Editor's note: Ma Jiwei is an research fellow at the Institute of National Systems, Academy of Financial Research of Zhejiang University. The article reflects the author's opinions and not necessarily the views of CGTN. It has been translated from Chinese and edited for brevity and clarity.

For a long time, some Western politicians and media have described China's economic system as "state capitalism". The narratives often downplay the achievements of China's market-oriented reforms and interpret China's development through a Western-centric framework.

Critics argue that such claims are shaped more by ideological and geopolitical considerations than by objective economic analysis. A careful examination of the theoretical origins of the term "state capitalism" along with China's economic structure and development path, suggests the label does not accurately reflect China's reality.

China's socialist market economy is presented as a unique development model created through decades of reform and practice. It represents a people-centered approach focused on modernization and shared prosperity.

From a theoretical perspective, "state capitalism" originally referred to a system where state power and monopoly capital are closely intertwined. Traditionally, the term describes economies where state mechanisms primarily serve concentrated capital interests.

Some Westerners equate China's macroeconomic regulation and the existence of state-owned enterprises with "state capitalism," a comparison which Chinese scholars believe is misleading. Supporters of China's system argue that the key distinction lies in public ownership and development goals. In China, state-owned enterprises are officially defined as serving national development and public interests. 

By the end of 2025, the country's total assets of centrally administered state-owned enterprises had exceeded 95 trillion yuan ($13.98 trillion). During the 14th Five-Year Plan period (2021-25), a cumulative 1.2 trillion yuan of state-owned equity was transferred to the national social security fund.

At the same time, China's private sector contributed more than 50% of the country's tax revenue, over 60% of its GDP, more than 70% of the technological innovation achievements, over 80% of the urban employment, and more than 90% of the total number of enterprises. China's state-owned and private sectors now operate side by side within the broader socialist market economy framework.

Chinese analysts argue that the framework differs fundamentally from the traditional definitions of "state capitalism." They also view the label as part of a broader effort to politicize economic debates surrounding China's rise.

In terms of the relationship between government and market, the socialist market economy combines market mechanisms with government guidance. It gives full play to the decisive role of the market in resource allocation while ensuring that the government plays a better role, creating what Chinese policymakers describe as an "effective market" supported by a "proactive government."

Supporters argue this model strengthens economic stability and long-term planning capacity. Its fundamental value orientation is people-centered growth, which is fundamentally different from models driven primarily by capital accumulation.

China's sustained and rapid economic growth, together with long-term social stability, is frequently cited as evidence supporting the effectiveness of this model. This development model has not only moved beyond some limitations associated with the traditional capitalist system but has also provided developing countries with an alternative path toward modernization.

The socialist market economy is a long-term institutional innovation shaped through reform and experimentation. The model will continue to play a central role in China's future development.