Before the founding of the People's Republic of China in 1949, in this weakened giant of a country with a population of nearly 500 million people a territory of 9.6 million square kilometers, the highest annual output of major industrial and agricultural products were as follows: yarn 445,000 tons, cotton cloth 2.79 billion meters, raw coal 61.88 million tons, generated energy 6 billion kwh, grain 150 million tons, and cotton 849,000 tons. This was the starting point of the economic development of the new China.

After 50 years' planned and large-scale economic construction, China today is one of the major economic powers with the greatest potential of development in the world, and its people live a comparatively well-off life as a whole. From 1953 to 2000, China had successfully completed nine five-year plans and marked achievements had been made, laying a firm foundation for future economic development. Since the implementation of reform and opening-up in 1979, China's economy has grown at an unprecedentedly rapid speed.

The reform began first in the rural areas in 1978, when the household contract responsibility system was introduced there. Under this system, farmers got the right to use the land, plan farmwork and dispose of products independently. State monopoly of the purchase and marketing of agricultural products was eliminated; the prices of the majority of farm products were freed; many policies restricting agricultural development were abolished; and farmers were allowed to go in for diversified business and set up township enterprises. All this had greatly aroused the farmers' enthusiasm for production.

In 1984, the economic restructuring shifted from the rural areas to the cities.

In 1997, the Chinese government stressed that the non-public sectors of the economy are an important component part of the socialist economy of China, in which profitability is encouraged for elements of production, such as capital and technology, making the economic restructuring march forward in bigger strides.

In 2001, reform in various fields was carried out smoothly, and saw great achievements. At present, a socialist market economy system is well on the way to being established in China, and the basic role played by the market has been improved in the sphere of resources allocation. At the same time, the macro-control system has basically taken shape. Moreover, the extensive mode of economic growth is being replaced by an intensive mode. According to the plan, the socialist market economy will be further improved by 2010, and by 2020 a comparatively mature socialist market economy structure will have been established in China.