The Chinese government has adopted a strategy of moving away from a Soviet-style centralised economy to a more mixed economy, allowing private enterprise to flourish and encouraging significant foreign investment in the country. China became a member of the World Trade Organisation in 2001. In order to stimulate foreign trade, five Special Economic Zones have been created, with relaxed investment laws benefiting overseas investors. This scheme has been extended to major Chinese cities, including Shanghai and Beijing.

China has one of the fastest developing economies in the world. Low cost manufacturing is a key element of its success, with Chinese companies often able to produce goods at a price far lower than that of their competitors. It holds a substantial share of the world textile industry and much of the clothing sold in western department stores will have been manufactured in China. High tech industries are increasingly well represented in the country, while satellite launches and, in 2003, a manned space flight demonstrated new levels of technological development. The government has reformed tax and financial systems in recent years to encourage growth in these areas.

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When Shanghai came under Communist control in 1949, many foreign companies relocated from the city to Hong Kong. Many of these businesses have now been encouraged to return to Shanghai and the city has a booming financial and business centre with a concentration of large multinationals. Economic reforms were finally authorised in 1991 and the government began a policy of reducing Shanghai's tax burden and encouraging investment. Since then, the economic growth of the city has been 9-15% per annum and it continues to rise in prominence as a major trade and finance centre. In 2005, its port was the biggest in the world in terms of cargo throughput, and was third behind Singapore and Hong Kong for container traffic.

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