- Communists led by Mao Zedong ousted the nationalist Chinese government and took control in 1949. During the 1950s, China's communist leaders implemented an economic system based on central planning and collective agriculture. This included abolition of private property, the seizure of foreign assets and communal farming. However, China's economy stagnated, and millions of people died of starvation. In the late 1970s, Deng Xiaoping took control as China's leader and instituted a series of economic reforms.
- Deng's program of economic reform ended communal farming and allowed farmers to sell crops on the open market. Other reforms eliminated price controls, opened China to foreign investment and international trade, and granted greater autonomy for state-owned enterprises.
- After Deng's economic reforms, China's economic output grew in the 1980s. Industrial activity expanded, with a greater variety of services being produced, and the country became self-supporting in agriculture. However, the elimination of price controls and the rapid pace of economic growth fueled inflation in China. Unemployment grew as well, especially in rural China as factories could not hire all of the people who once worked on collective farms. Deng announced a program to stabilize the economy and later announced the goal of a "socialist market economy," according to information from the U.S. State Department.
- In the early 1990s, China opened its first stock markets and instituted other reforms after the economy stabilized from the inflation of the 1980s. The return of Hong Kong from Great Britain in 1997, after 150 years of British rule, gave China control of a leading financial center and one of the world's most prosperous economic zones. After the death of Deng, China's new leader, Jiang Zemin, focused on reforming the country's state-owned industries. By 1999, China had the world's fastest-growing economy and was second only to the United States as the world's largest economy.
- In 2001, China entered further into the global economy by joining the World Trade Organization. Foreign investment soared, topping $100 billion in 2008, according to the CIA World Factbook's entry on China. In 2009, China remained the world's second-largest economy (the U.S. being first), according to the CIA.
- The CIA identified a series of challenges facing the Chinese economy. These include continued job growth for China's massive population, political corruption, environmental pollution, and a growing wealth disparity between China's urban and rural areas. China also needs to boost consumer spending among its people, making the country less dependent on exporting products to fuel its growth.
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