Covering a vast area of eastern Asia, China is bordered by 14 countries; to the east it has a long Pacific coastline. Two-thirds of China is uplands: the southwestern mountains include the Tibetan Plateau; in the northwest, the Tien Shan Mountains separate the Tarim and Dzungarian basins. The low-lying east is home to two-thirds of the population. China was dominated by Mao Zedong from the founding of the Communist People's Republic in 1949 until his death in 1976. Despite the major disasters of the 1950s Great Leap Forward and the 1960s Cultural Revolution, it became an industrial and nuclear power. Today, China is rapidly developing a market-oriented economy. The current leadership remains set on accomplishing this without political liberalization, instead enforcing single-party rule as was advocated by "elder statesman" Deng Xiaoping, who died in 1997.

About 93% of China's population are Han Chinese. The rest belong to one of 55 minority nationalities, or recognized ethnic groups. The minorities have disproportionate political significance because many, like the Mongolians, Tibetans, or Muslim Uyghurs in Xinjiang, live in strategic border areas.

The deeply resented policy of resettling Han Chinese in remote regions has led to ruthlessly suppressed uprisings in Xinjiang and Tibet. Han Chinese are now a majority in Xinjiang and Nei Mongol Zizhiqu (Inner Mongolia). Tibetan calls for greater political and cultural autonomy get much more international attention.

A one-child policy was adopted in 1979. Most Han Chinese still face strict family planning controls, though these are widely flouted. Cases of female infanticide at birth have produced a demographic imbalance, and rules were relaxed for minorities after some small groups came near to extinction.

Chinese society is patriarchal in practice, and generations tend to live together. However, economic change is putting pressure on family life, breaking down the social controls of the Mao era. Divorce and unemployment are rising; materialism has replaced the puritanism of the past. The Falun Gong spiritual movement, perceived as a rival to CCP authority, was banned in 1999.

Strengths

Huge domestic market. Self-sufficiency in food. Mineral reserves. Diversified industrial sector. Low wage costs. Rapid sustained growth. Growing export sector. Hong Kong as financial center. Heavy investment in communications and IT.

Weaknesses

Massive underemployment, rising unemployment (admitted as 132 million in February 2002). Migration to cities. Unevenly distributed resources. Poor transportation. Debt-ridden state sector.

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China's shift from a centrally planned to a market-oriented economy has steamed ahead since the 1980s, notably in the south, where liberalization has gone furthest. Growth had to be curbed on several occasions to control inflation. In the Ninth Five-Year Plan (1996–2000) the government retained strict controls, promoting intensive growth. The 1997 party congress boosted the process of privatizing the huge state-owned sector. The Tenth Five-Year Plan (2001–2005) placed fresh emphasis on rapid development, reforms, and improving competitiveness.

Trade entered a new era in 2000–2001. An unprecedented growth in imports followed a deal with the EU and the normalization of US trade relations. Even Taiwan dropped its ban on direct trade with the mainland. China's long-awaited accession to the WTO in December 2001 paved the way for further economic expansion.

China is a single-party state, dominated by the CCP, the world's largest political party. The National People's Congress, indirectly elected every five years, is theoretically the supreme organ of state power. It appoints the president and executive State Council, headed by the prime minister. The real focus of power, however, is the 22-member politburo of the CCP and, in particular, its standing committee of seven.

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The death in 1997 of Deng Xiaoping marked in effect the passing of the dominance of the "Immortals" – those who took part with Mao Zedong in the 1934–1935 Long March. Deng, the architect of China's economic reforms, had worked hard behind the scenes forming alliances to promote his reformist ideas and followers. Jiang Zemin consolidated his position as president and CCP general secretary after Deng's death, but a "fourth generation" leadership stands ready to emerge at the 2002 party congress, with Vice President Hu Jintao its most prominent figure.

Main Political Issues

Economic change and CCP authority

After the death of Mao Zedong in 1976, China embarked on economic reform, while seeking to secure the dominance of the CCP and avoid political upheaval. The "great helmsman" of this process for two decades was Deng Xiaoping, China's paramount leader, even after he had relinquished all official posts. Advocating a fast-track move to a "socialist market economy," Deng and his followers looked to South Korea and Taiwan as achieving high growth without political reform. At the 1997 party congress the reformers, led by Jiang Zemin, took their opportunity to realign formal party policy with their desire to privatize large areas of state-run industry. The transfer of much of the huge state economic system into private ownership has been a challenge to the CCP's ability to monopolize power. The 22 provinces, particularly those in the southeast, are acting increasingly independently of Beijing. At a popular level, there is growing rural discontent over widening wealth differentials. However, the party has allowed no political opposition to surface.

Shifting balances in the top leadership

The prodemocracy protests of 1989, culminating in the Tiananmen Square massacre, enabled conservatives within the party, under the then premier Li Peng, to gain the upper hand until Deng moved to restore the balance. His longevity shifted the advantage toward his heir apparent, President Jiang Zemin, who subsequently strengthened his own power base and international stature, while Premier Zhu Rongji spearheaded the economic reform and anticorruption campaigns. Li Peng, since 1998 president of the National People's Congress, still commands support, but all three are scheduled to stand down from the politburo at the 2002 party congress.. A major overhaul of party ideology in 2001, under Jiang's "Three Represents" doctrine, encouraged the equal promotion of business, culture, and the rural masses.

The push for economic modernization, and concerns about regional stability, dominate Chinese foreign policy. Investment, technology, and trade considerations outweigh ideology.

Despite lingering concerns over human rights, relations with the West have rebounded from the low of the 1989 Tiananmen Square massacre. China was awarded Most Favored Nation trading status by the USA in 2000 and entered the WTO in 2001. Despite initial tensions in relations with the new US administration in 2001, the two countries had reached a "common understanding" by the end of the year on the issue of terrorism, which had shot to the top of the global agenda.

Regionally, ties have been normalized with Vietnam and strengthened with South Korea. Relations with Russia have also improved steadily. The two countries stood together to condemn the UN bombing campaign against Yugoslavia in 1999, and against the proposed US missile defense shield.

Taiwan remains the dark spot of Chinese external relations. Beijing strongly rejects any moves to recognize even de facto independence for the island, and cross-straits relations are frequently damaged by displays of military might and repetitive threats. Despite such alarming flare-ups, however, closer links have been forged since 2000, with an increase in tourist traffic and indirect trade.

The People's Liberation Army (PLA) is being cut back as part of a modernization process, reducing both its numbers and its involvement in the economy through army-run industries. Closely linked with the ruling CCP, it had appeared unassailable until the mid-1990s, when it numbered as many as three million personnel. A key instrument of ensuring the party's dominance, it was used in 1967 to restore order after the chaos of the Cultural Revolution, and in 1989 to suppress prodemocracy protests in Tiananmen Square, as well as to stamp out dissent in Tibet.

China has a large weapons industry, and has extended its nuclear weapons capability to include the neutron bomb. It is a significant arms exporter.

China dominates the world market in molybdenum, titanium, and tungsten; it has the world's largest deposits of more than a dozen minerals, and commercial deposits of most others.

China is the world's largest coal producer, with reserves of about 800 billion tonnes, primarily in the Shaanxi and Sichuan basins. Annual output (over 1.3 billion tonnes) considerably exceeds demand; this and appalling safety records are forcing the closure of many mines.

Power generation, previously well behind demand, expanded rapidly to create overcapacity by the late 1990s. Nuclear power capacity in 1998 was just over 2000 MW from three reactors, with major expansion to 50,000 MW planned by 2020. The world's largest hydropower plant, the "Three Gorges" scheme on the Yangtze River, is due for completion in 2009, but faces sustained controversy over its proposed benefits, costs, and environmental consequences.

Crude oil production has risen only slightly since reaching 160 million tonnes in 1997. Eastern oil fields are depleted, and hopes now center on enormous reserves in the Tarim basin in the far west. A 4000-km (2500-mile) pipeline is due to come on line in 2004.

Climate and geology mean that natural disasters are quite frequent in China, and their impact is often made worse by human actions. The economic policies of the 1950s turned drought into a devastating famine, while poor building standards helped push the death toll in the 1976 Tangshan earthquake to over 500,000.

Economic growth is the priority of China's leaders. Industrial pollution and environmental degradation, already widespread, are increasing. However, the environment is a growing concern among educated Chinese. The unsuccessful 1992 campaign to stop the Three Gorges hydroelectric scheme was revived with growing open criticism in the late 1990s. The government is becoming less suspicious of Western pressure for environmental controls, and is taking steps to respond to acute problems of urban air pollution, deforestation, and water quality in particular.

Roads and railroads have been extended since 1949 to provide a basic national network. The transportation system is now being modernized and expanded to support the push for economic growth. The Ninth Five-Year Plan (1996–2000) provided for 8100 km (5000 miles) of new railroad. A high-speed rail link between Beijing and Shanghai is in prospect under the Tenth Plan. In 2001, plans were announced to connect the Tibetan capital, Lhasa, to the railroad system by extending the track from Golmud. If and when it is completed, this will present one of the world's highest railroads.

Container shipping is growing fast. Shanghai handled one-third of all Chinese container traffic before the reversion of Hong Kong (which is the world's biggest container port) to Chinese rule in 1997. The inland waterway system, which was hitherto in a state of disrepair, is being upgraded and now handles one-third of all internal freight. The Yangtze River (Chang Jiang) is navigable by ships of over 1000 tonnes for more than 1000 km (620 miles) from the coast. This capacity is planned to increase under the Three Gorges dam project.

Nine small airlines which had sprung up since 1988 were consolidated into three carriers in 2002. Hong Kong's new airport opened in July 1999. Air transportation is growing rapidly, like private car ownership, as wealth increases. Bicycles still form the main mode of personal transportation, however.

Economic changes threaten China's network of primary health care, which, combining traditional and Western medicine, used to extend to the remotest regions. The system of universal state employment was accompanied by a free health system, and the Chinese enjoyed a life expectancy on a par with many richer countries. The change to a market-oriented economy, however, has produced a two-tier system. A gaping divide exists between city and rural provision, fees for treatment are rising, and fewer people are covered by free health care as a benefit of state employment. The UN estimated in 2002 that there would be over ten million HIV/AIDS sufferers in China by 2010.

Despite the expansion of education since 1949, illiteracy and semiliteracy are still widespread. The government has set a target of nine years of education for all. School attendance fell when fees at all levels were introduced in the 1980s, but now most children of secondary school age are in school – including those catching up with primary education. Selection for higher education is now based on academic rather than political criteria. Internet-based distance learning degrees, first allowed in 1998, are especially popular in English, computing, and business studies. In May 2001, the government legalized private schools (tacitly permitted since the early 1980s) in an effort to regulate and profit from them. About seven million pupils are thought to attend them.

China's legal system is a mix of custom and statute. Judges were only required to hold law degrees from 2002. Economic reform and social changes have been paralleled by a rise in corruption and violent crime. Many party officials were condemned in the largest ever anticorruption trial in 2000. A crackdown on human trafficking followed the breaking of smuggling rings bringing Chinese into Europe. The death penalty is used extensively – China carried out over 80% of the world's executions in 2001. China's poor human rights record was brought to the fore by the 1989 Tiananmen Square massacre. Although many detainees have been released since that clampdown on dissent, many political prisoners remain.

The majority of Chinese are still farmers, whose living standards are threatened by rising production costs. Economic change has led to widening wealth disparities. The burgeoning small-business class and employees of companies with foreign investment have benefited most. They mainly live in the east, especially the southeast, where there are a number of millionaires. The main losers are the 150 million "surplus" agricultural workers, many of whom have migrated to the cities in search of jobs. By July 2001, there were more mobile phones in China than in the USA, 120.6 million in total, nearly one for every ten Chinese.

The easing of restrictions since the 1980s has led to the rapid growth of all kinds of tourism, from luxury tours to budget packages and backpacking. Hong Kong is a major entry point. Most of China is now open to visitors, and there have been some moves to allow tourists into Tibet, although access to Xinjiang in western China, and other areas, is sometimes impossible. The Great Wall, the Forbidden City in Beijing, and the terracotta warriors at Xi'an remain among the top attractions. The number of Chinese able to travel abroad now exceeds ten million.

China has the world's oldest continuous civilization. Its recorded history begins 4000 years ago with the Shang dynasty, founded in the north in 1766 B.C.E. Succeeding dynasties expanded China's boundaries; it reached its greatest extent under the Manchu (Qing) dynasty in the 18th century. Chinese isolationism frustrated Europe's attempts to expand into the empire until the 19th century, when China had fallen behind the industrializing West. For the previous 3000 years, it had been one of the world's most advanced nations.

• 1839–1860 Opium Wars with Britain. China defeated; forced to open ports to foreigners.
• 1850–1873 Internal rebellions against Manchu Dynasty.
• 1895 Defeat by Japan in war over Korean peninsula.
• 1900 Boxer Rebellion to expel all foreigners suppressed.
• 1911 Manchu Dynasty overthrown by nationalists led by Sun Yat-sen. Republic of China declared.
• 1912 Sun Yat-sen forms National People's Party (Guomindang).
• 1916 Nationalists factionalize. Sun Yat-sen sets up government in Guangdong. Rest of China under control of rival warlords.
• 1921 CCP founded in Shanghai.
• 1923 CCP joins Soviet-backed Guomindang to fight warlords.
• 1925 Chiang Kai-shek becomes Guomindang leader on death of Sun Yat-sen.
• 1927 Chiang turns on CCP. CCP leaders escape to rural south.
• 1930–1934 Mao Zedong formulates strategy of peasant-led revolution.
• 1931 Japan invades Manchuria.
• 1934 Chiang forces CCP out of its southern bases. Start of 12,000-km (7450-mile) Long March.
• 1935 Long March ends in Yanan, Shaanxi province. Mao becomes CCP leader.
• 1937–1945 War against Japan: CCP Red Army in north, Guomindang in south. Japan defeated.
• 1945–1949 War between Red Army and Guomindang. US-backed Guomindang retreats to Taiwan.
• 1949 1st October, Mao proclaims People's Republic of China.
• 1950 Invasion of Tibet. Mutual assistance treaty with USSR.
• 1950–1958 Land reform; culminates in setting up of communes. First Five-Year Plan (1953–1958) fails.
• 1958 "Great Leap Forward" to boost production fails; contributes to millions of deaths during 1959–1961 famine. Mao resigns as CCP chairman; succeeded by Liu Shaoqi.
• 1960 Sino-Soviet split.
• 1961–1965 More pragmatic economic approach led by Liu and Deng Xiaoping.
• 1966 Cultural Revolution initiated by Mao to restore his supreme power. Youthful Red Guards attack all authority. Mao rules, with Military Commission under Lin Biao and State Council under Zhou Enlai.
• 1967 Army intervenes to restore order amid countrywide chaos. Liu and Deng purged from party.
• 1969 Mao regains chair of CCP. Lin Biao designated his successor, but quickly attacked by Mao.
• 1971 Lin dies in plane crash.
• 1972 US President Nixon visits. More open foreign policy initiated by Zhou Enlai.
• 1973 Mao's wife Jiang Qing, Zhang Chunquio, and other "Gang of Four" members elected to CCP politburo. Deng Xiaoping rehabilitated.
• 1976 Death of Zhou Enlai. Mao strips Deng of posts. September, Mao dies. October, Gang of Four arrested.
• 1977 Deng regains party posts, begins to extend power base.
• 1978 Decade of economic modernization launched. Open door policy to foreign investment; farmers allowed to farm for profit.
• 1980 Deng emerges as China's paramount leader. Economic reform gathers pace, but hopes for political change suppressed.
• 1983–1984 Conservative elderly leaders attempt to slow reform.
• 1984 Industrial reforms announced.
• 1989 Prodemocracy demonstrations in Tiananmen Square. Crushed by army; 1000–5000 dead. Beijing under martial law.
• 1992–1995 Trials of prodemocracy activists continue. Plans for market economy accelerated.
• 1993 Jiang Zemin president.
• 1997 February, Deng Xiaoping dies at 92. July, UK hands back Hong Kong. September, party congress confirms Jiang's leadership and reformist policies.
• 1999 China develops neutron bomb. Portugal hands back Macao. Clampdown on Falun Gong sect.
• 2000 Taiwanese presidential election causes tension. USA normalizes trade relations.
• 2001 Major diplomatic incident with USA when Chinese pilot is killed and US spy-plane is forced down on Hainan Island. Beijing awarded 2008 Olympic Games. December, accession to WTO.
• 2002 Crackdown on Uyghur separatism. Sixteenth party congress.