China's Reform and Opening after 1978

After Mao Zedong's death, Deng Xiaoping led China toward 'reform and opening', launched at a Communist Party meeting in December 1978. In agriculture, the household responsibility system let farm families sell surplus output after meeting state quotas, and harvests rose quickly. From 1980, Special Economic Zones such as Shenzhen attracted foreign investment with lower taxes and fewer controls, testing market policies before spreading them. Prices were liberalized gradually through a 'dual-track' system, and state enterprises were later restructured.

Growth averaged close to 10 percent a year for about three decades, and the World Bank estimates that roughly 800 million people left extreme poverty. Yet the reforms also brought rising inequality between coast and interior, severe pollution and continued restrictions on political freedom. Scholars debate how much success came from markets and how much from the state's continued control of finance, land and key industries.