Public ownership is the principal aspect of the economy, and workers control the state. Other comrades have explained in much better detail, but this is a simplified version.

To understand this issue, one must first clarify the distinction between socialism and communism. Socialism is the transitional stage between capitalism and communism. During this phase, the working class has seized state power and begun guiding the economy toward its next logical form. Communism, by contrast, is the ultimate goal, at this stage, through collectivization and proletarianization, class distinctions are completely eliminated, and the state (having lost its reason for existence) gradually withers away.

Here, we must define the nature of the state. The state is an instrument of class rule, a specific structure within the government through which the ruling class implements its will. Consequently, when class distinctions are abolished, the state’s reason for existence vanishes. Rendered purposeless, it naturally proceeds toward dissolution.

During the transitional phase, the key lies in controlling the “commanding heights” of the economy. These primarily encompass finance, transportation, heavy industry, and the sectors driving macro-level development. By firmly controlling these commanding heights, the ruling class of society can steer the direction of economic development, such as by directing the overall economic trajectory through the provision or withholding of resources such as capital and infrastructure.

Retaining a secondary market economy for developing industries has been the orthodox view of early socialist development since the time of Marx. Marxism is not a philosophy of moralizing. Its stance on private property is not rooted in the belief that such property is morally evil or bad, but rather Marxism is a branch of scientific inquiry that employs evidence and material analysis to objectively examine the evolution of human society, construct models, and use those models to predict future societal trajectories.

The Marxist approach to private property stems from Marx’s analysis: the material basis of private property lies in the decentralization of production, however, as production processes grow increasingly complex, markets exhibit a natural tendency toward the concentration of production. Marx termed this concentration of production “socialization.”

Centralized production rests on a different foundation than decentralized production. When centralized production is combined with private ownership, social stability diminishes, as this arrangement allows a tiny minority to exercise precise control over every aspect of society. As Lenin pointed out in Imperialism, the Highest Stage of Capitalism:

Competition becomes transformed into monopoly. The result is immense progress in the socialisation of production. In particular, the process of technical invention and improvement becomes socialised.

This is something quite different from the old free competition between manufacturers, scattered and out of touch with one another, and producing for an unknown market. Concentration has reached the point at which it is possible to make an approximate estimate of all sources of raw materials (for example, the iron ore deposits) of a country and even, as we shall see, of several countries, or of the whole world. Not only are such estimates made, but these sources are captured by gigantic monopolist associations. An approximate estimate of the capacity of markets is also made, and the associations “divide” them up amongst themselves by agreement. Skilled labour is monopolised, the best engineers are engaged; the means of transport are captured—railways in America, shipping companies in Europe and America. Capitalism in its imperialist stage leads directly to the most comprehensive socialisation of production; it, so to speak, drags the capitalists, against their will and consciousness, into some sort of a new social order, a transitional one from complete free competition to complete socialisation.

Production becomes social, but appropriation remains private. The social means of production remain the private property of a few. The general framework of formally recognised free competition remains, and the yoke of a few monopolists on the rest of the population becomes a hundred times heavier, more burdensome and intolerable.

Marx predicted that as the scale of enterprises expanded, this social instability would grow, eventually becoming so acute that society could not move forward without resolving the contradiction. Given that the socialization of production is the inevitable result of the immense scale necessitated by complex production technologies, Marx did not believe that large enterprises (especially those that had grown by genuinely producing high-quality goods) could simply be broken up without destroying their technical foundations. Therefore, the structure of ownership surrounding them had to be changed, they had to be transformed from private property into public property. A moralistic analysis might argue that private property is inherently evil and should therefore be outlawed entirely. Such a mindset leads to the view that socialism is merely a matter of passing a law declaring all private property illegal, and that any nation failing to do so is an evil traitor betraying true socialism.

However, Marx’s analysis contains no moral condemnation of private property, rather the expropriation of industry is proposed for a very specific purpose: to resolve the contradiction between the socialization of production and the privatization of appropriation. Consequently, there is a necessary precondition for expropriation: the industry in question must have already achieved a sufficient level of socialization. If the state were to take over an economic sector dominated by small-scale proprietors (where production has not yet been socialized and operations are not yet conducted on a national scale) it would effectively be assuming control of a sector that objectively and materially lacks the infrastructure and technology required for nationwide operation. This would introduce a contradiction between socialized appropriation and private production. A moralistic stance ultimately leads to the pursuit of policies that run counter to Marxist analysis and are doomed to failure. Indeed, Lenin noted in The Tax in Kind that nationalizing small producers would amount to economic suicide for the party attempting it, in "Left-Wing” Communism: An Infantile Disorder, he also emphasized the necessity of learning to coexist with small producers. In The Communist Manifesto, Marx explicitly stated that it is impossible to nationalize all small producers overnight; instead, the largest enterprises must be nationalized first to foster rapid economic growth, thereby encouraging the rise of national giants and allowing for the gradual expansion of expropriation over a long period.

The Marxist vision of a classless society is not one where private enterprise is outlawed and punishable by law. Rather, it is a society where state-owned enterprises are so technologically advanced and efficient that any attempt to launch a private business would result in a total lack of competitiveness and inevitable bankruptcy. What prevents you from starting a private business is not the law, but the material conditions of the real world.

What the Soviet Union implemented was a wartime economy designed to prepare for the war against Germany. This was not the path to socialism generally envisioned by Marxists, but largely a creation of Stalin to deal with the material reality of the approachingwar in Europe, hence its designation in Chinese literature as the “Stalin Model.” It was essentially a revision of classical Marxism; while many emulated it due to its apparent short-term effectiveness, that success held true only when the economy was heavily concentrated on heavy industry.

When the time came to shift toward light industry, they encountered the very contradiction predicted by classical Marxism: the state simply lacked the material infrastructure to meet all light-industrial needs on a national scale. Naturally, black markets run by small producers emerged to fill this void. However, due to Soviet legal constraints, the state was compelled to constantly suppress these small producers who had spontaneously stepped in to address the system’s shortcomings. This once again confirms Lenin’s warning that time should not be wasted attempting to suppress small-scale producers who emerge spontaneously due to the inherent economic inefficiency of the system.

However, this situation fostered widespread corruption. Because their economic activities were fundamentally incompatible with the large-scale, nationalized production of all goods, the re-emergence of small-scale producers was inevitable forced to operate illegally, they became part of the black market, an unregulated secondary economic sector that, already operating outside the law, would leverage its influence to try to undermine the Soviet government.

In summary, China is undoubtedly a socialist country, and its development path aligns with the fundamental principles of Marxist historical materialism. Retaining secondary market-economy elements does not constitute a departure from socialism; rather, it is an orthodox and necessary means (as identified by Marx and Lenin) of developing the economy during a stage when productive forces have not yet been fully socialized. By firmly controlling key economic sectors such as finance and heavy industry, the state ensures that market mechanisms consistently serve the overarching objective of the transition to socialism. True socialism lies not in forcibly eliminating private enterprises through moralistic legislation, but in ultimately and historically transcending private ownership by developing the highly advanced material conditions of public ownership.

Short answer: yes.

Long answer: see here

Is China State Capitalist?

• The backbone of the economy is state ownership and socialist planning. 24 / 25 of the top revenue companies are state-owned and planned. 70% of the top 500 companies are State-owned. 1, 2 The largest bank, construction, electricity, and energy companies in the world, are CPC controlled entities, subject to the 5 year plans laid out by the central committee.
• Workplace democracy in action in the CPC.
• Is modern day china communist? Is it staying true to communist values?
• Didn’t China go Capitalist with Deng Xiaoping? Didn’t it liberalize its economy? Is China’s drastic decrease in poverty a result of the increase in free market capitalist policies?
• Is the CPC committed to communism?
• The Long Game and Its Contradictions. Audiobook
• The myth of Chinese state capitalism. Did Deng really betray Chinese socialism?
• Tsinghua University- Is Socialism with Chinese Characteristics real socialism, or is it state Capitalism?
• Isn’t China revisionist for having a capitalist sector of the economy, and working with capitalists? Why isn’t it fully planned like the USSR was?
• Castro on why both China and Vietnam are socialist countries.
• Roderic Day - China has billionaires.
• What is socialism with Chinese characteristics (SWCC)?
• How is SWCC not revisionist? How is it any different from Gorbachev’s market reforms?, 2
• Domenico Losurdo - is China state capitalist?, 2
• Did Lenin say anything about Market Socialism, or productivism?
• Vijay Prashad - Is China capitalist?

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