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Hong Kong Intelligence Report #42 A Distinction between Lenin's NEP & CCP's SOCIALIST Market Economy

Updated: Dec 7, 2021

Open-source intelligence (OSINT)

The 100th Anniversary of Lenin's The New Economic Policy (1921-1928)

FILE PHOTO: Vladimir Lenin (L) and Deng Xiaoping (R) Images: Public Domain
FILE PHOTO: Vladimir Lenin (L) and Deng Xiaoping (R) Images: Public Domain


A patriot is one who respects the Chinese nation, sincerely supports the motherland's resumption of sovereignty over Hong Kong and wishes not to impair Hong Kong's prosperity and stability. Those who meet these requirements are patriots, whether they believe in capitalism or feudalism or even slavery. We don't demand that they be in favour of China's socialist system; we only ask them to love the motherland and Hong Kong. - Deng Xiaoping (1)

The bourgeoisie in the West is preparing its counter-blow in advance. The bourgeoisie more or less knows what elements it will have to depend upon and it builds its counter-revolutionary cadres in advance. We witness this in Germany; we witness this, even if not quite so distinctly, in France; and finally we see it in its most finished form in Italy, where in the wake of the uncompleted revolution there came the completed counter-revolution which employed not unsuccessfully some of the practices and methods of the revolution.
Whither is the NEP leading us: Toward capitalism or toward socialism? This is, of course, the central question. The market, the free trade in grain, competition, leases, concessions – what will be the upshot of all this? If you give the devil a finger, mightn’t it be necessary to give him next an arm and then a shoulder, and, in the end, the whole body, too?
If the country’s most important productive forces were to fall into the hands of private capital, then there could not naturally even be talk of socialist construction and the days of workers’ power would be numbered. [Today 4/5 of Chinese workers are employed by capitalists]
To put it differently, the ownership of various factories, railways and so on by diverse capitalists would be superseded by an ownership of the totality of enterprises, railways and so on by the very same bourgeois firm, called the state. In the same measure as the bourgeoisie retains political power, it will, as a whole, continue to exploit the proletariat through the medium of state capitalism, just as an individual bourgeois exploits, by means of private ownership, “his own” workers. The term “state capitalism” was thus put forward, or at all events, employed polemically by revolutionary Marxists against the reformists, for the purpose of explaining and proving that genuine socialization begins only after the conquest of power by the working class. The reformists, as you know, built their entire program around reforms. We Marxists never denied socialist reforms. But we said that the epoch of socialist reforms would be inaugurated only after the conquest of power by the proletariat. - Leon Trotsky (2)


  • ''One Country'' means 'Socialism with Chinese characteristics' as a whole

  • ''One Country Two Systems'' = ''Socialism with Chinese characteristics''

  • ''Two Systems'' do not mean ''the Dual Power'' within one country

  • Lenin's The New Economic Policy (1921-1928) was the Soviet version of ''One Country Two Systems''

  • NEP and 'Socialism with Chinese characteristics' are in the opposite direction

  • Contrary to Russia in 1921, the Maoist mode of economy had transformed China from the bottom of the world economy (1949) into the World's number 11th industrialised economic power (1978) with average annual increase rate of economy 6.8% especially during 1967 to 1976

  • Main issues are 1) ''privatisation'' of the state properties by kleptocrats in the party; 2) unrestricted ''political accumulation of capitalists''; 3) expanding social dominance of private ''monopoly capital'' in China in terms of Marxism (Xi Jinping is believed to be introducing deliberate and imperative corrections into the operations of the market now)

  • Today 4/5 of Chinese workers (87% in 2018; almost 90%) are employed by private capital (A critical difference)

  • According to the general survey of National Bureau of Statistics (国家统计局, 2016), private capital dominates 80% of the national economy of China (READ MORE: 普查数据 - 按登记注册类型分组的法人位数、产业活动单位数及从业人数)

  • Although ''state-ownership'' or ''state control'' on economy itself does not automatically mean ''socialism'' (it is all about class nature of policies in practice), advocates of "the state enterprises advance, the private sectors retreat" or any other anti-state run enterprise crusaders of China are core anti-CCP forces that totally ignore and disdain social functions of the public sector as less profitable, less effective ''business'' organisations

  • State-owned enterprises (SOEs) are the political, economic leverage of CCP. Decrease of the number of SOEs means decline of CCP's social control, and increase of privatisation cases (social accumulation of capitalists)

Under a genuine state capitalism, that is, under bourgeois rule, the growth of state capitalism signifies the enrichment of the bourgeois state, its growing power over the working class. (3)

Unlike the official ideological policy and optimistic assumption of the early 1980s, Hong Kong people's attitude toward so called 'Socialism with Chinese characteristics' already showed critical significance on the recent social unrest (June 2019 - January 2021) and 'One Country Two Systems' in its entirety.

Therefore, objectively so called 'patriots' no longer can ignore or downplay the importance of understanding Chinese ''socialism'' as it has been one of inevitable social topics to push political evolution forward.

Nevertheless, self-proclaimed 'pro-establishment' camp and its paid ideologues are still incompetent to give citizens a clear distinction or definition about the one side of the same coin, 'Socialism with Chinese characteristics' which is simultaneously a constitutional part of 'One Country'. In other words, the governing mode of 'One Country' is 'Socialism with Chinese characteristics', and one of 'Two Systems' is also 'Socialism with Chinese characteristics'. Thus 'Capitalism with Hong Kong / Macau characteristics' is dependent on 'Socialism with Chinese characteristics'.

Although it seems that both 'Socialism with Chinese characteristics' and 'Capitalism with Hong Kong / Macau characteristics' (local governance system of local governments limited in Hong Kong and Macau) are paralleled or vertically related, all of them are part of 'Socialism with Chinese characteristics' within 'One Country Two Systems'. Simply China is constitutionally a socialist country including Hong Kong, Taiwan and Macau in terms of their constitution.

Unfortunately, ignorance and misunderstanding of 'One Country Two Systems' = 'Socialism with Chinese characteristics' are grave dangers while both internal and external reactionaries (e.g., real estate monopoly capital) perfectly exploited the miserable status of uneducated citizens to instil ''anti-China'' ''anti-Communist'' grievances in a people's mind. This is one serious issue.

Furthermore, what is this analysis more concerning here is that Marxist quality of 'Socialism with Chinese characteristics' itself. In fact, the revisionist reformist Deng Xiaoping (1904-1997) explained what it is as the citation above. Only abstracted 'patriotism' and 'profitability' were his concerns after 1978 (the end of the Mao era).

I consider it completely unimportant who in the party will vote, or how; but what is extraordinarily important is this—who will count the votes, and how. (4)

One post, an image of former Soviet leader Joseph Stalin with text added, appears to attribute a quip about vote counting to the dictator.
"Those who cast the votes decide nothing. Those who count the votes decide everything," the post says, attributing it to "Communist Tyrant and mass murderer Josef Stalin." (5)

Obviously, it already lost proletariat characteristics while we cannot see any 'Marxist' characteristics in China. Moreover, one-party system or dictatorship itself does not indicate if it is a Marxist administration or militarist regime or nationalist government. No matter what the name of the ruling party is. In other hand, class nature and eligible governance define if it is good or bad. For instance, dictatorship of capitalists (so called bourgeois democracy) is good and democratic for the ruling class themselves while it means bad and dictatorship for the working class in reality. The powerless people in economy further got deprived of their political power socially under the illusion of 'bourgeois democracy'. Yes, the ruling class themselves exclusively self-nominate and count the votes always in capitalist society. This is exactly the same in entire China as capitalism already restored nationwide.

Where are Socialist / Marxist characteristics?

This demonstrates yet again, so called 'Socialism with Chinese characteristics' is in fact 'Neoliberalism with Chinese characteristics' (David Harvey coined this term precisely) or 'State capitalism with Chinese characteristics' or 'Crony capitalism with Chinese characteristics' which is acceptable as long as it is patriotic to the motherland.

There are fundamentally several key points to distinguish Socialist / Marxist characteristics from State-capitalism / Bureaucrat-capitalism:

  • Workers' control on the state and methods of social production

  • All social production measures, transportation system, broadcasting system, financial system and trade system are publicly owned by the society not individuals

  • There is strongly irreversible policy orientation to transfer market economy into planned economy by consciously developing material conditions for it

'Socialism with Chinese characteristics' = Socialist market economy of China = Reform and Opening up does not possess the Marxist characteristics and orientation in general. On the contrary, it bears historical resemblance to the USSR's Perestroika (1986-1991) yet the Chinese reform is undeniably successful without hastily collapsing the country. Privatisation of state properties by bureaucrats and full-scale construction of advanced capitalist society are going to be gradually complete in 2049. The most important thing is that this entire process is the extreme opposite of Vladimir Lenin's NEP (The New Economic Policy, 1921-1928). There is no threat for Chinese capitalists on this matter at all.

This essay focuses on the distinction between 'Socialism with Chinese characteristics' and NEP in order to dispel doubts or intimidation among Hong Kong citizens.


Lenin's NEP (1921-1928) perfectly explains what 'Socialism with Chinese characteristics' (1979-) is. Today we hear a lot about the Chinese version of 'One Country Two Systems' but we hear less about the Soviet version of 'One Country Two Systems'(NEP).

First of all, discrepancies between Vladimir Lenin (1870-1924)'s socialist NEP and Deng Xiaoping (1904-1997) 's Socialist market economy of China are not about the strategic use of the market economy itself. This point (the use of the market economy) does not disqualify socialist revolutions of the 20th century scientifically.

Marxism is illegal under One Country Two Systems in Hong Kong? Although Communist Party of Hong Kong could be a political joke by opposition, the hostile reactions from 'loyal waste' (忠誠廢物) showed class nature and misconception of so called 'pro-establishment' camp on September 24, 2018.


On Monday (24th), the government gazetted that it is to prohibit the operation of the Hong Kong National Party and listed it as an illegal society. On the same day, the "Hong Kong Communist Party" posted on the Facebook page that it had sent a letter to the Security Bureau to inform the party's establishment, stating that it would "actively try to build up armed forces and will not rule out armed uprisings", which caused concern. Elizabeth Quat, a member of the DAB Legislative Council, believes that the government must face up to and ban the relevant organisation. ... Michael Luk Chung-hung, a member of the Legislative Council of Hong Kong Federation of Trade Unions, criticised that the people involved are "political clowns" who trample on the bottom line of the country. Pauline Ngan Po-ling, local deputy to the People’s Congress, described the move as a serious challenge to the Basic Law and "One Country, Two Systems."

As we know, so called 'pro-establishment' ideologues (they themselves are not Communists; in fact there is no Communist in Hong Kong politics) frivolously abandoned any incisive studies on socialist experiments of the 20th century. Instead, they themselves are flirting with Marxism, and opportunistically stand with anti-Communist KMT and compradors on this topic. Simply, they could say: 'Capitalism is good. In practice, Marxism is illegal under One Country Two Systems in Hong Kong. It sounds like Boris Yeltsin (1931-2007). In the future, they will loudly say this 'separatist' line when CCP starts disintegration. We are Chinese patriots not Marxists at all. (This is their true voice) ' Exactly, this is their genuine political colour as paid representatives of the local monopoly capital. Anyway who allows this exorbitantly treacherous attitude of the unreliable 'pro-establishment' camp which also can be seen as ideological chaos of this city?

Notably, Lenin's NEP had its Russian characteristics. Specifically, the October Revolution was a struggle to gain support of farmers by Bolsheviks and workers. Furthermore, they successfully established the Marxist administration before the civil war broke out. A sheer contrast to any other socialist revolutions including the Chinese Communist Revolution of 1949. For the latter, the workers and their parties lightened the burden of revolution after they won civil wars as resistance of the capitalist class was dramatically weakened.

As a result, during 1917 and 1921, Russia fatally had lacked three major material conditions to launch socialist construction of society: 1) Advanced productivity and mutually developed correlation between industry and agriculture; 2) Cultural and organisational sophistication of the ruling party and the class; 3) The final defeat of the internal and international bourgeoisies (today the world still lacks this condition), absence of imperialist interference and technocrat sabotage.

Apparently, the Bolshevik administration had suffered from the lack of material conditions to push socialist solutions even after the success of the October Revolution. For instance, nationalisation of 1917 and 1918 was not simultaneously accompanied by workers' reorganisation of companies (social production facilities). It was not adequate and thorough.

Even War Communism (1918-1921) was the farthest from any kind of socialism while it was just common General War policy under the Russian Civil War (1917-1923).

War-torn Russia was necessary to take the long-term capitalist method (market economy) to create material and technical conditions to move the track to socialism. For this purpose, management of companies, railways and social production facilities needed market economy to some extent.

However, there is a marked contrast between State / bureaucrat capitalism of China (1979 - present) and Lenin's NEP (1921-1928) that the workers' monopoly of tax and credit, establishment of social system for economic control.

Although State / bureaucrat capitalism of China (1979 - present) heavily depends on FDI, and its capitalist economic share / domination reached more than 60% of the entire national economy in 2020, Lenin's NEP (1921-1928) nationalised all industries, and they lent capitalists companies partially. Instead, they strictly did NOT allow privatisation of state enterprises like Deng Xiaoping. It is critically and irreparably DIFFERENT from 'Socialism with Chinese characteristics'.

Note: Originally landless peasants had enjoyed conditional landholding as the Decree on Land guaranteed since November 8, 1917 until 1929. The concept of NEP was embryonically contained in the decree itself.

Also, unlike China's Socialist market economy, which is dominated by private enterprises due to the liberation of foreign capital. The practice of the Soviet Union's New Economic Policy, which was the opposite to the former, was to nationalise all industrial enterprises and lent some of them to capitalists. Increased 2,000 small businesses that employ 40,000 to 50,000 workers were privately run for rent, while 4,000 well-equipped state-run companies employed 1 million workers in the market. Competed with controlled capitalists by maintaining credit and taxation mechanisms in hands of the workers and Bolsheviks, and socially curbed the political accumulation of capitalists. Moreover, foreign trade is monopolised by the state. This unprecedentedly expressed the genuinely Marxist approach to the market economy in the last century. (7)

Control over the economic process remains in the hands of the state power; and this power is in the hands of the working class. (8)