In a recent post Paul Krugman in while criticizing China's interventions in forex markets to engage in a peculiarly managed minor devaluation of the yuan/rmb (not worth all the hype and flagellating, frankly), he labeled the Chinese system as being "rapacious crony capitalism." This has led various commentators in various papers to have varying degrees of vapors. But even if we grant that "rapacious" is not a scientific term that may be dramatic for blogging but is not useful for seriously categorizing the Chinese economic system, the hard fact is that it is not obvious what it is, and it may simply be too complicatedly mixed and large for any of the usual categories to really fit.
This is actually a current professional problem for me and my wife, who are nearing completing the third edition of our textbook, Comparative Economics in a Transforming World Economy, MIT Press. It is one of the two most widely used textbooks in that field, our big rival being one by Paul Gregory and Robert Stuart (with Bob having just passed away very recently). Our second edition was in 2004 and is seriously out of date, and unlike textbooks in many fields, pretty much all of our chapters need substantial rewriting. As it is, we are nearly done, but the remaining country studies are the hardest to do, and of those the last to be done and the hardest to do will be our chapter on China. From the standpoint of professional comparative economics, what the heck the Chinese system is is a matter of serious and substantial debate.
So, at some level we are sort of traditional on these matters. There are two big categories out there: the degree to which an economy is run by markets rather than central planning and the degree to which it is characterized by private or state ownership of the means of production, with private ownership being "capitalism" while state ownership being "socialism," this last categorization being basically codified by Karl Marx himself. There are of course many other such matters of significance, such as policies about social safety nets and redistribution, but these are generally viewed as less central in determining the fundamental nature of the system.
So, the US has always been more or less a market capitalist system, despite episodes during major wars, especially WW II, of being command capitalism. After all, while there remained private ownership of the means of production (capitalism), there were no private automobiles produced in the US due to command orders of the US government. But, the US and UK and others who went into such modes during wartime dropped them when the wars were over. They were strictly temporary. As it is, the command mode has pretty much disappeared in the world, with only a handful of pathetic cases left, most notoriously North Korea, although even it is moving towards more of a market system (especially in agriculture, usually the first sector to move in that direction), even if it remains the last remnant of the old command socialist type.
As it was, China never was that much of a full-blown command socialist economy. It was always more decentralized than the old USSR, with this partly due to its sheer size and diversity, something we characterized with a quotation for the beginning of our China chapter in the past (and which may yet be kept): "The mountains are high; the emperor is far away." (old Chinese proverb)
OK, so our old title for the chapter was "China's Socialist Market Economy: The Sleeping Giant Wakes" (the last drawing on a famous statement Napoleon Bonaparte supposedly made about China: "China is a sleeping giant. When China wakes, she will shake the world.") Very likely that title will stay. But it is in fact a title that comes from the Chinese government itself, a characterization that they continue to hold to; China is a "socialist market economy."
OK, it is indeed a market economy. It probably was not during the Mao era, even if command central planning was much weaker than in the old USSR. There was still command planning, but a lot of it was decentralized to local levels. After Deng Xiaoping took control in 1978, he pretty much undid most of the command central planning apparatus, moving the economy to being predominantly a market one.
The more complicated issue involves property ownership, and here there is no agreement. A major part of this is that China has property forms that are not seen anywhere else in the world. One of the larger parts of the Chinese economy, which used to get lots of publicity but has not received much lately, is what was called the Town and Village Enterprise (TVE) sector. This is the sector that lies between the remaining state-owned sector (from the center) and the fully privatized corporate capitalist sector of the Chinese economy. There are at least four different property forms in this mostly rural part of the Chinese economy, with them varying from being somewhat more publicly (if locally) owned to being more privately, although in some cases cooperatively so, owned. Much of this sector, which as more than a third of the whole economy, is very hard to characterize as being either socialist or capitalist, although clearly the Chinese like to consider it more socialist.
Now this odd term is close to others that have been or still are used to describe economies around the world. One is "market socialist." That was most famously used to describe the former Yugoslavia, which also had a form of workers' management that attracted lots of attention from comparative economists. Other nations also were called this, especially Hungary, which lacked the workers' management part. They had forms of collective or state ownership, but no (or little) command central planning. The state-owned enterprises operated in market environments. The famous Hungarian comparative economist, Janos Kornai, came up with the matter of "soft budget constraints" as something such economies generate, governments regularly bailing out their firms, although we do see this quite a bit in more market capitalist economies as well.
The other similar term is "social market economy," which Germany uses to label its system ("sozialmarktwirtschaft" in German). This is really a fully market capitalist system, but one with a large social safety net. And the Germans have that, certainly compared to the US, and many have commented on the generally better functioning of that economy (which also has lots of labor-management cooperation) than many other economies around.
So, the Chinese system is not like either the old Yugoslav or the current German system, even though it has a lot of state or collective ownership, and certainly is heavily a market system. Clunky and not precisely accurate and vaguely propagandistic as it is, "socialist market economy" may be the best we can do.
Additional material: Oh, on the "cronyism" part, this clearly is an issue, and a big one in China now. Especially favored to get high positions in larger enterprises, whether privately or state or hybridly owned are reportedly children of high Communist Party officials. Corruption has increased substantially, and current Chinese leader (holding all three of the top power positions, Party General Secretary, President, and Chair of the Military Commission) has put into place a large anti-corruption campaign. This has much support because of the scale of the problem, even as many perceive it to be somewhat directed at political enemies.