Law of Value was still largely valid in light industry.

After Stalin’s death, the view that “the Law of Value (is) not a law of capitalism but a law of all commodity production, including planned commodity production in socialism” (Jewsei Liberman, 1965) became dominant, and based on this, the planned economy was relaxed with the Kosygin reforms of 1965 — a mistake that was linked to the backwardness of light and consumer goods industries and led to deep (and unresolved) social contradictions.

Marx on the Transition Period

Marx himself distinguished in his “Critique of the Gotha Program” between the first and higher phases of communist society. In the first phase, Marx argued, “the law is still — in principle — bourgeois law,” meaning some inequality persists resulting from different individual capacities.

These “disorders,” Marx said, are “inevitable in the first phase of communist society.” Only in the higher phase, when “all springs of cooperative wealth are flowing full,” can society realize the principle “From each according to his ability, to each according to his needs.”

The complete overcoming of the Law of Value and commodity production is only possible when productive forces are sufficiently developed to produce abundance and societal needs can be satisfied without resorting to market mechanisms:

In Russia in 1917, in East Germany in 1949, or in China in 1949, these conditions were not yet present. Instead, these societies were in a transitional period where elements of capitalism and socialism coexisted and had to be dialectically overcome.

The Role of the State and Planning

Central planning remains the tool for overcoming the chaos of capitalist production in socialism. But practice has shown that planning without considering the Law of Value and real economic incentives can lead to inefficiencies, resource waste, and innovation barriers.

It is crucial, unlike “market socialists” like Tito, Dubček, or Khrushchev, that the Law of Value is useful for developing productive forces, as it allows for its abolition and replacement by more advanced laws of value — but “market socialism” can never be the goal, let alone remain stable in the long term, because it will inevitably face the same contradictions as capitalism, albeit to a lesser degree, such as the contradiction between capital and labor.

The socialist state must therefore, especially while tolerating the Law of Value, ensure the separation of political and financial capital to avoid the political consequences of the Law of Value (bureaucratism, lobbying) and keep politics away from the interests of the capitalist class, which are fundamentally different from those of the working class.

Summary: The Law of Value

The Marxist analysis of the transition period demands a concrete, materialist, and dialectical approach — as Marx, Engels, and Lenin emphasized, socialism is not a finished model but a process that aims to overcome capitalist relations of production based on developed productive forces.

Applying the Law of Value and utilizing market mechanisms in socialist construction are not betrayals of Marxist principles but expressions of the historical necessity to create the material conditions for the higher phase of communist society.

The experience of all socialist states shows that the “narrow bourgeois legal horizon” can only be overcome when societal productive forces reach a level that enables abundance and need satisfaction for all.

Until then, socialist society remains “marked with the scars of the old society” — including the Law of Value, which carries both great risks and opportunities for socialist development.

Part 3: “Socialism 1.0”

The Beijing Cultural Review (BCR), founded in 2008, sees itself as a “socialist discourse space for finding solutions amidst China’s modernization crises.”

Its independence from state institutions and its critical perspective on the CPC’s policies make it an important source for nuanced, non-Eurocentric analyses of Chinese socialism.

The BCR brings together Chinese and international voices (including Joseph Stiglitz, Perry Anderson, Samir Amin) in the debate, providing a multi-perspective approach to the development of socialism in China.

The authors of the BCR distinguish three major phases of socialist development in China:

1. Socialism 1.0 (1949–1976/80): Marked by the liberation struggle, the shaping of the socialist path, the “Great Leap Forward,” and the Cultural Revolution.
2. Socialism 2.0 (1980–2014): Shaped by Deng Xiaoping’s reform and opening policy and Xu Muqiao’s economic theories.
3. Socialism 3.0 (2014–present): Characterized by renewed centralization, expansion of social systems, and the end of the first phase of socialist construction.

Historical Context: The Double Revolution

The building of socialism in China, as Mao Zedong emphasized, proceeded under conditions quite different from the Soviet Union.

Already during the anti-Japanese liberation struggle of the 1930s, the CPC established rudimentary government structures in liberated areas where different forms of property coexisted.

Mao analyzed China’s relations of production during the liberation as “colonial, semi-colonial, and semi-feudal” (Mao, “On New Democracy,” 1940).

The CPC thus faced the dual task of achieving national independence and modernizing society and industrializing — a task that aligns with Lenin’s analysis of “two revolutions” (democratic and socialist).

After victory over the Kuomintang and the founding of the PRC in 1949, Mao formulated a phased theory of socialist construction:

1. Phase of the New Democracy: Aimed at land reform, expropriation of large landowners, and redistribution of land to peasants.
2. Socialist phase: Building socialist industry and transferring the means of production into social ownership.

Mao emphasized:

“It is quite clear that the colonial, semi-colonial, and semi-feudal character of today’s Chinese society necessitates dividing the Chinese revolution into two phases.” (Mao, “On New Democracy,” 1940)

This first phase of New Democracy, similar to Lenin’s NEP, was intended to tolerate private ownership for the development of productive forces:

“In the present stage, it is necessary to protect and develop the economy of the bourgeoisie as long as it benefits the national economy and does not harm the working class and the majority of the people. (…) The policy of the people’s government is to protect the individual economy of peasants, artisans, and small entrepreneurs, to permit and control private capitalist economy, and to develop the state economy.” (Mao, “On the Diktat of the People’s Democracy,” 1949)

The central contradiction of the early years of socialist construction in China was that, on the one hand, a modern industry had to be created, i.e., productive forces had to be developed, but on the other hand, socialist democracy and equality should be realized.

Marcus Hesse correctly formulates:

“Even in 1949, the year of the proclamation of the People’s Republic of China, Mao assumed that several decades of capitalist development would be necessary as a prerequisite for the socialist revolution. The dynamics of international political events (Cold War, Korea War) forced Mao to go further within a few years than he originally wanted.” (Hesse, “Mao’s China – A Critical Balance,” 2016)

The prioritization of heavy and armaments industry was motivated not only economically but also geopolitically — especially due to the Korean War and the threat of US imperialism.

After the “Century of Humiliation” (1839–1949) that severely weakened China politically and economically, the PRC had to rely on rural areas as the central basis for industrialization due to its low level of industrialization and limited resources.

Unlike the Soviet Union, China specifically relied on extensive internal mobilization of agricultural surpluses rather than foreign loans, international investments, or imperialist exploitation.

The resources for building heavy industry were to come mainly from agricultural production and the massive labor force of peasants.

Within the framework of New Democracy, there was a re-centralization of administration, enabling more efficient organization of rural areas and promoting the formation of people’s communes, the first collective production forms that laid the foundation for later socialist collectivization.

The people’s communes aimed not only to increase agricultural output but also to bundle social services and education in rural areas, improving living conditions and reducing the urban-rural divide — a central goal of New Democracy.

The CPC relied on a controlled integration of rural economy into the overall economy to gradually limit the capitalist development of the bourgeoisie without jeopardizing productive forces through rapid upheavals.

The priority was the development of productive forces and the gradual transformation of property relations as the basis for the transition to socialism:

“We must guide workers and capitalists to organize production committees under the leadership of local authorities, to reduce costs, increase production, and ensure good sales, so that both state and private interests are considered — work and capital both benefit, and the war effort is supported.” (Mao, “On Industry and Commerce Policy,” 1948)

The rapid industrialization under the New Democracy led to new social contradictions: the concentration of expertise and decision-making power in the hands of specialists and managers weakened the direct control of the working class over the means of production and led to the emergence of a new “managerial class,” which in many places effectively replaced the old capitalists.

Mao responded to this development with campaigns for grassroots control of officials and promoting criticism of hierarchy — measures that had limited effect:

The principle “first strong, then prosperous” led to impressive industrial growth during the first five-year plan (1953–1957; electricity +219%, coal +178%, steel +306%, machinery and tools +180%)[2] but could not prevent widespread poverty and high unemployment (20–30% in the cities).

The structural problems of Chinese agriculture — lack of mechanization, vulnerable supply chains, low efficiency and motivation, inadequate infrastructure — largely remained unchanged.

Nevertheless, the standard of living of Chinese workers and peasants increased manyfold:

From 1951, a system of unemployment, pension, health, accident, and maternity insurance was introduced for workers, employees, and state officials; land reforms expropriated large landowners and distributed land to over 300 million peasants.

Hunger was first alleviated after decades; grain production increased from around 113 million tons in 1949 to about 164 million tons in 1952.

Women gained full legal equality and received, for the first time in modern Chinese history, full social recognition; the number of primary school students doubled between 1949 and 1957, education became accessible to large parts of the population, and child mortality fell from 150 per 1000 live births (1948) to 31 per 1000 (1956)[3], life expectancy increased from less than 40 years (1949) to about 50 years (1957).

3.1: “Great Leap Forward” and Cultural Revolution:

With the “Great Leap Forward” (1958–1961), the CPC sought to “skip” the capitalist development phase of the “New Democracy” on the way to socialism and initiate a direct, accelerated development toward socialism.

The decision to de facto skip or prematurely end the “New Democracy” phase was based on three core arguments:

1. The social contradictions in the countryside intensified again; the CPC believed that prolonging the “New Democracy” would secure the existence of the bourgeoisie.
2. With the end of the Korean War (1953) and the beginning of the Vietnam War (1955), fears of imperialist aggression by the United States grew; similar to the end of the NEP, rapid development of heavy industry was required to defend the revolution in case of emergency.
3. The growing ideological differences with the Soviet Union (Chinese-Soviet split) from 1956 (Khrushchev’s “Secret Speech”) led China to a security policy need for rapid autarky and ideological separation from “Soviet revisionism,” developing an alternative to the Soviet Union’s moderate line under Khrushchev.

The formation of large People’s Communes and the emphasis on ideological mobilization was supposed to eliminate the “three great differences” — between city and countryside, workers and peasants, and mental and manual labor.

Mao proclaimed that with collectivization, “communism (will) begin in ten years” — with free food, clothing, and communal living in people’s canteens.

However, in practice, the Great Leap Forward led to serious misdevelopments. Central planning targets were massively exaggerated, as local officials under political pressure sought to report successes. The resulting false reports led to inflated state grain requisitions — often depleting local supplies entirely.

Simultaneously, millions of workers were pulled from agriculture to work on infrastructure and steel projects, while agricultural production was neglected in favor of steel industry. Furthermore, unscientific farming methods further ruined the harvests.

The consequences were catastrophic: between 1959 and 1961, the worst famine in the history of the People’s Republic occurred. Conservative estimates suggest at least 15-20 million people died. Especially rural provinces like Anhui, Henan, and Sichuan were affected.
In addition to economic and political misjudgments, there were massive droughts, floods, and unusual weather phenomena, such as the flooding of the Yellow River in 1958[4].

From 1961, the CPC returned to a more moderate economic policy, oriented toward Stalin’s development model with central planning and collective ownership. The system of people’s communes was relaxed in practice, and incentives in agriculture were reintroduced through small individual plots (Responsibility System). Grain production recovered from a low of 143 million tons (1960) to about 171 million tons (1964). The acute famine was thus overcome.

Nevertheless, social disparities persisted: The Hukou household registration system cemented the urban-rural divide — urban populations had access to education, healthcare, and secure wages, whereas rural areas remained structurally disadvantaged — a legacy that would influence China well beyond Mao’s era.

Anyone who has read this far should have quickly grasped the mistake of the Great Leap Forward: With the GSL, the CPC tried to dialectically resolve the contradiction between productive forces and relations of production in an idealistic way.
The establishment of progressive relations (People’s Communes system) was supposed to be the key to developing advanced productive forces — the progressive superstructure was supposed to develop the backward base.

But:

“The political, legal, philosophical, religious, literary, artistic, etc., development relies on the economic. But they all react on each other and on the economic basis. It is not that the economic situation is the cause, the only active factor, and everything else only a passive effect. Rather, it is an interplay based on the economic necessity that ultimately prevails.” (Engels, “Letter to Walther Borgius,” 1894)

The Great Proletarian Cultural Revolution

After the misguided course of the GSL, Mao was so weakened within the CPC that he no longer gained majority support in the Politburo and was effectively sidelined by the local Party leadership in Beijing.

Leaders like Liu Shaoqi and Deng Xiaoping, representatives of the “Right Line” of the CPC, who were responsible for stabilizing China’s economy after the GSL, dominated daily politics.

Following this phase of pragmatic reforms in the early 1960s, Mao launched the “Great Proletarian Cultural Revolution” in 1966 through mass mobilization. Its declared goal was to limit the emergence of new social privileges and hierarchies in socialism, especially by opposing “old thinking and institutions” and elements perceived as “bourgeois” in the Party, education, and culture.

Mao addressed youth and students directly, mobilizing them as carriers of the “pure revolutionary spirit.” With the founding and support of the Red Guards, he created a base outside traditional Party structures, which could operate independently of local and administrative agencies and loyally support him as the leader.[5]

During this movement, which lasted until 1976, broad segments of the population, especially youth, were mobilized by the Red Guards. Many political, scientific, and cultural leaderships were examined, with many losing their positions or being re-educated.

Within a few months, numerous schools and universities were temporarily closed, libraries and cultural institutions destroyed or restructured.

About 17 million young people were sent to the countryside as part of the “Send-down” campaign to practice social equality and reduce the urban-rural gap.[6]

During the Cultural Revolution, a radical form of grassroots democracy was promoted, aiming at direct mass participation in political decision-making. Mao emphasized that societal renewal could only succeed if the masses “storm the heavens” and question existing authorities:

In the form of so-called “revolutionary committees,” workers, peasants, and students temporarily took over leadership roles in many institutions. The practice of “criticism and self-criticism” became a central means of political struggle: in collective meetings, factories, schools, and village assemblies, authorities were openly questioned, deviations discussed, and ideological behavior scrutinized.

The Cultural Revolution thus relied on a previously little-developed form of participatory control within socialism, where the continuous mobilization of the masses was not only desirable but necessary to keep the revolution alive during the transition. In theory, this was to prevent the formation of new elites — but in practice, these processes often led to instability, power vacuums, and internal conflicts.

Production data from this period are inconsistent, but it is clear that national production during the Cultural Revolution declined sharply:

“Shortly after (the start of the Cultural Revolution), the total national output value fell by 9.6 percent in 1967. This decline continued steadily in 1968 — in southwest China, production dropped by 41 percent; in Yunnan, state-owned industrial output fell by almost two-thirds. (…) An increase in revolutionary intensity (from the 25th to the 75th percentile) was associated with a 6.9% decrease in the probability of graduating from university for cohorts born between 1956 and 1960. (…) It was also associated with a 4.6% decrease in the probability of working in a professional field and a 10.4% decrease in the probability of working as an entrepreneur for cohorts born between 1956 and 1960.” (Bai & Wu, “Political Conflict and Development Dynamics: Economic Legacies of the Cultural Revolution,” 2023)

This section can be understood as a continuation of the misunderstanding of the relation between productive forces and relations of production.

The Cultural Revolution aimed to promote societal modernization and equality through ideological renewal and political campaigns, regardless of the level of material development.

In line with Engels’ formulation, the question remained whether and to what extent ideological impulses can genuinely promote the development of productive forces in a sustainable way. In retrospect, the Cultural Revolution brought about profound social and institutional changes but was fundamentally opposed to the development of productive forces.

Nevertheless, we agree with the analysis of the Communist organization:

“For Mao, contradictions are ultimately not a form of existence of material reality that determine the development of the socio-economic base and thus its superstructure. Mao’s argument that the main contradiction in China shifts depending on the phase of political struggle, and that the antagonistic or non-antagonistic character of a contradiction depends not on its material structure but on how the country’s political leadership handles it, opens the door to a fundamental voluntarism: if contradictions can be changed arbitrarily, then strict laws of proletarian revolution and socialist construction are no longer conceivable.” (Schulze et al., “The Great Leap Back,” 2024)

Part 4: Socialism 2.0

The years after 1971 marked a profound turning point in the history of the People’s Republic of China. Already in the last decade of Mao’s era, with Mao’s approval, the right opposition around Deng Xiaoping was given room for initial economic reforms.

The economic stagnation during the Cultural Revolution made the need for structural changes obvious. The inefficient planning and ongoing supply shortages in the system of people’s communes revealed the limits of the previous development strategy.

With Mao’s death in 1976 and the political departure of the “Gang of Four,” the phase of mass mobilization and the Cultural Revolution ended.

The power struggles between remaining Maoists like Hua Guofeng and reformists led by Deng Xiaoping favored the latter — Deng’s pragmatic perspective and long experience in economic administration shaped the course of the CPC from then on:

Deng, active in the CPC since the 1920s and having experienced both revolutionary and administrative phases of socialism 1.0, became the architect of a new development strategy.

His experiences with the limitations of planned economy in the context of developing productive forces and the dominance of propagandistic class struggle led him to a sober analysis of the system’s internal contradictions. Deng’s key insight was that the development of productive forces — not just the construction of advanced relations of production — must form the material basis of socialism.

In a 1979 conversation with Hu Qiaomu, Deng already emphasized:

“Communism is something very grand and beautiful, but we cannot reach it without first making our economy significantly stronger (…) The main task now is the development of productive forces. Only with a solid economic foundation can we one day realize the higher principles of communism.” (Deng, “Conversation with the Chairman of the Democratic League Hu Qiaomu,” 1979)

Reform of the Planned Economy

The central weakness of the people’s communes and planned economy was the lack of incentives: shifting to ideological rather than material rewards led to productivity losses and demotivation — precisely because “the springs of cooperative wealth” were still far from abundance.

The CPC therefore decided to “use profit and not revolutionary spirit as the main driving force for economic development” and to accept temporary, sometimes massive, social inequalities to enable a higher overall standard of living.

The key element of the initial reforms was the introduction of the “Responsibility System” in agriculture — farmers received guaranteed state prices for their quotas, and could sell surplus freely on the market. This market-oriented relaxation explicitly followed the NEP model.

The results: Grain harvests rose from 280 million tons (late 1970s) to over 400 million tons in the mid-1980s, meat consumption and average caloric intake increased significantly. For the first time in Chinese history, hunger was sustainably overcome.[7]

The conscious use of commodity-money relations and the restoration of realistic prices and costs stimulated not only agricultural but also industrial production.

The principles of performance and distribution according to work regained importance. This solved a central problem of Maoist planned economy — the lack of a connection between incentives and productivity.

Policy of Reform and Opening

The “Reform and Opening Policy” (ROP) was decided in 1978, after the success of the “Responsibility System,” at the Third Plenum of the CPC Central Committee:

The “Four Modernizations” (agriculture, industry, defense, science, and technology) formed the strategic development goal. The establishment of special economic zones following Lenin’s model aimed to mobilize know-how and capital for the development of the state sector, with foreign investments always linked to majority state ownership. This kept control over the organized bourgeoisie in the hands of the socialist state.

With the expansion of market mechanisms into industry and the possibility to sell surpluses freely, China achieved food self-sufficiency and generated foreign exchange through exports of consumer and industrial goods for further development.

4.1: Xu Muqiao and the Long Transition Period

Xu Muqiao, one of the leading economists (and somewhat architect) of Chinese economic reform, argued based on Marx’s “Critique of the Gotha Program” that China was in a long “first phase of socialism,” which would last at least a century.

The attempt during Mao’s era to force underdeveloped productive forces into highly socialized relations was, dialectically-materialistically, a mistake.
The gradual development of commodity production, state capitalism, and finally socialism — and only in the distant future communism — must be explicitly and precisely adapted to the development of material productive capacities.

In his comprehensive, empirical, strictly Marxist work “China’s Socialist Economy” (1986), he argues:

“The establishment of people’s communes in 1958 was inspired by the idea of quickly reaching communism. The consequences of this hurried collectivization were disastrous: yields declined, administrative chaos, loss of motivation. (…) Later, it was recognized that this was an idealist and unmaterialist mistake, and the system of production teams was restored.”

China is now (at the beginning of the Reform and Opening) in the phase of “underdeveloped socialism” — the priority of this phase is to align property relations with the level of productive forces development — he divides this development into several smaller parts of socialist evolution, based on Marx’s and Lenin’s classifications of socialism and communism, in a two-stage process (or first and second phase of communism):

“Marx points out that communism is divided into two phases, and that socialism is the lower phase. Today’s history presents us with a new question: Shouldn’t socialism also be divided into several stages? In a country with widespread small peasant economy, we must first transform this economy into a collective economy, and after a considerable period, transfer it into a society owned by the whole people — in parallel with the growth of productive forces. Before all means of production are owned by society, there is a period where two systems of socialist public ownership coexist. This is the immature stage of socialism, in which China currently finds itself. Recognizing this fact is of great importance, as it helps to avoid premature application of principles that only apply to the first phase of Marx’s defined communism.” (Muqiao, “China’s Socialist Economy,” 1986)

Contradictions of Reform

As market reforms progressed, new contradictions emerged, notably the growing urban-rural divide and the first large-scale migrant worker flows. The CPC responded with increased worker participation in enterprises, expansion of macro planning, and the introduction of market elements such as the possibility of bankruptcy for state-owned firms.

The principles of social ownership and distribution according to work were maintained but no longer exclusively tied to planned economy as the sole control mechanism.

At the 14th CPC National Congress (1989), it was clarified, following Xue Muqiao, that “China is in the early stage of underdeveloped socialism” — and during Deng’s famous “Southern Tour” in 1992, he confirmed some successes of special economic zones and set the course for nationwide reforms.

Deng emphasized:

“Revolution means the emancipation of productive forces, as does reform. (…) After establishing the basic socialist system, it is necessary to fundamentally change the economic structure that has hindered the development of productive forces and to create a powerful socialist economic structure that promotes their development. (…) Both the liberation and expansion of productive forces are essential.”

The “Southern Tour” was a slogan tour, here are some hits:

• “It does not matter whether the cat is black or white — the main thing is that it catches mice.”
• “We should do more and talk less.”
• “Cross the river by feeling the stones.”

Perhaps Deng wanted to boost the production of slogan mugs during his Southern Tour.

Besides numerous aphorisms, Deng summarized the core of the new CPC line during the Southern Tour:

“The fundamental difference between socialism and capitalism is not whether there are more planning elements or market elements. China should develop a socialist market economy, improve the modern enterprise system, and establish a socialist economic system. (…) China is still in the early stage of socialism. The development of productive forces must be given priority, economic development should be the focus, science and technology are the primary productive forces, and the overall progress of society should be promoted.”

Faction Fight

During the 1980s, a deepening factional struggle took place within the party leadership between the reformers around Deng Xiaoping and the “Left Conservatives” around Chen Yun.

Both Deng and Chen belonged to the first generation of party cadres and shared similar positions under Mao regarding moderate market mechanisms — Chen was involved, among other things, in developing China’s first Five-Year Plan (1953).

Both camps aimed to develop productive forces through market mechanisms and to overcome the economic stagnation of the late Mao era, but they differed sharply in their assessment of how to do so.

The reformers around Deng advocated for extensive liberalization, strong integration of market mechanisms, and cautious but targeted opening to the outside world.

The cadres around Chen Yun, although not oppose reforms, favored a strongly regulated, plan-oriented model that tolerated market elements only as limited tools within a planned system:

Chen formulated the famous concept of the “Vogelkäfig” (“birdcage”), in which the market is the bird that can flutter but not escape — the cage being the state framework. Chen warned against uncontrolled opening, which could lead to social inequality, inflation, and political instability.

He called for “proportional development” of economic sectors based on secure state control over core areas such as production, prices, credit, and investments.

Reforms, in his view, should proceed “gradually, orderly, and verifiably” — with clear limits and reattachment to central planning:

“In March 1979, I said that in the past 60 years, the main mistake of planning in the Soviet Union and China was that we paid attention to planned and proportional development and neglected market regulation, which is an essential part of socialist systems. That’s why we need reform. But in the course of reform, we cannot abandon planned and proportional economic development. Otherwise, the entire economy will fall into chaos.” (Chen Yun, “Several Issues concerning the current economic work,” 1988)

The conflict between these two lines dominated the 1980s and was particularly evident in how far market forces could be pushed ahead of planning.

While Deng’s camp increasingly sought to unleash market forces to stimulate growth, Chen insisted on keeping these forces within clear boundaries.

“The relationship between invigorating the economy and the state plans is like that of a bird and its cage. We cannot hold the bird in our hand; if we do, it will die. We must let it fly — but only within a cage. Without the cage, it would fly away. If we compare the revival of the economy to a bird, the cage is the state plan. Of course, the size of the cage should match the bird. Although we adhere to state plans, certain economic activities should not be limited to a region or province; they can also occur in other regions, provinces, countries, or continents. Just as we often need to adjust the size of the cage to the bird, we must constantly revise our five-year plans. We must use the cage — that is, both economic revival and regulation by market forces should play their respective roles within the framework of the state plan, and we must not deviate from the format of state plans.” (Chen Yun, “Some Questions Concerning Attainment of the Strategic Objectives Set by the Party’s Twelfth National Congress,” 1982)

Despite all differences of opinion, both apparently shared a love of metaphors.

Since Deng could rely on a broader group of pragmatic cadres, Deng’s reform course prevailed over Chen Yun’s more moderate approach — a development with sometimes fatal consequences.

A Thousand Stones

The rapid economic upswing during reforms and opening brought about a sharp increase in social contradictions.

With the dissolution of the people’s communes and the transfer of state enterprises, many people lost social security and jobs. The broad liberalization of prices in the consumer sector (1984) and raw materials led to massive price hikes; consumer prices increased by about 20% in 1987.

The political guardrails — such as the 13th Party Congress (1987), which aimed to double GDP by 2000 — created enormous pressure on local cadres and enterprises to rapidly expand production capacity and initiate new large projects.

In anticipation of rising demand, factories, infrastructure, and facilities were built on a large scale without being fully utilized in the short term — resulting in massive overcapacity and resource waste.

With the introduction of Special Economic Zones (from 1980) and targeted openness to foreign capital, China experienced a huge investment boom — numerous joint ventures and international companies brought capital and modern technology into the country, establishing new production facilities quickly, especially in coastal regions like Shenzhen and Zhuhai.

The associated employment boom attracted millions of migrant workers from rural areas and accelerated urbanization. At the same time, the parallel development of similar industries led to overcapacity, as production facilities sometimes grew faster than effective demand — especially domestically.

Thus, China’s economy grew dynamically, but new imbalances arose: between coast and interior, labor and capital, and between supply and demand.

4.2: Tian’anmen Demonstrations

The social contradictions unleashed by liberalization ultimately led to massive unrest in Beijing, Shanghai, Guangzhou, Nanjing, and other large cities.

“The crisis is a direct consequence of reform policies — the privatization of agriculture, the attempt at privatizing industry, the introduction of free markets, and decentralization, which transferred important economic decisions to the regions. Especially the coastal regions, which quickly and uncontrollably amassed wealth, then competed with inland areas for scarce resources, especially raw materials. Conditions developed that brought the country to the brink of economic chaos. The government could no longer guarantee supply; power was rationed so heavily that factories only operated two or three days instead of six; prices went completely out of control; corruption became endemic, and all the moral decay of the old society began to reappear.” (Hinton, The “Great Reversal”: The Privatization of China, 1991)

Contrary to anti-communist reporting about the Tian’anmen protests, the protesters’ demands were not for liberalization or vague bourgeois democracy, but rather the opposite.

The rapidly escalating contradictions of the reform and opening process and the restriction of worker participation were direct consequences of liberalization — looking at images of the protesters, one sees, alongside many pictures of Mao and Zhou Enlai, many participants from the Communist Party itself; thousands gather on the square to sing “The Internationale” together. [8]

The core of the protests was the increase in corruption in politics and security agencies, rising living costs, and, of course, the loss of grassroots democracy under Mao:

“It was not ‘democracy’ that motivated the protests of young academics, but the poor conditions of study and miserable canteen food. Against the background of an overheated economy, high inflation, and rampant corruption, students quickly gained support from workers, employees, journalists, intellectuals, officials, and party cadres.”[9]

The protests lasted more than 40 days — from a student movement, it grew into a mass movement, which was initially tolerated and even encouraged by the CPC; several official meetings took place between government representatives and protest leaders, discussing concrete proposals promoted by the student leadership — one of these discussion rounds between Premier Li Peng and student leaders was broadcast live nationwide. [10]

The situation escalated when, on the evening of June 3, two soldiers were lynched by protesters — one was later disemboweled, burned, and hanged in humiliation. [11]

On June 4, the People’s Liberation Army evacuated the square after 43 days; at night, soldiers and tanks moved into the city center. The military fired live ammunition at demonstrators and uninvolved persons, especially in the streets around the square. According to various estimates, hundreds of people were killed, the exact number remains unclear to this day.

On the square itself, after intense negotiations, demonstrators remaining there were allowed a free withdrawal. They left the square early in the morning. Most of the casualties occurred in surrounding streets, where the military acted with great severity against protesters, supporters, and residents.

Also present were CIA operatives, including James R. Lilley, who, in addition to financing the right wing, later helped create the “Tiananmen myth” (Wikileaks).[12]

It would be wrong, however, to say that the Tiananmen protesters were solely driven by foreign interests seeking to secure access to capital through influence over the student movement.
The protests were reactions to societal contradictions caused by the overly rapid, unplanned opening of China’s economy — that this opportunity was also exploited by foreign interests is known, among other sources, from the “U.S. Tiananmen Papers”[13] and the preparations of CIA and MI6’s “Operation Yellowbird” (or “Operation Siskin”).[14]

Summary: Reform and Opening

The years after 1971 mark a historic turning point for the People’s Republic of China — the economic stagnation of the late Mao era and the evident weaknesses of planned economy, which contradicted the development of productive forces — especially the lack of incentives and the crises of the people’s communes — made profound changes unavoidable.

Deng Xiaoping and the reformers focused on developing productive forces as the basis for future prosperity and accepted temporary, sometimes massive, social inequalities to enable a higher overall standard of living.

The introduction of market elements, the orientation toward Lenin’s NEP, and the creation of special economic zones led to high growth rates, a massive increase in agricultural production, and a sustainable end to hunger.

But this development also brought new, sometimes serious contradictions:

• The rapid opening of the economy and price liberalization led, especially in the mid-1980s, to price hikes and overcapacity in industry.
• The end of comprehensive social security and the new labor market dynamics created insecurity and social tensions.
• The gap between coast and interior, labor and capital, widened considerably.
• Corruption, rising living costs, and the loss of democratic participation increasingly characterized the societal climate.

These factors culminated in the Tiananmen protests of 1989, which, contrary to Western reports, did not primarily demand liberal democracy but were a reaction to overheating, inflation, and social regression.

The protesters mainly criticized corruption, poor living conditions, and the loss of grassroots elements of democracy under Mao. The movement evolved from a student protest into a mass movement, which was initially tolerated but ultimately suppressed with military force.

Reform was necessary — the recognition that the contradiction between productive forces and relations of production must be resolved during the socialist path is correct.

However, more moderate reform plans, such as those of Chen Yun, would have been far more sensible both for Confucian stability and for minimizing social contradictions compared to Deng’s “shock therapy.”

In line with Chun, we say:

If Deng had resigned in 1980, his achievements would have been immortal. If he had resigned in 1984, he would still have been a great, albeit flawed, man. But he only left in 1990. Oh, what can one say about that?

4.3 Jiang Zemin – “Breschnew Era”

After Deng Xiaoping’s political retreat from 1990, China entered a phase of profound organizational reform and democratization within the Communist Party of China (CPC).

In the final years of Deng’s term, especially after Tiananmen, the party adopted a reform-opposing stance, in contradiction to the increasing societal tensions.

Improvements in democratic centralism, initiated in the 1980s under Zhao Ziyang — such as at the village level — were halted.

Under subsequent leaders Jiang Zemin (1989–2002) and Hu Jintao (2002–2012), the previously strong charismatic leadership was replaced by a more collective and bureaucratic-institutionalized leadership structure — instead of dominance by individual figures, regular leadership changes and formalized decision-making became central to political practice.

This included measures like the introduction of term limits (de jure codified in 1982) and the institutional separation of party and government roles. The goal was to prevent arbitrariness and concentration of power, strengthen political stability, and ensure continuity.

In 2000, Jiang Zemin expanded the CPC’s programmatic basis with the “Three Represents” theory, opening the party to new social groups, explicitly including entrepreneurs.

The “Three Represents” basically means that entrepreneurs are now allowed to be members of the Communist Party — but what the “Three Represents” does not mean is the end of a (1) democratically centralist party or (2) the end of the CPC as a workers’ party:

An entrepreneur can join the CPC if he/she…

1. Has led a “model life” according to party regulations, i.e., considered an “advanced element” (先进分子) of society.
2. Has a clean record, positive assessments from the social environment, and anonymous reviews from the party regarding his/her “socialist conviction.”
3. And has completed a one-year preparatory period:

“During the preparatory period, the candidate is mentored by two mentors. At the same time, he/she must attend at least a three-day course (e.g., at the Party school) and submit quarterly reports (思想汇报) on Marxism-Leninism, the guidelines of the CPC, and current political developments. Meanwhile, the party organization verifies the candidate’s information in his/her resume, political engagement, and convictions. At least eight colleagues, neighbors, and acquaintances are consulted about the candidate.” (https://merics.org/sites/default/files/2020-05/Zentralisierte%20F%C3%BChrung%20-%20Heterogene%20Parteibasis.pdf)

The “Three Represents” followed the comprehensive reform of the basic law for village committees (1998), which stipulated that…

“All villages should hold elections for their village committees, and all candidates should be nominated by village residents. Several candidates could run for a three-year term. Voter turnout was usually high. By 2008, about 900 million people in more than 734,000 villages had participated in elections for about 3.2 million village leaders. (…) Through institutionalizing elections at the village level, party leaders aimed to make local administrations more accountable and improve the functionality of the existing administrative system.” (https://wikileaks.org/plusd/cables/89BEIJING18828_a.html)

Significant Export

Under Jiang Zemin, rural development was massively neglected in favor of export-oriented industry, especially in metropolitan areas, where China’s new economic backbone — export-driven manufacturing — was taking shape. Investment in agriculture, rural infrastructure, and social security systems remained limited, forcing millions of rural residents to migrate to cities as migrant workers. The number of manufacturing firms increased from 377,300 in 1980 to nearly eight million in 1996.[17]

This widened the already existing wealth gap between urban and rural areas, and between East and West China. The increasing regional inequality became one of the most urgent social problems and a persistent tension in China’s development model — a consequence of the growth strategy that favored export sectors and urban centers under Jiang Zemin.

From the 14th Party Congress in 1992, Jiang initiated comprehensive economic reforms, as the Deng model had reached its limits due to debt, corruption, and overproduction:

The CPC reformed the “socialist market economy” (a name Jiang briefly gave to the Chinese system), integrating further market elements, transforming many state enterprises into joint-stock companies (with the state maintaining a majority stake), restructuring the banking system so that loans were only granted to financially viable firms, and gradually privatizing or dissolving smaller and medium-sized state firms.

Despite these measures, many state firms still posted losses — it was only during the Asian crisis of 1997 that the CPC undertook a comprehensive restructuring of state enterprises and a major reform of the banking system to tighten supervision.

Regarding developments under Jiang, Helmut Peters wrote in the “Z. Zeitschrift Marxistische Erneuerung”:

“Compared to Lenin’s NEP, cooperation with this capital takes on new dimensions and effects. Foreign capital now plays an indispensable and significant role in the country’s production and reproduction process. It breaks down barriers that hinder the formation of a unified national market (“opening inward”). (…) The international multinationals expect the Chinese government to mobilize a large part of the roughly 400 billion US dollars invested, mainly to modernize state enterprises. With the relocation of manufacturing to China, capital has not only accelerated the country’s industrialization — often in the manner of Manchester capitalism — but also contributed significantly to China’s closer integration into the capitalist world economy.” (Peters, “The Chinese Transformation Process,” 2004)

Jiang Zemin himself expressed it in the “Self-Criticism” section at the 15th CPC Congress as follows:

“We must recognize that China is now in the early stage of socialism and will remain in this stage for a long time. The modest prosperity achieved so far is still characterized by a low level, incompleteness, and unbalanced development, and the contradiction between the growing material and cultural needs of the people and the backward social production remains the main contradiction of Chinese society. China’s productive forces, science and technology, and education are still relatively backward. Until the realization of industrialization and modernization, there is a long way to go; the dual economy structure of city and countryside has not yet been changed; the trend of increasing regional disparities has not yet been reversed; the number of needy people remains large; the total population continues to grow, and the proportion of the elderly is rising; the pressure from employment and social security is increasing; the contradiction between ecological environment and natural resources on the one hand and economic and social development on the other is becoming more evident; we are still confronted with the superiority of developed countries in the fields of economy, science, and technology, and other areas; the economic structure and management systems are not yet fully developed; problems such as democracy, rule of law, ideological and moral construction, and others are still visible. To consolidate and increase the current modest prosperity, we need long-term hard work.” (Jiang, “On the Strategic Objectives Set by the 12th National Congress,” 2002)

Era of Hu Jintao and Wen Jiabao

With the 16th CPC National Congress in November 2002, Hu Jintao and Wen Jiabao took over leadership of the CPC and initiated a strategic course correction.

Faced with increasing social tensions, rising income disparities, and environmental degradation, the issue of social balance and sustainable development gained importance.

Hu Jintao introduced the concept of “Harmonious Society,” which aimed at equal opportunity, social justice, reducing disparities, and improving security and environmental quality — an explicit response to negative side effects of previous economic policies, such as the urban-rural divide, corruption, environmental problems, and protests.

The tension between socialist ideals and market elements characterized this phase profoundly.

With the “Scientific Outlook on Development” (Hu Jintao, 2002), the party prioritized sustainable development and social justice, but progress was slow: many regions continued to evaluate cadres mainly by GDP, which fostered risky accumulation, formal urbanization, corruption, and widening social gaps.

Nevertheless, the CPC under Hu achieved massive improvements in the living standards of rural and urban Chinese:

Including nationwide minimum wages, which were raised in multiple stages to address the large income gap between urban and rural areas and among regions; significant increases in social assistance (“dibao”) and extensive expansion of health and pension systems, especially for migrant workers and rural residents:

“The ‘Guarantee of Minimum Living Standard’ (urban ‘dibao’ system) saw a sharp increase in beneficiaries. Between 2000 and 2001, the number of those in need rose from 4 million to 11.7 million (an increase of 190.8%), and in 2002, it reached 20.65 million.” (Liu, “Reforms of Social Benefits Law in the People’s Republic of China,” 2010)

Environmental protection was institutionalized in 2008 with the creation of the Ministry of Environmental Protection and the strengthening of environmental authorities at central and local levels, leading to stricter regulations and more effective sanctions for violations.
It gained authority over emission certification, environmental crime penalties, and the coordination of national standards.

In the 10th Five-Year Plan (2001–2005), the goal was set to reduce energy consumption per unit of GDP by 20% by 2010. China actually reduced energy consumption by 19.1% during this period.

To promote educational equity and equal opportunity, laws such as the revised Compulsory Education Law (义务教育法) were enacted in 2006, providing free access to the full compulsory schooling for all children — including migrant children. Similarly, the law on the equal treatment of national minorities was updated, explicitly criminalizing discrimination based on origin and establishing positive measures.[19]

Although social problems and disparities have been partly addressed, and fundamental improvements in social welfare and living conditions achieved, political reform did not follow, corruption grew, and structural issues — such as inequality or dependence on exports — remained unresolved.

Summary: Socialism 2.0

The “Socialism 2.0” and its accompanying market reforms led to profound structural tensions between the people and the ruling organs of the CPC in its practical implementation.

By the time China shifted from Deng’s development model to a phase of intensified export orientation under Jiang Zemin — a process that Chun might call “detonating the birdcage” — the ideological legitimacy of the CPC, claiming its primary goal was to develop productive forces in the service of socialism, became increasingly questionable:

By the end of Jiang’s tenure, it became clear that the separation between political and economic capital could no longer be maintained. Corruption and the structural fusion of economic interests with political power, the “osmosis of money and power” (Lenin), dominated the real conditions within the PRC — in this context, Jiang’s “Theory of the Three Represents” served as an ideological superstructure for a deep penetration of capital into the state and party apparatus.

Nevertheless, it must not be overlooked that, amidst these contradictions, an unprecedented surge in productive forces occurred — a surge that could not have been reproduced under pure market conditions in this speed and intensity:

Between 1978 and 2013, China’s real GDP grew by a factor of 48 — an average annual growth of 9.8%.

At the same time, labor productivity increased nearly ninefold — these economic transformations were accompanied by significant social progress: literacy rose from 65.5% in 1982 to 96.3% in 2015; among youth aged 15-24, literacy is now nearly 100%. [20]

Life expectancy increased from about 66 years (1978) to over 76 years (2015), while infant mortality decreased from roughly 49 to about 9 deaths per 1,000 live births.

The successful land reforms and the gradual industrialization of rural areas not only overcame hunger sustainably for the first time in Chinese history but also triggered a profound reorganization of education and health sectors.

According to international standards (World Bank), CPC has lifted approximately 750 million people out of absolute (extreme) poverty from 1978 to 2012.
Irrespective of the measurement scale, the reduction in poverty figures is the largest in both quantitative and qualitative terms in human history:

“In the past 40 years, the number of people in China with an income of less than $1.90 per day has fallen by nearly 800 million — nearly three-quarters of the global poverty reduction since 1980. According to China’s current poverty standards, the number of poor people has decreased by 770 million. By all measures, the pace and scale of poverty alleviation in China are unprecedented in history.” (https://thedocs.worldbank.org/en/doc/bdadc16a4f5c1c88a839c0f905cde802-0070012022/original/Poverty-Synthesis-Report-final.pdf)

The urbanization rate increased from 18% (1978) to over 56% (2015), accompanied by massive state investments in transportation infrastructure, housing, and social services. [22]

But only under Hu Jintao — interpreted by some of China’s left as an actor of a “Socialism 2.5” — did the CPC begin a systematic review of the internal contradictions of the Deng era:

The social policies initiated under the paradigm of “Harmonious Society” led to substantial improvements in living conditions both in rural and urban areas.

In parallel, the tensions in the reform and opening process were alleviated through partial rollback of market mechanisms and partial democratization within the party — for example, through collective leadership in the Politburo and reforms of village electoral laws (see basic law for village committees).

Nevertheless, a core systemic crisis remained unresolved under Hu: deep structural corruption and the ongoing osmosis of financial and political capital, which threatened to delegitimize the socialist transformation process.

In his closing speech at the 18th CPC Congress (2012), Hu Jintao issued a stern warning about this danger and emphasized the party’s historic responsibility to overcome this contradiction in the interest of socialist overall development:

“Imbalanced, uncoordinated, and unsustainable development remains a major problem. The capacity for scientific and technological innovation is weak. The industrial structure is unbalanced. The rural infrastructure remains insufficient. Resource and environmental pressures have intensified. Many systemic hurdles hinder scientific development. (…) Fighting corruption and promoting political integrity — a central political task that is of great concern to the people — is a clear and long-term political commitment of the party. If we fail to solve this problem well, it could be deadly for the party and even lead to its collapse and the fall of the state. (…) A small number of party members and officials waver in their faith in the party’s ideals and convictions and are not fully aware of their mission. Formalism and bureaucratism as well as waste and luxury are serious problems. In some areas, corruption and other misconduct are widespread, and the fight against corruption remains a major challenge for us.” (https://_ftn23)

Part 5: Socialism 3.0

Son of the Cultural Revolution

Xi Jinping was born in 1953 as the child of Xi Zhongxun and Qi Xin in Beijing.
His father, Zhongxun, was a member of the first generation of Chinese leadership and founder of CPC rule over Yaan, having completed the “Long March” (or “March to Yaan”) after the Kuomintang signed an armistice with fascist Japan.

During the Cultural Revolution, Zhongxun (we are aware that “Xi” is the correct designation, but to avoid confusion, we abbreviate his father by his given name) was removed from his political offices and humiliated in public criticism sessions for allegedly not behaving according to Party discipline — after his criticism session, he personally wrote to Mao:

“After arriving in Xi’an, I was beaten twice by the Red Guards, and one of my ears was so badly injured that I became deaf. In the early years of the People’s Republic of China, I worked in Xi’an. Now the Red Guards are bringing me onto the streets of Xi’an to criticize and fight me. Only the families of counterrevolutionaries can be pleased with this.” (Torigian, “The Party’s Interests Come First: The Life of Xi Zhongxun,” 2025)

Xi’s mother was also repeatedly interrogated and mistreated during the Cultural Revolution because of her association with her husband — including in criticism sessions in which Xi and his siblings were forced to participate.

After a six-month detention, following Xi’s escape from forced labor by the Red Guards on the mainland, he was sent for six years to Shaanxi Province to do manual labor.

Regarding his time in detention and the Cultural Revolution, which Xi later called “years of chaos,” Xi himself later recounted:

“During the ten years of chaos [Cultural Revolution], my whole family was attacked. I was only fifteen years old then. Because of my ‘dissatisfaction with the Cultural Revolution,’ I was isolated and interrogated by the Special Cases Committee — I had to stand in ‘airplane position’ as a punishment from morning to night. Once, during the Spring Festival, my younger brother brought me a plate of dumplings. I wanted to eat them, but the people from the Special Cases Committee snatched them away and said: ‘Do you know what kind of people used to eat dumplings? Do you want to relive the heavenly life from before, which you lost? That’s just a dream!’ Shortly thereafter, in August, I was detained. I had only one unlined garment, and by December, it was very cold. At night, I slept on the cold ground, using a piece of ice as a pillow. My whole body was infested with lice. I collapsed from illness and even thought about death.” (Torigian, “The Party’s Interests Come First: The Life of Xi Zhongxun,” 2025)

Nevertheless, Xi tried to join the CPC as early as 1973 during the Cultural Revolution — he succeeded only on his 10th attempt in the following year, after his father was gradually politically rehabilitated.

After the end of the Cultural Revolution, Xi studied chemical engineering in Beijing and began his political career in the Military Commission within the Ministry of Defense.

During the 1970s and 1980s, Xi worked in various administrative bodies until he was appointed Vice Mayor of Xiamen in Fujian Province’s pilot Special Economic Zone in 1985.
As a member of the governing body of a provincial administrative zone, he from then on had frequent contacts with high-ranking party cadres, including Hu Yaobang and Hu Qiaomu.

In the following decade, he rose from 1997 to Party Secretary of Fuzhou, the capital of Fujian — in the same year, he ran for the CPC Central Committee and, on the last list position, became one of the youngest members ever in the CPC Central Committee.

Meanwhile, Xi earned his doctorate in Marxist philosophy from the prestigious Tsinghua University between 1998 and 2002.
His dissertation, “Tentative Study of Agricultural Marketization,” analyzed Chinese agriculture through a historical-materialist lens within the development of relations of production.

In 2002, Xi became CPC Secretary of Zhejiang Province, an economically vital region where he successfully replaced old industries with modern sectors like IT and automotive. The strong economic growth and his conflict-free leadership boosted his reputation among local party members. His good relationship with Jiang Zemin, who was in Zhejiang from 2004 onwards, was also politically advantageous.

In 2007, Xi took over as CPC Secretary of Shanghai — later the same year, he was elected to the Standing Committee of the Politburo and became responsible for Hong Kong and Macau.

In 2008, he was elected Vice President of China and took on representative tasks such as organizing the Olympic Games and leading the Party School, which he held until 2013.
As head of the Party School, Xi promoted classical Marxism (and some postmodern thinkers like Marcuse) and called for “further development of thinking and action capacity of cadres based on Marxist world outlook and methodology.”[25]

“Where Deng Xiaoping adhered to pragmatism, Xi Jinping again venerates ideology: he preaches Marx and practices Lenin with long-unseen force and rigor (…) Where the Party smelled of disintegration, Xi gave it new strength and discipline, where it was aimless, he re-embued it with purpose” (Strittmatter, “The Reinvention of Dictatorship,” 2018)

By the 18th CPC Congress in 2012, Xi was seen as the most likely successor to Hu — although he initially had to outmaneuver rivals such as Bo Xilai within the Party.

Bo, a “charismatic supporter of Maoist ideas,” fell in 2012 due to a massive corruption scandal in Chongqing — Hu’s close confidant Ling Jihua also lost influence after a family scandal was concealed. This diminished the options for alternative candidates.

Xi was regarded as an experienced, unobtrusive consensus politician with good background and broad acceptance across factions — the party leadership explicitly relied on Xi’s “uncontroversial” character to end the intra-party conflicts that had persisted since Jiang’s era (Tuanpai vs. Shanghai faction):

“Thanks to his impeccable revolutionary family background and his relatively controversy-free political career, Xi was able to gain support from various cliques or factions within the party — including the princelings, the Communist Youth League, and remnants of the Shanghai faction.” (Wo-Lap Lam, “Chinese Politics in the Era of Xi Jinping: Renaissance, Reform, or Retrogression?” 2015)

5.1: “Era Andropov”

The Jiang-Hu era escalated the core contradiction of reform politics to a peak; pervasive corruption created a strong alienation between the people and rule, class conflicts widened more than ever, and the development of productive forces was pursued in a manner inconsistent with the proclaimed ideals of Chinese socialism — the export-driven growth model (“workshop of the world”) since Jiang’s era, while leading to impressive economic and social developments (see above), was inseparable from maintaining low-wage sectors.

Professor Zhang Ming of Renmin University (“People’s University”) offered a fitting comparison:

“Many problems are piling up: income gap, conflicts between ordinary people and officials, urban-rural divide, healthcare problems — none of these have been solved,” Zhang Ming said. “The new leaders are now in big trouble.” He also speaks of a “lost decade,” comparing it to the “Breschnew era” (1964–1982), when the Soviet leader symbolized the stagnation of the USSR. [26]

The CPC thus faced the challenge of overcoming contradictions stemming from decentralization and corruption, which had spread since Deng’s era.

The “fight against corruption” became the top priority after Hu Jintao’s resignation in November 2012:

In the course of the anti-corruption campaign, according to official data from the Central Discipline Inspection Commission (CDIC), about 2.7 million civil servants were investigated by October 2017, with roughly 1.5 million sanctioned either disciplinarily or criminally.

The campaign explicitly targeted not only lower-level officials (“flies”) but also high-ranking leaders (“tigers”), who were called “tigers.”

Among the most prominent cases are former Vice Mayor of Luliang Zhou Yongkang and presidential advisor Ling Jihua. Assets worth over one billion RMB were confiscated from Zhou Yongkang — after he continued his systematic corruption (primarily bribery for political influence) even after the 18th Party Congress, he was arrested in 2018 and sentenced to death in 2021. [27]

The focus of the campaign was less on combating everyday corruption and more on rooting out systemic corruption stemming from the close intertwining of political power and private capital interests since the beginning of the reform and opening. Particular attention was paid to cases where political offices were used to promote business interests — such forms of (illegal) lobbying where economic influence and state decision-making overlapped. [28]

Such networks had formed mainly in lucrative sectors like energy, infrastructure, and real estate, where local and central officials gained access to enormous resources and rent sources.

The campaign was accompanied by extensive media staging: on platforms like “anticorruption.chinafile.com,” new cases were continuously published — many accused were pressed to make public confessions, which were broadcast on state TV.

This form of public humiliation served not only as a symbolic rehabilitation of political authority but also as an internal disciplinary effect — especially toward those parts of the apparatus that had settled into gray areas between official duty and private benefit.

Unusual in the anti-corruption campaign was the complete transparency of investigations internally and externally.
The “European Journal of Political Economy” published an empirical study on the campaign:

“The anti-corruption campaign led by the Chinese government and CPC has probably, for the first time in history, given researchers access to a unified dataset on corrupt officials. The information includes name, gender, age, education, length of party membership, position, embezzled money, and several other characteristics.”

The effectiveness of the anti-corruption campaign sometimes became almost caricatured: in 2014, casino revenues in Macau, China’s special administrative region, plummeted by one-third — many corrupt party officials who had previously squandered their illicit earnings there were now behind bars:

“Especially luxury goods are selling much worse in China than in previous years. But a sector that reliably generated higher and higher billion-dollar revenues year after year previously — the casinos in Macau, China’s special administrative region, listed on the Hong Kong stock exchange — suffered a heavy blow: in November, the sixth consecutive month of decline, with revenues dropping by nearly one-fifth compared to the same month last year, to about 2.44 billion euros.” [31]

“Xi Jinping Thought”

Unlike the guidelines of earlier party generations, the “Xi Jinping Ideas” are the first to bear the name of an active General Secretary of the CPC (since 2012) in their designation.

The “Xi Jinping Thought” also differs quite clearly from the guiding ideas of previous CPC leaderships:

Marxism is explicitly understood here as an ongoing, evolving science that reacts to changing material conditions and is adapted to concrete realities.

Xi emphasizes the importance of continuous theoretical work within the CPC and exchange with international communist and workers’ parties to position China’s development model in the international context:

In 2021, CPC organized the largest multilateral gathering of political parties worldwide — including delegations from Cuba’s CPC, Vietnam’s CPC, Spain’s CPC, Jordan’s CPC, the African National Congress (ANC), the Palestinian Fatah, and notably, Siegmar Gabriel from the German SPD.

Since 2012, the CPC has founded, renewed, or expanded various organizations for international solidarity and economic cooperation, including:

• 2012: Reform of the “Shanghai Cooperation Organization” (SCO) to strengthen regional security cooperation (8 member states).
• 2014: Establishment of the “China–Community of Latin American and Caribbean States (CELAC) Forum” (33 countries).
• 2015: First conference of the “Forum on China–Africa Cooperation” (FOCAC; 54 African states), expanding economic and infrastructure cooperation.
• 2017: Establishment of the “Belt and Road Forum for International Cooperation” (BRI; over 60 partner countries), promoting infrastructure and trade in the Global South.

The strengthening of multipolarity based on international solidarity is, of course, not an end in itself; we wrote about it:

“When we talk to China, we get an airport; when we talk to Germany, we get a lecture,” said Ngozi Okonjo-Iweala, Director-General of the World Trade Organization, at an ambassadorial conference in Berlin. By “we,” the Nigerian refers to African states, which, with amazement, increasingly pursue membership in BRICS, especially those who, over decades and centuries, were colonized first and then neo-colonized through loans and interventions. Through BRICS, they have the opportunity to achieve economic emancipation outside the old order. The inner affairs of a state are based on the material existence of the people who host it.
Attempts at emancipation in the Global South, especially in Africa and South America, can so far only be realized by breaking free from the unilateral stance of the United States and its allies — as shown, among others, by the “U.S. Tiananmen Papers”[13] and CIA/MI6 preparations of “Operation Yellowbird” (or “Operation Siskin”).[14]

For an assessment of BRICS, we recommend, following this article, our piece “BRICS; a Chance, not a Goal.”

The largely critical-to-China analysis by the Rosa Luxemburg Foundation accurately states:

“According to Chinese proposals, no single civilization or group should dominate the international order. Instead, the wisdom and principles of different civilizations and cultures should influence the world order to strengthen its foundation and legitimacy. (…) China advocates (…) an international order based on the system and charter of the United Nations, supported by international law (…), values, principles, and standards revolving around equality, diversity, cooperation, development, and cooperative security.”

5.2 “New Era”

A central aspect of this conceptual framework is the 2017 redefinition of the main contradiction in Chinese society.

Previously, the pursuit of material prosperity and underdevelopment of productive forces were at the forefront; under Xi, the contradiction between “unbalanced and inadequate development” and the rising expectations of the population takes a more prominent place:

“Not only have the material and cultural needs (of the Chinese people) increased; their demands for democracy, rule of law, justice and fairness, safety, and a better environment are also growing. At the same time, China’s overall productive forces have significantly improved, and in many areas, our production capacity is among the world’s best. The more urgent contradiction is that our development is unbalanced and inadequate. This has become the main obstacle to meeting the people’s rising expectations for a better life.” (Xi, “Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects and Strive for the Great Success of Socialism with Chinese Characteristics for a New Era,” 2017)

This understanding of societal development explicitly includes aspects such as social equality, ecological sustainability, poverty alleviation, and the rule of law:

“We must establish a balance between economic growth and environmental protection, and recognize that environmental protection is the protection of productive forces, and environmental development promotes productive forces. We will further promote green, circular, and low-carbon development with greater awareness. We categorically reject economic growth at the expense of the environment.” (Xi, “Initiate a New Era of Ecological Civilization,” 2013)

The “New Era of Chinese Socialism” is thus explicitly characterized by shifting from the quantitative development strategy of productive forces since 1978 to a qualitative development that “corresponds to the characteristics of a higher stage of socialist development.” [33]
The classification of the different stages of socialist development explicitly follows the writings of Xu Muqiao (see 4.1).

The implementation of this New Era follows long-term development strategies, including the goal of achieving significant progress in “socialist modernization” (i.e., sustainable development of productive forces) by 2035 and building a “modern socialist society” by the 100th anniversary of the People’s Republic in 2049 — that is, developing productive forces for socialism.

A central element of this “New Era” is the strengthened use of planned economic control mechanisms in selected sectors of the economy — state planning actively intervenes in key industries by setting concrete development goals, coordinating resource allocation, and structuring innovation processes through policies, subsidies, and regulations.

Since the 14th Five-Year Plan (2021–2025), for the first time since the beginning of reform and opening, specific quantitative targets have been set for key industries and societal sectors, such as domestic content share, innovation, and environmental indicators — including a planned reduction of economic growth to 4.4%[34] and raising the “market sufficiency rate” (the share of domestic products in total demand) to 70%.[35]

Priorities are set through five-year plans, focusing on sectors like semiconductor technology, artificial intelligence, sustainable energy, and high-speed infrastructure.

State funds, government-led credit allocation, and strategic state holdings direct capital flows into these sectors, ensuring coordination among enterprises, research institutions, and local administrations — pursuing a productive-force-oriented development logic, where economic modernization is not an end in itself but a means for societal transformation.

Politically, Xi’s era is marked by a reinforced centralization of decision-making structures — leadership positions in party, state, and military are consolidated, new commissions for intra-party coordination and enforcement are introduced. The goal is to ensure party unity and operational capacity, as well as to prevent organizational and ideological weaknesses:
This includes reforms of the “Legislation Law” (中华人民共和国立法法) of 2012 and 2023, which standardized the application of Chinese law across provinces (to a large extent) and can now be revised by “guiding decisions” of the Supreme People’s Court — unlike the civic legal system, since 2023, “socialist values” have also been made mandatory for party cadres in the “socialist rule of law with Chinese characteristics.”

In concrete terms, this means, for example, that party cadres must regularly hold town hall meetings where they listen to “all citizens’ concerns.”[36]

At the same time, the number of democratic participation opportunities in every part of society has improved since 2012.

The Australian social scientist Prof. Roland Boer describes the development as follows:

“Over the last ten years, I have closely followed the development of specific consultation processes on legislation — at various levels: national, provincial, urban — but with a special focus on grassroots consultation processes. And here, we find hearings, proposals, working groups, feasibility studies, and much more to promote bottom-up suggestions. The example I’d like to highlight — and which I’ve studied intensively — concerns the National Security Law for Hong Kong Special Administrative Region, announced in June 2020 and implemented in early 2021 (…) What impressed me most about this legislative process was the patience and thoroughness. Especially during the Hong Kong unrest, hundreds and hundreds of meetings and consultations took place, millions of characters were written with proposals and comments from all sectors. The first draft was sent for review, revised, resubmitted, and so on — until it felt ready for announcement. Only when this process was completed from the people, for the people, could the law be announced and enforced.”[37]

In terms of societal development, the reduction of extreme poverty, improvements in education, economic growth, and increased living standards are summarized.

The associated changes are seen as the result of targeted political steering and economic planning:

“We also have quite a few problems that concern the vital interests of the population, such as education, employment, social security, healthcare, housing, ecology and environment, food and drug safety, workplace safety, public security, justice, and law enforcement. Some of our people still live in poverty, while on the other hand, formalism, bureaucratism, hedonism, and extravagance are serious problems. In some areas, corruption and misconduct are widespread, and the fight against corruption remains a very serious challenge for us.” (Xi, “Decision of the Central Committee on Deepening Reforms,” 2013)

In this context, Xi emphasizes much more the importance of Marxism-Leninism as a science and clearly demonstrates a correct understanding of Marxism in his works:

“Engels once pointed out: ‘Marx’s entire way of thinking [approach] is less a doctrine than a method. It does not so much provide ready-made dogmas but tools for further investigation and a method for such investigations.’ He also noted that theories ‘are a product of history, taking very different forms and thus very different content at different times.’ The fundamental principles of scientific socialism must not be abandoned; if they are, it would no longer be socialism. Likewise, scientific socialism is not a fixed dogma. I once said that the profound social changes China is currently experiencing are not simply a continuation of China’s historical and cultural experiences, nor a repetition of socialist practices of other countries, nor an emulation of other modernization efforts, nor can they be easily inserted into the templates developed by earlier Marxist classics. There is no orthodox, fixed version of socialism. A blueprint only becomes a luminous reality when we connect the fundamental principles of scientific socialism with China’s realities, historical and cultural traditions, and contemporary needs — and constantly analyze and summarize the lessons learned from our practice.” (Xi, “Broader Dimensions for Marxism in Contemporary China and the 21st Century,” 2018)

Ecological Turn

Since the beginning of “Socialism 3.0,” China has been the world’s leading investor in green and renewable energies:

“With around 290 billion US dollars, China remains the undisputed leader in 2024. This accounts for about 40% of global investments. Second place is held jointly by the EU countries and the UK (114 billion USD), followed by the US with 97 billion USD.”[38]

At the end of 2023, China had an installed solar capacity of 610 GW and a wind capacity of 375 GW. Since 2014, solar capacity has increased sixteenfold, and Chinese manufacturers now control over 80% of the global solar module market.

By 2025, more than half of China’s electricity is expected to come from renewables — a 21% increase compared to 2021. [39]

Within the framework of the Five-Year Plans, China’s planned economy functions as a central instrument to steer material and technological production — especially in the energy sector, which is regarded as a strategic lever of national development:

The energy policy of China is deeply embedded in a system of centralized political control, where state planning and capital accumulation are linked based on long-term societal goals — the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) coordinate investment distribution, define production targets, and guide technological innovation processes.

The key players in the energy sector are predominantly state-owned giants, which effectively act as an extension of political leadership. These companies, such as State Grid Corporation, China National Energy Group, and China Huaneng, are not autonomous market actors in the classical sense but are integrated into the planned implementation of political directives, e.g., towards decarbonization of production.

Part 6: Conclusion – Socialist Construction in China

The question of the character of Chinese society cannot be decided superficially based on visible consumption phenomena, the existence of billionaires, or the legalization of private-capitalist forms.

A scientific socialist analysis must consider the development of relations of production in connection with the state of material productive forces and ask whether the social superstructure is still bourgeois or already proletarian — and whether the state ultimately acts as an instrument for the development of socialist relations.

Over the past decades, China has reflected on the historical contradiction between the level of productive forces and relations of production and intentionally used market elements and private sectors during the “socialist construction phase” to raise these productive forces to a level that provides the material foundation for socialist relations of production.

This process — theoretically outlined by Marx, Engels, and Lenin — is characterized by the continued dominance of the leading role of the Communist Party of China and the political-centralized control over all strategically decisive sectors of the economy.

The controversial debate over whether the reform and opening policies constitute a “system change” to capitalism is, from a Marxist-dialectical perspective, shortsighted. As shown in this article, the core of socialist development is not the rapid abolition of all contradictions but the dialectical overcoming of historically inherited structures and the consistent political guidance of this conflict-laden process by the party. The insistence on classic consumption indicators or dogmatic rejection of market elements misses the fundamental materialist finding: Socialist construction in China follows the historical necessity to enable the development of productive forces through flexible, stage-appropriate forms.

The existence of social inequality, capitalists, billionaires, and international capital flows is an expression of this still-contradictory, unfinished process, and does not oppose but rather indicates the transition phase — as long as the political and economic control, the strategic steering of the key means of production, and the leadership of the socialist state and party remain intact. As Marx already emphasized: “A social formation never ceases to exist before all its productive forces are developed enough for it” (Marx, “Critique of Political Economy,” 1859).

The experiences of Lenin’s NEP, Vietnam’s Đổi Mới, and other socialist reforms clearly show: The transition to socialism is not an abstract jump but a real, contradictory process of transformation. The policy of the CPC — combining long-term strategic planning, the central role of public ownership, and subordinating market dynamics to political-societal goals — represents an original development of Marxism under specific Chinese conditions.

Even at the current stage of the “New Era,” China pursues the construction of material and institutional prerequisites for a socialist community through extensive planning tools, targeted industrial policy, and the strategic dominance of the CPC. The resulting class and interest contradictions are not signs of abandonment but necessary components of this process.

In conclusion, it emerges:

China is not a capitalist state in the strict sense but is a socialist state in transition, where dialectical handling of markets and private property is part of the conscious construction of the socialist foundations of society. The political and economic strategy of the CPC remains aimed at gradually overcoming capitalist elements and creating a modern, developed socialist mode of production.

Part 7: Critiques of China

The vast majority of critiques of China’s socialist construction focus not on the premise of construction itself but on its mechanisms.

Looking at the very comprehensive pamphlet “On the Rule of Capital in China” by the Communist Party (German Party, CP), which presents itself as a manifesto against “Dengism” (whatever that is supposed to be), one quickly concludes that even behind these detailed critiques, no historically-materialist understanding of societal development is at work.

The critique is that the transition period, the socialist construction, is actually state capitalism — in China, a market economy intended to rapidly develop productive forces with minimal social contradictions.
It recognizes, in detail, the consequences of this transition period:

“Labor power has become a commodity with the transition to capitalism, the working class has become an exploited class, and many achievements of socialism have been lost.”[40]

These critics sound like Soviet peasants who were surprised that money still existed after the revolution.

Recognizing the contradictions of the market economy, which manifest as “overcapacity in many key industries,” an increase in labor disputes, unequal wealth distribution, and so on, during the construction of socialism, is not an attack on socialist building but an acknowledgment of its current position in history.

When Marx writes:

“The bourgeois relations of production are the last antagonistic form of the social process of production, antagonistic not in the sense of individual antagonism, but in the sense of an antagonism arising from the social conditions of individuals, but the productive forces developing within bourgeois society also create the material conditions for overcoming this antagonism.”

… what do the opponents of Chinese socialism think these “developing productive forces,” which are “precisely the material conditions for solving this antagonism,” are?

Even the CP, which in the introduction to its pamphlet describes China’s development as “comparable to the NEP in Soviet Russia or early Soviet Union,” dismisses this as “Dengism,” and does not specify what exactly the difference is.

The argument seemingly is that the NEP only lasted until 1924 – while the reform and opening began in 1978.
This argument, which is based on no substantive content, not only ignores the fundamental fact that China’s material conditions have always been vastly different, but also that the NEP was not abandoned because its goal was achieved, but because…

“We (the Soviet Union) lagged behind the advanced countries by 50 to 100 years. We must go through this gap in ten years. Either we do it, or we will be crushed.”[41]

Hastily industrializing, with all the consequences we know today, was (in the sense of Soviet leadership) necessary to rapidly develop Soviet heavy industry and push back imperialist aggression, which manifested itself most clearly in Operation Barbarossa.

The label “Dengism” as a blanket condemnation is already problematic because it ignores the profound differences between the various phases of economic and social development since 1978. If one dates the beginning of “Dengism” to 1978, one must necessarily homogenize the different stages of productive forces development and political orientation.

Is Hu Jintao then “less Dengist” in this sense than Jiang Zemin? Was Jiang Zemin “more Dengist” than Deng Xiaoping himself — and is Xi Jinping again “less Dengist” than his predecessors? Where does this “Dengism” start and where does it end? Is a moderate introduction of market elements enough to qualify a policy as “Dengist”? And when does it allegedly become “too much”?

As our text shows clearly, we also criticize certain developments during the Deng-Jiang era — but to deny the CPC that it has not, not least through massive intra-party self-criticism in the early 2000s, continuously distanced itself from the mistakes of that time, is an idealist distortion of reality — a nuanced analysis recognizes that this is a historical development process involving corrections, shifts of direction, and new focal points.

The CP also claims that it has a fundamentally different understanding of socialism — that Chinese socialism is simply the development of productive forces as a purpose and goal.
This thesis is supported by some Deng quotes where he, among other things, describes “the growth of productive forces” as the “highest criterion” for judging whether a path is capitalist or socialist:

“The Communist Party of China still claims in its statutes that its highest ideal and ultimate goal is to strive for communism. But the document does not explain what the party understands by it.” (https://_ftn42)

They then note; “Reducing the concept of socialism to a higher standard of living is of course completely wrong. Even the capitalist development of a country can increase the consumption possibilities of broader social strata.” — Correct!

Just annoying if the concept of socialism of the CPC differs completely from what the CP claims — in the Chinese Constitution, it states:

“The basis of the socialist economic system of the People’s Republic of China is socialist public ownership of the means of production, i.e., ownership by the entire people and collective ownership of workers. The socialist public ownership system has abolished the exploitation of man by man and practices the principle ‘From each according to his ability, to each according to his work.’” [43]

It continues:

“In the first phase of socialism, the state maintains a basic economic system in which public ownership is the mainstay, and various forms of ownership develop together, and it maintains a distribution system in which distribution according to work is the mainstay, while other forms of distribution also exist.” [44]

The Chinese understanding of socialism aligns with ours and with that of the entire communist movement: it is based on social ownership of the means of production and on centralized economic planning that directs production and resource allocation according to societal needs.

It is obvious that representatives of the CPC in the current stage of socialist construction increasingly speak of the development of productive forces — not because it is an end in itself but because this development forms the core of the current phase of the socialist process.

The CP also writes that…

“The ‘Dengist’ position ultimately also (means) giving up the fight for socialism in our own country. Because if a capitalist country, where the state plays a more active role in the economy, is already accepted as ‘socialist,’ if, as in Deng Xiaoping’s case, socialism is essentially reduced to the growth of productive forces, then the Marxist concept of socialism-communism as a society free from exploitation based on social ownership is apparently completely lost.”

According to this argument, Lenin’s Soviet Union between 1921 and 1924, Cuba during the “Special Period” of the 1990s, and Vietnam during Đổi Mới reforms were not socialist states.

The CPC explicitly affirms its position in the socialist construction process at every Party Congress and every People’s Congress, describing it, as Xu formulated, as “underdeveloped socialism.”

A socialist state explicitly declares itself as a “socialist state” — but this does not mean that it has already completed socialism; this self-understanding is generally accepted.

It thus apparently must be emphasized once more: The People’s Republic of China is currently not a socialist state in the Marxian or Leninist sense:
Socialism, understood as “democratic management over production,” and as “the actual movement that abolishes the current state,” is the higher societal development that, in the sense of historical materialism, follows capitalism.

This sequence is not a natural principle but a conclusion derived from the material development that capitalism entails and the social contradictions it creates.

To achieve this material development, the CPC has made decisions in a profoundly contradictory process, through a dialectical process that is always in flux, to establish market mechanisms to develop productive forces — a path similar to Lenin’s NEP. This route, which China is currently following, the “socialist construction with Chinese characteristics,” is the path to socialism, according to the common understanding, in China.

Extra: Dossier

Basic Concepts of Marxism:

Productive Forces
Refer to the totality of a society’s productive means – including labor power, technology, knowledge, and tools. They indicate how materially developed a society is.

Relations of Production
Describe the social relations of ownership and power in production – for example, who owns, who works, and how cooperation is organized.

Economic Base
The totality of productive forces and relations of production. It forms the foundation of any social system.

Superstructure
Politics, law, culture, religion, and ideology – these are based on the economic base and help stabilize the social order.

Law of Value
In capitalism, the value of a commodity is determined by the socially necessary labor time. It also continues to operate during transitional phases toward socialism.

Surplus Value
The excess value workers produce beyond the value of their own wages. This is appropriated by capitalists as profit.

Commodity Exchange / Commodity Production
Production for the market, where goods are made not for direct need satisfaction but for sale.

Division of Labor
Splitting labor into specialized tasks – a basis for efficiency, but also for alienation and social inequality.

Birthmarks of the Old Society
Remnants of capitalist structures within socialism – such as money, markets, or unequal relations – which are to be gradually overcome.

Bourgeois Law
Legal equality despite social inequality. According to Marx, it still applies in early socialism.

Dialectics
Thinking in contradictions: Social development occurs through conflicts and their resolution, e.g., between productive forces and relations of production.

Antagonistic Contradiction
Irreconcilable class contradiction – for example, between capital and labor.

Non-Antagonistic Contradiction
Contradictions in socialism that can be resolved through politics – such as between town and countryside.

Society of Abundance
A society where all needs can be met. Only then is the abolition of the market, money, and class relations possible.

Planned Economy
Centralized control of production by the state to overcome the anarchy of the market.

Market Socialism
A system with a socialist superstructure but market-based elements – bears the risk of conserving capitalist contradictions.

Distribution According to Work
Principle during the socialist transitional phase: Those who contribute more, receive more.

Distribution According to Needs
Goal of communism: Everyone receives what they need – regardless of the work performed.

Half-State
Term for the state under socialism: It still exists but is meant to “wither away” in the transition to communism.

Proletarian Revolution
Revolutionary rupture with capitalism by the working class.

Mode of Production
Combination of productive forces and relations of production – e.g., feudal, capitalist, or socialist mode of production.

Social Formation
Concrete historical expression of a mode of production – e.g., slave society, capitalism, socialism.

Dialectical Materialism
Marxist worldview: The material world is primary; development occurs through contradictions and their resolution.

Historical Materialism
Marxist view of history: Human history is the history of class struggles. Social change arises from material conditions, which in turn shape ideas.

Relevant Abbreviations:

CPC
Communist Party of China – the leading political force in the People’s Republic of China since 1949.

NEP
New Economic Policy – economic policy in the early Soviet Union (from 1921) that temporarily allowed market elements.

PR China
People’s Republic of China – socialist state founded in 1949 after the CPC’s victory.

PROR
Policy of Reform and Opening – China’s economic reform strategy from 1978 that combined market mechanisms with state control.

BCR
Beijing Cultural Review – independent Chinese journal that critically examines socialism with Chinese characteristics.

GLF
Great Leap Forward – idealist, campaign-style attempt by the CPC (1958–1961) to accelerate industrialization. Ended in a severe crisis.

CO
Communist Organization – Marxist group from Germany that, among other things, criticizes Mao’s voluntarist approaches.

CP
Communist Party – Marxist party from Germany, split off from the CO (see above).

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References:

• Engels, F.: Letter to Walther Borgius, 1894.

• Marx, K.: Critique of the Gotha Program. Marginal notes on the program of the German Workers’ Party, 1891.

• Kunzmann, M.: Theory, System & Practice of Socialism in China, 2018.

• Leese, D.: The Chinese Cultural Revolution, 2016.

• Bai, Y. & Wu, Z.: Political Conflict and Development Dynamics: Economic Legacies of the Cultural Revolution, 2023.

• Schulze, M. et al.: The Great Leap Back, 2024.

• Torigian, M.: The Party’s Interests Come First: The Life of Xi Zhongxun, 2025.

• Chen Y.: Some Questions Concerning Attainment of the Strategic Objectives Set by the Party’s Twelfth National Congress, 1982.

• Liu, D. Vorname: Reforms of Social Welfare Law in the People’s Republic of China, 2010.

• Hinton, W.: (Monograph on the Tiananmen Crisis), 1991.

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[3] https://phil-fak.uni-koeln.de/fileadmin/chinastudien/papers/No_1986-1.pdf

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[5] Leese, „Die chinesische Kulturrevolution“, 2016 Kp. 2

[6] Leese, „Die chinesische Kulturrevolution“, 2016 Kp. 5

[7] https://www.bpb.de/shop/zeitschriften/apuz/archiv/533547/wirtschaftsreformen-in-der-volksrepublik-china/

[8] https://www.youtube.com/watch?v=0DbijSAH1-Q&t=3439s

[9] https://www.news.ch/Tiananmen+89+Unbewaeltigte+Vergangenheit/627626/detail.htm

[10] https://www.news.ch/Tiananmen+89+Unbewaeltigte+Vergangenheit/627626/detail.htm

[11] https://iconicphotos.wordpress.com/2015/05/15/tiananmen-the-view-from-the-communist-party/

[12] https://wikileaks.org/plusd/cables/89BEIJING18828_a.html

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[21] https://thedocs.worldbank.org/en/doc/bdadc16a4f5c1c88a839c0f905cde802-0070012022/original/Poverty-Synthesis-Report-final.pdf

[22] https://www.stats.gov.cn/english/

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[25] Xi, „China regieren“, Bd. IV

[26] https://newsv2.orf.at/stories/2149315/2149323/

[27] https://www.chinadaily.com.cn/a/202110/29/WS617bdf8fa310cdd39bc7232c.html

[28] https://www.sciencedirect.com/science/article/pii/S0176268024000612

[29] https://safeguarddefenders.com/en/blog/corruption-everywhere-chinese-tv-airs-party-produced-mass-tv-confessions

[30] https://www.sciencedirect.com/science/article/pii/S0176268024000612#sec7

[31] https://www.faz.net/aktuell/wirtschaft/wirtschaftspolitik/china-antikorruptionskampagne-schadet-kasinos-in-macau-13296503.html

[32] https://kritikpunkt.com//de/2025/01/10/brics-eine-chance-kein-ziel/

[33] https://www.tagesspiegel.de/politik/203-minuten-sozialismus-mit-xi-jinping-3882100.html

[34] http://de.china-embassy.gov.cn/det/zt/Newsletter/202104/P020210912054562562053.pdf

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[37] https://www.youtube.com/watch?v=N6tUEaWEeoU&t=1231s

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[39] https://germany.enerdata.net/publikationen/energie-nachrichten/china-gr%C3%B6%C3%9Fte-stromerzeugung-aus-erneuerbaren-quellen-2025.html

[40] https://kommunistischepartei.de/diskussion/die-herrschaft-des-kapitals-in-china/

[41] https://www.marxists.org/deutsch/referenz/stalin/1931/02/wirtschaft.htm

[42] https://kommunistischepartei.de/diskussion/die-herrschaft-des-kapitals-in-china/

[43] https://kommunistischepartei.de/diskussion/die-herrschaft-des-kapitals-in-china/

[44] https://kommunistischepartei.de/diskussion/die-herrschaft-des-kapitals-in-china/

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[46] https://kommunistischepartei.de/diskussion/die-herrschaft-des-kapitals-in-china/