Forty Years of Reform and Opening: From the ''Economic Miracle'' to the Middle-Income Trap

In 1978-79, China experienced two major turning points that had fundamental consequences for its future development. The Third Plenum of the Party's Central Committee endorsed the concept of ''seeking truth from facts'' and inaugurated the post-Mao era of ''reform and opening.'' At almost exactly the same time, the United States and China established normal diplomatic relations, and moved quickly to the normalization of their economic relationship as well. The economic policies China implemented in the subsequent 40 years have achieved enormous success. China has achieved high and sustained rates of growth| it has lifted millions of its citizens out of poverty| China has become the world's largest trading economy and holds the world's largest pool of foreign exchange reserves. It is now the second largest source of outbound foreign direct investment, and may soon become the first, replacing the United States.