This Briefing Paper analyses China’s economic reforms, indicates some of the problems encountered in the reform process and traces the impact on incomes and income distribution. The paper concludes that, although China's starting point as the centrally planned economy with the biggest population in the world was unique, in undertaking these economic reforms, China is finding itself confronted by a range of problems and imbalances familiar to other restructuring economies. Such imbalances apply not just in the developing world but also among the OECD (Organisation for Economic Co-operation and Development) countries. Nonetheless, the reforms, when judged against the rapid economic growth they have unleashed, are strikingly successful; there is no convincing evidence yet that they have either overheated or run out of steam.