One subject of the World Economic Forum held in Davos of Switzerland in 2012 is "reforming the capitalism," which reminds me a joke: If first-class economists exist, then the first-class economy will not exit. This joke actually reveals a fact: The current economic crisis faced by the West is a crisis of the West's mainstream economic theory and also a crisis of the Washington Consensus based on the theory, because the core of the Washington Consensus is the "market fundamentalism."

The market fundamentalism believes that market — the "invisible hand" — can automatically promote the economic balance thus any governmental interference is unnecessary. As the economic crisis is spreading and deepening in the West, the "market fundamentalism" has become notorious.

In fact, regarding relations between the market economy and governmental interference, China's general designer of the Reform and Opening-up Deng Xiaoping had a very deep insight. In his South Tour Speeches 20 years ago, he said firmly and confidently, "Planning and market forces are not the essential difference between socialism and capitalism. A planned economy is not the definition of socialism, because there is planning under capitalism; the market economy happens under socialism, too. Planning and market forces are both ways of controlling economic activity."

Based on this viewpoint, the Chinese "socialist market economy" theory was formed. Its core is harmoniously combining the "visible hand" of government and "invisible hand" of market so that the market's efficiency in distributing resources and the socialist macroeconomic balance could both be realized. Although this mode is still being adjusted and improved, the overall competitiveness brought by it has laid the foundation for the current rapid rising of China.

In fact, "market fundamentalism" had already exposed its shortcomings long ago. In the 1980s, the promotion of "economic restructuring" in Africa by the Western countries ended with deepened economic and social crisis; the implementation of "shock therapy" once carried out by Russia also ended with a "catastrophe". "Market fundamentalism" has dragged the whole Western world into current financial and economic crisis, which is the worst since the 1930s.

Historical evidence shows that "market fundamentalism" is a blind alley. Planning and market are both economic means. Only a dynamic equilibrium between the two can make success, which is one of the most important features of the China mode. In this sense, the great exploration and practice carried out by China today will not only promote its own rise in all aspects but also affect the future developmental path of the whole world.