Editor's note: Yuan Sha, a special commentator for CGTN, is the deputy director of the Department forGlobal Governance and International Organization Studies at the China Institute of International Studies. The article reflects the author's opinions and not necessarily the views of CGTN.

For decades, Western politicians, think tank pundits and mainstream media have repeatedly labeled China as a "non-market economy."

However, the notion that there is only one legitimate model of a market economy is deeply misleading. Such Western discourse in fact represents a smear campaign on China's economic model, which is based on a deeply flawed argument and highly politicized intentions.

A flawed argument

The concept of a "non-market economy" originated during the Cold War era as a discriminatory clause crafted by the West to restrict trade with socialist countries. Even after the end of the Cold War, the West kept using this highly ideological concept in an aim to retain its "authority" to monopolize the meaning and status of market economy.

Under its logic, Western countries go further, portraying China's economic model as "state capitalism" and arguing that Party and state development plans, together with industrial policies that support strategic sectors such as semiconductors and electric vehicles (EV), amount to excessive government intervention.

They also claim that the Chinese government's deep engagement with private and non-state enterprises constitutes administrative overreach, which, in their view, severely distorts normal market operations and impairs fair global competition.

This seemingly authoritative judgment, however, rests on the deeply flawed premise that the "small government, large market" model that the West has promoted is the only universal, one-size-fits-all standard that all market economies worldwide must adopt.

Framing every form of government intervention as inherently opposed to free market principles reflects rigid theoretical dogma that completely disregards the diverse historical backgrounds, resource endowments and development stages of countries across the globe.

In practice, no country in the world operates a purely laissez-faire market economy today. Western countries themselves have implemented extensive government intervention measures to boost the international competitiveness of their domestic sectors, including targeted subsidies on agriculture, preferential government procurement policies such as the "Buy American, Hire American" initiative, and strategic state shareholdings in key industries such as aerospace.

A political tool

In fact, the term does not exist in international law or multilateral rules of the World Trade organization (WTO). This arbitrary designation has long transcended pure economic debate, evolving into a blatant political tool designed to curb China's industrial upgrading and preserve the long-held technological and economic dominance of Western nations.  

Labeling China a "non-market economy" also serves a convenient political purpose at home. Facing growing public discontent over stagnant wages, de-industrialization and widening inequality at home, they frequently scapegoat China by attributing the success of its manufacturing sector to alleged unfair subsidies and "over-capacity," shifting public attention away from their own policy failures.

The most ironic part of this Western narrative lies in its double standards. When the West hold a competitive advantage, they loudly advocate for open markets and fair competition; when they lose that edge, they resort to exorbitant tariffs, export controls, aggressive anti-dumping and countervailing sanctions, and even deploy state power to suppress rival firms and insert "toxic clauses" in its trade agreements with third countries.   

While fiercely denouncing China's "non market practices," Western countries themselves increasingly turn to industrial support policies and unilateral protectionist measures. The US even paralyzed the WTO's dispute settlement system by blocking the appointment of judges to its Appellate Body, which harms the very foundation of the international trading system.

China's socialist market economy in practice

In reality, China's socialist market economy does not reject the core logic of market-based resource allocation. Instead, it pursues a dynamic balance between an efficient market and an active, accountable government. This model is never a deviation from basic market economics, but an enrichment and development of market theory, designed precisely to address inherent market failures and allocate social resources by balancing market efficiency and social equity.

Since joining the organization in 2001, China has fully honored its WTO commitments, continuously shortened its negative list for foreign investment and dramatically improved its ranking in the World Bank's global business environment assessment.

The decades-long success of China's economic development fully demonstrates that government and market are never locked in a zero-sum game. The synergy of the market's "invisible hand" and the government's "visible hand" has demonstrated unique strengths in tackling financial crises, lifting hundreds of millions out of poverty and developing emerging strategic industries, which have delivered tangible benefits to the people in China and around the world.

This proven practice has also opened new, viable pathways for developing countries to pursue modernization, breaking the myth that Western-style "small government" models are the only legitimate path to prosperity. Every country, regardless of its size or development stage, possesses the inherent right to independently choose an economic development path that aligns with its own historical background, resource endowments and public needs.

It is in this context that China's Global Development Initiative (GDI) has won widespread acclaim from the vast majority of Global South countries, who have long been frustrated by the unequal, aid-with-strings-attached development models imposed by traditional Western institutions.

Such diversity of market economy models should never be dismissed or suppressed by ideological labels. Instead, the international community should uphold the principle of inclusive fair competition, allowing diverse models of market economies to thrive together through fair competition.

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