Since its emergence, socialist theories have undergone centuries of evolution and practical experimentation, consistently serving as a major intellectual force driving social transformation. Both planned socialism and classical socialist theories have faced a significant challenge in their practical development, and that is resolving the question of effectiveness satisfactorily.
Generally speaking, socialism is a social theory and institutional arrangement that advocates collective control by all members of society over production, distribution, and management, with the aim of achieving social equality, justice, and shared prosperity. Within the trajectory of Marxist thought, socialism is regarded as the initial stage in the transition from capitalism to communism. Its core objectives are to eliminate exploitation, liberate the productive forces, and ensure that the fruits of development are shared by the entire population.
Based on contemporary classical theory and the practical experience of various countries, including China, the modes of realization and paths of development of a socialist society are generally concentrated in several aspects.
First, the predominance of public ownership. The means of production are held by society or the state in order to prevent excessive concentration of wealth. However, the concept of the “means of production” is defined very broadly and has not been specified in a precise, efficiency-based manner that yields clear and effective practical results. Consequently, in practice, there have been instances of misjudgment and inconsistency regarding the appropriate scope of public ownership. In addition, the extent to which public ownership should be considered “predominant” remains a major and unresolved issue.
Second, distribution according to labor. This principle emphasizes that individual income should be determined primarily by the quantity and quality of one’s labor, with the aim of eliminating “unearned income” in an absolute sense. In contemporary society, however, the core issue is no longer simply the amount of money one receives, but rather the ways in which that money is obtained. Privilege, corruption, and low-efficiency forms of labor all fall into the category of unearned gains, and these have, to a certain extent, already been subject to governance and correction.
Third, social equality and fairness. This aspect is crucial, since it is directly related to the elimination of class antagonisms and the level of social welfare provision. The overarching ideal is clearly to provide equal access to education, healthcare, and social security. The real challenge, however, lies in how to achieve and realize these ambitious goals. If even the most basic forms of social security are difficult to sustain, this indicates that, from an overall perspective, the material and institutional conditions for a comprehensive improvement in social welfare provision are not yet in place, and alternative paths must therefore be explored.
Fourth, coordinated development through planning. Classical theory envisions the use of macroeconomic regulation to ensure that economic development is not driven solely by profit but also by the satisfaction of social needs. At a deeper level, however, this is fundamentally a question of power and resources. There are still practical obstacles and unresolved issues when it comes to deploying power and resource allocation to generate the greatest economic benefits.
From both theoretical and practical perspectives, China has combined Marxism with its own conditions to develop the theory of “socialism with Chinese characteristics”. This framework allows the market to play a decisive role in resource allocation, while also enabling the state to correct broadly defined “market failures” through macro-level regulation, such as Five-Year Plans and national strategies for emerging industries. The difficulty, however, lies in determining what exactly constitutes “market failure” and which areas truly require “correction”. In practice, drawing these policy boundaries is extremely challenging. The resulting outcome may be uneven economic growth, with industries alternately encouraged and then constrained, leading to a loss of developmental direction. As a consequence, when economic resources become insufficient, efforts to improve the actual provision of social welfare also face serious constraints.
In the theory of socialism with Chinese characteristics, strong emphasis is placed on upholding the leadership of the Communist Party. In terms of the relationship between power and resources, this serves as a fundamental institutional guarantee. Since the mid-2020s, China has further emphasized the goal of “common prosperity,” aiming to narrow the wealth gap through mechanisms such as social philanthropy and coordinated regional development initiatives, including rural revitalization. The overarching aim is to enhance the level of social welfare provision, although progress in this direction is clearly constrained by overall economic capacity.
Furthermore, within this framework, there are “whole-process people’s democracy”, a high degree of technological autonomy, and distinct institutional advantages. In certain fields, the concentrated allocation of resources under socialism with Chinese characteristics has demonstrated notable strengths, exemplified by the system where the entire nation is mobilized. Particularly in strategic sectors such as artificial intelligence, new energy, and deep-space exploration, the achievements attained have attracted worldwide attention. Nevertheless, the problems that have emerged in practice should not be underestimated.
These challenges include disparities in income distribution. Although China emphasizes common prosperity, the urban–rural divide and income inequality across industries remain central concerns in society. Demographic pressures are another major issue, where population aging and declining birth rates are expected to become increasingly severe after 2026, posing significant challenges to the sustainability of the social welfare system. In addition, the external environment constitutes a critical challenge. As geopolitical frictions intensify and international trade protectionism grows, external competitive pressures remain extremely strong.
In fact, China is actively pursuing policy solutions by attempting to integrate an "efficient market" with a "proactive government" to address these real-world issues. The crux of the matter lies in the fact that a proactive government often means there would be more state interventions, which in turn signifies that the space for the market will inevitably shrink. Consequently, finding a balance remains a significant, unresolved challenge in practice, as the boundaries between the two remain blurred. ANBOUND’s founder Kung Chan believes that from an epistemological perspective and given the nature of the issue, this is fundamentally a question of "space" rather than one of “policy planning”. Resolving this spatial tension will continue to be the core challenge for China's socialist practice in the years to come.
Therefore, from the perspective of real-world policy practice, China’s path of socialist development remains a dynamic model that is still being tested, explored, and refined. It has not yet reached the stage of a classical, fully effective, and empirically validated theoretical framework. Viewed through the relationship between efficiency and wealth creation, this reality means that the socialist stage cannot ignore efficiency. Otherwise, wealth will not simply materialize, nor can the advantages of socialism be meaningfully realized. Consequently, no socialist policy practice can afford to overlook the existence and role of the principle of efficiency. Hence, efficiency-oriented modes of production, commonly attributed to capitalist economic structures, must be given sufficient space to function to drive aggregate economic growth and furnish the material basis for achieving common prosperity.
Take China's land resources as an example. Over decades of policy implementation, local governments have almost universally utilized industrial parks to allocate land and other resources to manufacturing units at low costs. This approach has, by extension, forced the service sector to shoulder disproportionately higher costs. In essence, state intervention has prioritized providing cheap, critical resources to the manufacturing sector while imposing a "cost premium" on services. While this form of state intervention is inherently socialist and has significantly incentivized production, which indeed fueled China's economic rise, it has also acted as a structural constraint on the growth of the country’s service industry to a certain degree.
Real-world experience shows that land is a critical resource. In China’s transition from a production-oriented society to a consumption-oriented one, and further into a post-industrial phase, sustained resource support is essential. What is meant by “transition” is, in essence, the reallocation and readjustment of resources, a process in which a clear pattern of core state power intervention and policy orientation can be observed. Mobilizing such resources to achieve transformation requires the redistribution and redefinition of power. Relying solely on market forces, without the involvement of authority, would make this task exceedingly difficult if not impossible. This form of power intervention already touches upon the very essence of socialism. In this sense, it can be argued that precisely because China is a socialist country, capable of using state power to mobilize and allocate key resources, it has been able to enhance productive efficiency at a higher level of resource concentration.
Yet, at this level of analysis, another problem becomes apparent. In terms of economic realization, socialist countries in practice operate in a layered or stratified approach. If the allocation of key resources constitutes the primary expression of socialism, then the distribution of welfare does not, because it is still built upon the expansion of wealth. One must genuinely have sufficient resources before distribution can even be discussed. At this level, the principle remains “more work, more pay”, with efficiency as the main criterion. This, in essence, is in fact a capitalist mode of production. On this point, the perspective of a stratified or “structural socialism” diverges in policy practice from the prevailing mainstream theories. All in all, structural socialism holds that the underlying logic is socialist, but only at the foundational level. Above this foundation, in the sphere of social production, capitalist modes of production must continue to be employed, adhering to capitalist principles of efficiency. This is what is meant by structural socialism.
In this sense, while the foundation “structural socialism” remains socialist, its external framework functions according to capitalist principles. This means that its core is socialist, yet its market operations adhere to capitalist logics. At the same time, its development follows capitalist modes, even as its guiding ethos is socialist, with welfare ultimately generated through capitalist methods of production. In practice, socialism is realized in society through the interaction of these two layers, i.e., socialist and capitalist, resulting in what can be conceptualized as a “dual-shell” social structure.
The implementation of this structural socialism is closely tied to the control of key resources. In practice, key resources are not limited to land, as already defined in the Chinese Constitution. In a post-industrial society, another critical resource is the dominant market, i.e., the capital market, which the Constitution does not define. In discussions on post-industrial society, ANBOUND consistently emphasizes that the capital market is the pivotal lever. Under such a scenario, market investors can leverage it, and so too can, and indeed should, the government through fiscal policy and the central bank. Both investors and government fiscal authorities face significant opportunities in the development of productive finance and the capital market, and the government holds decisive core authority in intervention, thereby reflecting the fundamental nature of socialism.
Kung Chan is of the opinion that as long as the so-called “key resources” of land and capital are firmly controlled, the core of structural socialism is securely established at the foundational level. Beyond this, the broader social sphere should be liberalized and activated, operating according to capitalist modes of production, pursuing and engaging in highly efficient production and development.
In fact, the construction of a unified, large-scale market is also an important theoretical endeavor that requires expansion and development, and the perspective of “structural socialism” represents one possible theoretical experimental window within this effort.
Kung Chan believes that, as a developing major power, two points are clear. First, the assumption of the homogenization of social hierarchy and uniform ideology does not hold. Second, capitalist competition originating externally is transnational and global. These two points determine that the ongoing state of socialist practice is almost permanent, and can only end through sufficient accumulation of wealth and abundant welfare provision. In this context, it is unrealistic to approach the theory and policy practice of socialism solely from the perspective of the nation or society as a whole. With this in mind, it becomes necessary for China to implement socialism through a tiered, structured approach in order to delineate clear boundaries.
Furthermore, from the perspective of building a unified national market, it must first function as a market before it can be considered unified. As a market, efficiency must be emphasized, and the “capitalist efficiency principles” cannot be undermined under the guise of socialism by tolerating inefficiency. Thus, both the invalidity of the assumption of social and ideological homogenization and the intensifying reality of external competition compel China to make rational spatial choices and draw relatively clear policy boundaries. From the standpoint of policy practice, only in this way can a unified national market take shape smoothly and continue to grow and strengthen.
Of course, whether “key resources” are truly “key”, and whether they are sufficient to reflect the core attributes and values of socialism, is a question that deserves careful and specialized study. There are also many institutional techniques, experiences, and patterns involved. Yet land and the capital market remain foundational areas for the development of any country, which is essentially a consensus of any societal development. Even in the post-industrial era, the service sector still constitutes a broad form of “production”, still involves construction, and is still undergoing development. Therefore, even as China gradually enters the post-industrial stage, structural socialism still has the conditions to continue and develop. Moreover, the fundamental basis of the service sector is itself a key resource of structural socialism, i.e., the capital market.
In short, the focus of structural socialism is primarily on the resolving spatial, not theoretical issues. Neither is it about the question of path, direction, or industry, but a matter of policy implementation.
It is worth noting that, beyond its long-term coexistence, the spatial overlap of capitalism and socialism is now showing clear signs of crowding out. China’s policies and laws now increasingly lean left, with an urgent drive to expand overall welfare provision and achieve quick results. Examples of this include labor regulations and healthcare systems, yet these goals cannot be fully supported by economic growth. Traditional socialist domains, such as higher education, are also unable to fully coordinate in this. At present, nearly all universities are public, while experiments with private institutions have largely failed and are shrinking. For example, universities sponsored by Li Ka-shing and foreign cooperative programs have been halted.
In terms of research methodology, there is a pragmatic approach of “prescriptionism” that opens a window to address the issue of effective policy. The current major challenge is that an active government must achieve results through effective policies.
If bold exploration also encompasses theoretical investigation, then “structural socialism” represents a theoretical field worthy of study. It defines and clarifies many of the previously vague boundaries in social reality, effectively opening a window for policy practice and creating potential conditions and opportunities for the future development of Chinese society and its markets.
Final analysis conclusion:
One major problem in the practical development of socialism is effectiveness. In theory, socialism with Chinese characteristics can correct broadly defined “market failures” through state macroeconomic regulation. In practice, however, defining market failure and drawing clear boundaries for corrective policy interventions is extremely difficult. At present, socialism with Chinese characteristics has evolved into a form of “structural socialism”. Its underlying logic lies in firmly controlling two “key resources”, namely land and capital, while allowing the broader social and economic spheres to advance according to capitalist modes of operation.
