P.R. China was extremely poor when the Communist took over China in 1949, because of a series of wars. Between 1959 and 1961, natural disaster occurred all over P.R. China. People of P.R. China experienced one disaster after another at that time. Considering those situations, People of P.R. China decided to implement a centrally planned economy for all the people to survive the extreme poverty.

In early 80' s of twenty century, P.R. China carried out the policy of reform and opening. And the economy began transforming from centrally planned to market-oriented. Whereas the system operates within a political framework of occasional Communist control, the economic influence of non-state organizations and individual citizens has been steadily increasing. With the market-oriented economy, leaders of P.R. China intended to make all people become rich, and with occasional Communist control, P.R. China government could prevent economical opportunists, and keep the market developing steadily, rapidly, healthily and in balance.

As a result, P.R. China has kept the economy increasing at an average speed of 9% each year since 1978. By the end of 2003, P.R. China has got a GDP of US $ 1.4 trillions, the sixth largest in the world, after U.S. , Japan , German, England and France .

In 2003, the total investment in fixed assets in P.R. China is more than RMB 5.5 trillions yuan and the total volume of foreign trade is US $850 billions, which has surpassed England and France, only lagged behind U.S., Germany and Japan, taking the 4 th place in the world. And foreign exchange reserve of P.R. China has been more than US $400 billions, taking the 2 nd place in the world, only behind Japan .

Measured on a purchasing power parity (PPP) basis, China in 2004 stood as the second-largest economy in the world after the US , although in per capita terms the country is still poor. Agriculture and industry have posted major gains especially in coastal areas near Hong Kong and opposite Taiwan and in Shanghai , where foreign investment has helped spur output of both domestic and export goods.

However, the Chinese government has struggled to (a) sustain adequate jobs growth for tens of millions of workers laid off from state-owned enterprises, migrants, and new entrants to the work force; (b) reduce corruption and other economic crimes; and (c) keep afloat the large state-owned enterprises, many of which had been shielded from competition by subsidies and had been losing the ability to pay full wages and pensions. From 100 to 150 million surplus rural workers are adrift between the villages and the cities, many subsisting through part-time, low-paying jobs.

Popular resistance, changes in central policy, and loss of authority by rural cadres have weakened China 's population control program, which is essential to maintaining long-term growth in living standards. At the same time, one demographic consequence of the "one child" policy is that China is now one of the most rapidly aging countries in the world.

Another long-term threat to growth is the deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table especially in the north. China continues to lose arable land because of erosion and economic development.

As part of its effort to gradually slow the rapid economic growth seen in 2004, Beijing says it will reduce somewhat its spending on infrastructure in 2005, while continuing to focus on poverty relief and through rural tax reform.

Accession to the World Trade Organization helps strengthen its ability to maintain strong growth rates but at the same time puts additional pressure on the hybrid system of strong political controls and growing market influences. China has benefited from a huge expansion in computer Internet use, with 94 million users at the end of 2004. Foreign investment remains a strong element in China 's remarkable economic growth. Shortages of electric power and raw materials may affect industrial output in 2005. More power generating capacity is scheduled to come on line in 2006.

In its rivalry with India, China has a lead in the absorption of technology, the rising prominence in world trade, and the alleviation of poverty; India has one important advantage in its relative mastery of the English language, but the number of competent Chinese English-speakers is growing rapidly.

In the following table, we presented the key economic data collected from http://www.cia.gov/ and from China Statistics Yearbook 2004. In case of differences, we will give data from both sources. ( If you want to acknolowdge those data please click on the word Table).