The New Economic Organization

In the process of developing a socialist market economy, new economic organizations that are wholly owned or absolutely controlled by private citizens of the mainland of China, Hong Kong, Macao, Taiwan and foreign businessmen appeared. From the perspective of the characteristics of ownership, the current laws and regulations refer to these forms of economy as “non-public economic organizations”, that is, the economic components other than public ownership among various social economic components. At the current stage of our country, the non-public sector of the economy includes self-employed, private, Hong Kong, Macao and Taiwan investment and foreign investment sectors of the economy, as well as the non-state-owned and non-collective components in mixed ownership economy and joint-stock cooperative economy. In the non-public sector of the economy, the self-employed economy is also known as the “individual ownership economy”. It usually refers to a sector of the economy in which the means of production are owned by the worker, the work is done by an individual or the family members, and the income of the work is owned and controlled by the worker. In our country, self-employed sector of the economy refers to the self-employed businesses registered in accordance with relevant national regulations. Private sector of the economy is an economic form based on private ownership of the means of production. The main difference between the private sector of the economy and the self-employed sector of the economy is that the former obtains legal profits through hired labor. The main form of it is private enterprises, including private sole proprietorships, private partnerships, private limited companies and private share-holding limited companies. The mixed ownership economy is the type of economy formed by investment entities of different ownerships in an enterprise or company since our country’s Reform and Opening-up. It contains several components in the state-owned, collective, self-employed, private, and foreign-funded businesses and its main form is a mixed-ownership enterprise. The shareholding cooperative business is an economic form with both the cooperative system and the shareholding system. It is a new organizational form that meets the requirements of the market economy in the exploration of the reform of our country's economic system. Its main economic form is the shareholding cooperative enterprise.

The investment economy by Hong Kong, Macao and Taiwan businessmen is an economy formed by investors from Hong Kong, Macao and Taiwan in China directly investing in the establishment of enterprises in the mainland of China. Its economic forms mainly include solely-foreign owned enterprises, joint ventures or cooperative ventures with Mainland investors and joint stock limited companies invested by them foreign funded economy is the economy formed by foreign investors’ direct investment in mainland of China. There are four main economic forms: foreign-funded enterprises (also known as “solely foreign-owned enterprises”), Sino-foreign joint ventures, Sino-foreign cooperative enterprises and foreign-invested joint stock companies. In self-employed businesses, individuals engage in production and the means of production or product income is owned by the individuals. There are less than 7 employees (including 7 people), and the entire personal property bears civil liabilities. The businesses are founded by urban idle labor and other self-employed individuals with self-raised funds and are approved by the administrative department for industry and commerce and have obtained business licenses in industry, handicrafts, passenger and cargo transportation, commerce, catering, services (including repairs) and house repairs. Non-agricultural self-employed individuals in rural areas also can engage in this type of business. Significant changes have taken place in China’s economic structure and social structure. In the new economic organization and the new social organization (the “two new organizations”), new social classes of entrepreneurs and technical personnel of private technology companies and management and technical personnel employed by foreign-funded enterprises, self-employed business owners, private business owners, employees of intermediary organizations, freelancers and so on have brought new changes to the form of social organizations.

The Distribution System both Main Distribution According to Work and a Variety of Distribution Methods

China’s current income distribution system. This income distribution system is gradually established with the continuous deepening of China’s ownership reform and the continuous improvement of the socialist market economic system. It is determined by the basic national conditions of the primary stage of socialism in China, the basic economic system with public ownership playing a leading role and all forms of ownership growing side by side, the level of productivity development and the existence of people's labor differences. At the same time, it is also an objective requirement for the development of a socialist market economy. Performance-related pay is the socialist principle of distribution, so in the initial stage of socialism, we must adhere to the dominant position of performance-related pay. The public ownership of the means of production realizes the equality of people in the possession of the means of production. Each worker provides labor for the society on the basis of joint possession of the means of production and the society distributes income according to the quantity and quality of labor provided by each worker. Only by adhering to the dominant status of performance-related pay can we guarantee the ultimate realization of the dominant status of public ownership and the socialist nature of the basic socialist economic system, ensure that people establish a harmonious economic relationship on the basis of equal economic relations and ensure that we go forward towards the goal of common prosperity. The main status of performance-related pay is shown in the following: first, in the income distribution of the whole society, performance-related pay accounts for the largest proportion and plays a major role; second, among the total income of workers in the public sector of the economy, the performance-related pay is the main source of income. Under the conditions of a socialist market economy, a distribution system with performance-related pay playing a leading role and multiple income distribution methods existing side by side essentially reflects various factors of production such as labor, management, capital, technology, and land, all participating in the distribution of income according to their contribution. Among them, performance-related pay playing a leading role reflects that the labor factor is the most important part of various production factors. The ownership structure with public ownership playing a leading role and all forms of ownership growing side by side and the development of the socialist market economy determine the current distribution system. In addition to performance-related pay, the coexistence of multiple distribution methods is also required. The diversification of the forms of public ownership also determines the diversification of the forms of pay distribution. Due to the implementation of shareholding system, joint-stock cooperative system, cooperative system, contract management, etc., various pay distribution methods other than performance-related pay will inevitably arise. To develop a socialist market economy, we must follow the laws of the market economy. Various production factors (labor, land, capital, management) must have corresponding market evaluations, and the owners of these production factors should receive corresponding income. In addition, the market economy also needs risk income and income obtained through social security. All of this is the inherent requirement of the socialist market economy system. In short, in the primary stage of socialism, the pay distribution system of performance-related pay playing a leading role and multiple income distribution methods existing side by side is the result of the combined effect of many factors such as multiple ownership sectors of the economy, multiple business methods, and the internal mechanism of market economy operation.

To implement this pay distribution system, we must adhere to the principle of performance-related pay playing a leading role and the production factors such as capital, technology and management participating in the distribution. We must adhere to the unity of efficiency and fairness, create fair opportunities, rectify the distribution order, and oppose both egalitarianism and large income gap. In the primary distribution and redistribution of national income, we must balance the relationship between efficiency and fairness, and redistribution pays more attention to fairness. We must insist on protecting legal income, regulating excessively high income, and banning illegal income. Moreover, we must insist on encouraging some regions and individuals to rely on honest labor and legal operations to get rich first, and then they should help the regions and individuals who get rich later, and finally realize the common prosperity of the whole society, so that all people can share the achievements of development.