The vast Chinese economy has developed in fits and starts since the founding of the People's Republic in 1949. China is the world's largest producer of rice, and a major producer of cereals and grain. Large mineral deposits, particularly coal and iron ore, provide the raw material for an extensive steel industry. In the last ten years, central government policy has switched the emphasis in development from heavy to light industry, and promoted the evolution of a service sector. Chemicals and high technology industries have grown particularly quickly.
China is self-sufficient in oil and is developing a petrochemicals industry.
Trade has been hampered somewhat in recent years by a shortage of foreign exchange, but China has benefited from the availability of soft loans from Western banks. This is one of the results of the fundamental changes introduced under what Beijing describes as the 'socialist market economy' under which market mechanisms were introduced to attract foreign investment and improved trade terms. These developments may be seen as a natural progression from the 'open door policy' of the mid-1980s in which the previous tight restrictions on foreign trade were abandoned, while foreign companies were encouraged both to sell products in China and to establish joint ventures with Chinese commercial organisations. Special Economic Zones were established in China's southern provinces to which foreign investment and modern industrial capacity has been concentrated. While the Chinese economy has benefited greatly from these policies, development has been uneven and has suffered from some inflationary pressure and financial instability.