Chinese Economic Reform

The Chinese economic reform (simplified Chinese: 改革开放; traditional Chinese: 改革開放; pinyin: Gǎigé kāifàng; literally "Reform and Opening up") refers to the program of economic reforms called "Socialism with Chinese characteristics" in the People's Republic of China (PRC) that were started in December 1978 by reformists within the Communist Party of China (CPC) led by Deng Xiaoping.

China had one of the world's largest and most advanced economies prior to the nineteenth century, while national product per capita remained average in global terms. The economy stagnated since the 16th century and even declined in absolute terms in the nineteenth and much of the twentieth century, with a brief recovery in the 1930s.

Economic reforms introducing capitalist market principles began in 1978 and were carried out in two stages. The first stage, in the late 1970s and early 1980s, involved the decollectivization of agriculture, the opening up of the country to foreign investment, and permission for entrepreneurs to start up businesses. However, most industry remained state-owned. The second stage of reform, in the late 1980s and 1990s, involved the privatization and contracting out of much state-owned industry and the lifting of price controls, protectionist policies, and regulations, although state monopolies in sectors such as banking and petroleum remained. The private sector grew remarkably, accounting for as much as 70 percent of China GDP by 2005, a figure larger in comparison to many Western nations. From 1978 to 2010, unprecedented growth occurred, with the economy increasing by 9.5% a year. China's economy became the second largest after the United States. The conservative Hu-Wen Administration more heavily regulated and controlled the economy after 2005, reversing some reforms.

The success of China's economic policies and the manner of their implementation has resulted in immense changes in Chinese society. Together with large scale government planning programs alongside market characteristics has reduced poverty, while incomes and income inequality increased, leading to a backlash led by the New Left. In the academic scene, scholars have debated the reason for the success of the Chinese 'dual track' economy, and have compared them to attempts to reform socialism in the Eastern Bloc and the Soviet Union, and the growth of other developing economies.

For 2010, China was ranked 140th among 179 countries in Index of Economic Freedom World Rankings, which is an improvement from the preceding year.