socialism could only emerge in developed leaders communist capitalist economies Deng argued his policies were necessary as China still had feudal hang overs However such policies began a still on going debate about whether China has now become a capitalist country in all but name was based on the concept of economics in control Deng s approach rather than the Maoist idea of politics in control In other words had was more important than political dogma or economic pragmatism Practice versus Whatever In September 1982 the 12th Congress of the CCP approved Deng s economic plans as well as various personnel changes He was then in a position to introduce the second phase of his plans for industry DISCUSSION POINT Do you think that Deng s use of market mechanisms and allowing the existence of privately owned firms and enterprises automatically meant that China was likely to become a fully developed capitalist economy To discuss this in any depth you will need to do some research on key terminology and definitions such as capitalism socialism and market mechanisms Industry phase 2 1984 89 In October 1984 the Resolution on the Reform of the Economic System began Phase 2 This further reduced state control over enterprises though they still remained under public ownership Deng also made it clear that unprofitable enterprises would be closed down To make profits easier the state tax on enterprise profits was reduced from 55 to 33 in 1983 84 This emphasised that ownership and management were two separate aspects and that managers could be given some freedom in selecting ways to improve production In particular it allowed private groups to lease small and medium sized enterprises though the largest ones remained under direct government control The government also introduced a legal framework that protected private investment This as As the