China’s Socialist Market Economy: A Great Invention

Liu Yingjie*

China Center for Innovation Strategy and Policy Research, Beijing, China

Abstract: How did China’s economy achieve what many call a global miracle? This enduring “China puzzle” has long intrigued economists worldwide. The answer, viewed through the lens of economics, lies in one remarkable innovation: the socialist market economy. This article examines China’s extraordinary developmental journey—how the nation explored, built, and refined this unique system. It identifies the defining features of the socialist market economy, highlights its original contributions, and considers the challenges ahead in constructing a more advanced socialist market economy system. This study argues that combining socialism with a market economy is an unprecedented reform experiment in human history. It enables the “invisible hand” of the market and the “visible hand” of government to work in tandem, fusing the strengths of both systems. Notably, this system has demonstrated formidable vitality and creativity, underscoring the institutional strengths of socialism with Chinese characteristics. In doing so, China’s experience has not only rewritten political economy textbooks but also changed how humanity perceives socialism and the market economy, and further enriched and developed the theory and practice of scientific socialism.

Keywords: Socialist market economy; Socialism; Market economy; Socialism with

JEL Classification Codes: P30; P31

DOI: 10.19602/j.chinaeconomist.2025.11.01