The People's Republic of China was established on October 1, 1949, under Mao Zedong's leadership, marking the end of the Chinese Civil War and a shift from the Republic of China. Mao's socialist policies transformed China from a traditional peasant society to a planned economy with a focus on heavy industries.
However, campaigns like the Great Leap Forward and the Cultural Revolution caused disruptions and suffering. Economic reforms initiated by Deng Xiaoping in the late 1970s propelled China to become the world's second-largest economy. In the 21st century, China's economic growth and technological advancements led to trade tensions and a trade war with other major economies.
China possesses a mixed socialist market structure and an upper middle-income developing economy. It became the world's largest economy based on purchasing power parity (PPP) in 2016 and remains the second-largest by nominal GDP. China's GDP in dollar terms fluctuates due to currency exchange rate variations. It accounts for around 18.6% of the global economy based on PPP and approximately 18% in nominal terms. The country plays a vital role in international trade, attracting foreign direct investment and managing its currency, the renminbi (yuan), against a basket of currencies.