No contradiction between socialism and market ecnonomy

There is no fundamental contradiction between socialism and a market economy. The problem is how to develop the productive forces more effectively. We used to have a planned economy, but our experience over the years has proved that having a totally planned economy hampers the development of the productive forces to a certain extent. If we combine a planned economy with a market economy, we shall be in a better position to liberate the productive forces and speed up economic growth.

Since the Third Plenary Session of our Party's Eleventh Central Committee, we have consistently stressed the importance of upholding the Four Cardinal Principles, especially the principle of keeping to the socialist system. If we are to keep to the socialist system, it is essential for us to develop the productive forces. For a long time we failed to handle this question satisfactorily. In the final analysis, the superiority of socialism should be demonstrated in a greater development of the productive forces. The experience we have gained over the years shows that with the former economic structure we cannot develop the productive forces. That is why we have been drawing on some useful capitalist methods. It is clear now that the right approach is to open to the outside world, combine a planned economy with a market economy and introduce structural reforms. Does this run counter to the principles of socialism? No, because in the course of reform we shall make sure of two things: one is that the public sector of the economy is always predominant; the other is that in developing the economy we seek common prosperity, always trying to avoid polarization. The policies of using foreign funds and allowing the private sector to expand will not weaken the predominant position of the public sector, which is a basic feature of the economy as a whole. On the contrary, those policies are intended, in the last analysis, to develop the productive forces more vigorously and to strengthen the public sector. So long as the public sector plays a predominant role in China's economy, polarization can be avoided. Of course, some regions and some people may prosper before others do, and then they can help other regions and people to gradually do the same. I am convinced that the negative phenomena that can now be found in society will gradually decrease and eventually disappear as the economy grows, as our scientific, cultural and educational levels rise and as democracy and the legal system are strengthened.

In short, the overriding task in China today is to throw ourselves heart and soul into the modernization drive. While giving play to the advantages inherent in socialism, we are also employing some capitalist methods -- but only as methods of accelerating the growth of the productive forces. It is true that some negative things have appeared in the process, but what is more important is the gratifying progress we have been able to achieve by initiating these reforms and following this road. China has no alternative but to follow this road. It is the only road to prosperity.