In Xiaogang Village, 18 farmers signed a contract to farm collectively owned land by household, linking effort and rewards more directly. This became a major symbol and early driver of rural reform, helping raise farm output and freeing labor and resources for non-farm growth.
At the Third Plenum of the 11th Communist Party Central Committee, leaders shifted the country’s main focus toward economic modernization. This meeting is widely treated as the political starting point of China’s reform-era growth and its gradual re-engagement with the global economy.
China created Special Economic Zones (SEZs) to test market-oriented policies such as foreign investment incentives and more flexible business rules. Shenzhen—next to Hong Kong—became the most influential early experiment, demonstrating how export-led manufacturing and investment could accelerate growth.
At a key Party meeting in October 1984, leaders adopted a major policy document on economic restructuring. It helped move thinking beyond a strict “plan versus market” divide and supported broader reforms in state industry, prices, and enterprise management.
China formally submitted an application to resume its status in the General Agreement on Tariffs and Trade (GATT), the predecessor framework to the World Trade Organization (WTO). This step signaled a long-term strategy: using global trade rules to expand exports, attract investment, and integrate with world markets.
China restarted a national stock exchange in Shanghai, rebuilding capital-market institutions that had been dormant for decades. Equity and bond markets were still tightly shaped by policy, but reopening the exchange supported enterprise reform and new ways to finance growth.
Deng Xiaoping toured fast-growing southern cities and used speeches to defend and restart market-oriented reforms that had slowed after 1989. The tour strengthened political support for experimentation, foreign investment, and faster growth—especially in coastal regions.
At the 14th Party Congress, leaders confirmed building a “socialist market economy” as the target of reform. This provided clearer ideological backing for wider use of market pricing, competition, and enterprise restructuring, while keeping Party-led state authority central.
China unified its two-track exchange-rate system, aligning the official rate with the market-oriented “swap” rate. This change simplified trade and investment transactions and supported rapid expansion in exports and foreign direct investment during the mid-1990s.
China amended its Constitution to state that non-public sectors—such as individual and private business—are an “important component” of the socialist market economy. This strengthened the legal and political foundation for private enterprise growth alongside state ownership.
China became the WTO’s 143rd member, committing to significant tariff cuts and trade and investment rule changes. WTO entry accelerated China’s role as a major manufacturing exporter and deepened its ties with global supply chains, reshaping trade flows across the Global South and the wider world.
Mainland China and Hong Kong signed the Closer Economic Partnership Arrangement (CEPA), an agreement to reduce barriers on goods and expand market access in services. It supported deeper regional integration and helped channel investment, logistics, and finance through Hong Kong as China’s trade expanded.
China announced a revaluation and moved away from a strict U.S. dollar peg, shifting toward a managed system referencing a basket of currencies. This was an important step toward a more flexible exchange rate, shaped by growing trade surpluses and international pressure as China’s global economic weight increased.
A revised Company Law took effect, updating rules for how companies are formed and governed and strengthening the legal framework for market activity. The law supported a business environment with more standardized corporate structures, which mattered as China expanded trade, investment, and private-sector activity after WTO entry.
The 17th Party Congress promoted the Scientific Development Concept, stressing more balanced and sustainable growth alongside continued development. Coming near the end of the 1978–2007 reform-era period, it signaled an official effort to manage the social and environmental strains created by decades of rapid globalization-driven expansion.
China's Reform-Era Growth: From Opening to Globalization (1978–2007)