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China's dramatic economic transformation can only be understood in relation to her modern history. David Pyle reviews the post-1978 reform process in the context of two centuries of Chinese economic, social and political history. Agricultural, industrial and financial reforms and the attraction of foreign trade and direct investment are analysed in detail. The conclusion compares China's gradualist approach with the 'big bang' of Eastern Europe and the former Soviet Union, examining China's prospects and the lessons to be learnt elswhere.