Eighteen villagers in Xiaogang, Anhui, secretly signed a contract to divide commune land among households and link rewards to output. The experiment became a symbol and early driver of rural reform, showing how stronger incentives could raise farm production. It helped build momentum for later national policy shifts away from strict collective farming.
The CCP’s 11th Central Committee held its Third Plenum in Beijing, widely treated as the political starting point of Reform and Opening. The meeting shifted the Party’s main focus toward “socialist modernization” and set policies that prioritized economic development and pragmatic problem-solving. This decision created top-level backing for experimenting with market-like methods while keeping one-party rule.
China adopted a national law allowing Chinese entities to form equity joint ventures with foreign companies and individuals, under government approval. The law signaled a concrete legal pathway for foreign capital and technology to enter the PRC economy. It became one of the early legal foundations for “opening up” to international business.
China’s national legislature approved building Special Economic Zones (SEZs) in Shenzhen, Zhuhai, Shantou, and Xiamen. These areas were designed as policy laboratories with more flexible rules to attract investment, expand exports, and test new management methods. The SEZ approach helped China try reforms in limited spaces before extending them more widely.
Shenzhen’s SEZ was formally established, making it the most prominent early test site for reform policies. The zone’s rapid changes in investment, manufacturing, and local governance gave reformers examples they could point to in policy debates. Shenzhen’s results later became central to arguments for expanding market-oriented reforms.
The CCP’s Third Plenum of the 12th Central Committee passed a major decision on reforming the economic system, with a stronger emphasis on cities and enterprise management. It argued that planning and commodity (market) mechanisms could be combined, helping justify wider experimentation beyond agriculture. This helped push reform from rural changes toward broader industrial and urban restructuring.
China’s legislature granted Hainan provincial status and designated the entire island as a Special Economic Zone. This expanded the SEZ model from city-sized pilots to a province-wide experiment with investment and trade policies. It also reflected the leadership’s continued commitment to testing “opening up” on a larger scale.
After weeks of student-led protests and broader public demonstrations, the government used military force to clear Tiananmen Square and surrounding areas. The crackdown led to arrests and tighter political controls, and it damaged China’s relations with many foreign governments for a time. In the reform story, it marked a turning point where economic change continued, but political opening narrowed sharply.
China’s State Council announced the launch of Pudong development in Shanghai, aiming to build a new growth area and strengthen Shanghai as a financial and commercial center. This decision signaled that reform was not limited to small coastal pilots, but could be used to reshape major national cities. Pudong later became closely linked to finance, trade, and large-scale urban development during China’s market transition.
The Shanghai Stock Exchange was re-established in late 1990 and began operation in December, restarting a formal stock market after decades without one in the PRC. The move created a new channel for raising capital and experimenting with modern financial institutions under state oversight. It also showed reform leaders’ willingness to test tools often associated with capitalist economies.
The Shenzhen Stock Exchange opened for trade, adding a second major mainland stock market alongside Shanghai. Together, these exchanges expanded experiments in securities (tradable stocks and bonds) and corporate finance. The early 1990s stock markets became politically sensitive tests of how market institutions could operate within China’s socialist framework.
Deng Xiaoping traveled through southern China, including key reform areas such as Shenzhen and Zhuhai, and delivered remarks strongly backing continued reform and opening. The tour helped reverse reform slowdowns after 1989 and strengthened pro-reform momentum within the leadership. It became a widely recognized signal that faster economic reform would remain the national direction.
The CCP’s 14th National Congress met in October 1992 and declared that China’s economic restructuring target was to establish a “socialist market economic system.” This was a major political statement: it provided top-level legitimacy for using market mechanisms more broadly while keeping the socialist and one-party framing. The congress is often treated as the point where post-1978 reforms moved into a clearer, system-wide market-oriented direction.
Deng Xiaoping's Reform and Opening (1978–1992)