China is the world’s most populous country, with a continuous culture stretching back nearly 4,000 years.

Many of the elements that make up the foundation of the modern world originated in China, including paper, gunpowder, credit banking, the compass and paper money.

After stagnating for more than two decades under the rigid authoritarianism of early communist rule under its late leader, Chairman Mao, China now has the world’s fastest-growing economy and is undergoing what has been described as a second industrial revolution.

The People’s Republic of China (PRC) was founded in 1949 after the Communist Party defeated the previously dominant nationalist Kuomintang in a civil war. The Kuomintang retreated to Taiwan, creating two rival Chinese states – the PRC on the mainland and the Republic of China based on Taiwan.

Beijing says the island of Taiwan is a part of Chinese territory that must be reunited with the mainland. The claim has in the past led to tension and threats of invasion, but since 2008 the two governments have moved towards a more cooperative atmosphere.

The leadership of Mao Tse-Tung oversaw the often brutal implementation of a Communist vision of society. Millions died in the Great Leap Forward – a programme of state control over agriculture and rapid industrialisation – and the Cultural Revolution, a chaotic attempt to root out elements seen as hostile to Communist rule.

However, Mao’s death in 1976 ushered in a new leadership and economic reform. In the early 1980s the government dismantled collective farming and again allowed private enterprise.

The rate of economic change hasn’t been matched by political reform, with the Communist Party – the world’s biggest political party – retaining its monopoly on power and maintaining strict control over the people. The authorities still crack down on any signs of opposition and send outspoken dissidents to labour camps.

Nowadays China is one of the world’s top exporters and is attracting record amounts of foreign investment. In turn, it is investing billions of dollars abroad. The collapse in international export markets that accompanied the global financial crisis of 2009 initially hit China hard, but its economy was among the first in the world to rebound, quickly returning to growth.

In February 2011 it formally overtook Japan to become the world’s second-largest economy, though by early 2012 the debt crisis in the eurozone – one of the biggest markets for Chinese goods – was beginning to act as a drag on China’s growth.
As a member of the World Trade Organization, China benefits from access to foreign markets. But relations with trading partners have been strained over China’s huge trade surplus and the piracy of goods.

The former has led to demands for Beijing to raise the value of its currency, the renminbi, which would make Chinese goods more expensive for foreign buyers and possibly hold back exports. Beijing has responded with a gradual easing of restrictions on trading in the renminbi.

Some Chinese fear that the rise of private enterprise and the demise of state-run industries carries heavy social costs such as unemployment and instability. Moreover, the fast-growing economy has fuelled the demand for energy. China is the largest oil consumer after the US, and the world’s biggest producer and consumer of coal. It spends billions of dollars in pursuit of foreign energy supplies. There has been a massive investment in hydro-power, including the $25bn Three Gorges Dam project.

The economic disparity between urban China and the rural hinterlands is among the largest in the world. In recent decades many impoverished rural dwellers have flocked to the country’s eastern cities, which have enjoyed a construction boom. By the beginning of 2012, city dwellers appeared to outnumber the rural population for the first time, according to official figures.

Social discontent manifests itself in protests by farmers and workers. Tens of thousands of people travel to Beijing each year to lodge petitions with the authorities in the hope of finding redress for alleged corruption, land seizures and evictions.

Other pressing problems include corruption, which affects every level of society, and the growing rate of HIV infection. A downside of the economic boom has been environmental degradation; China is home to many of the world’s most-polluted cities.

Human rights campaigners continue to criticise China for executing hundreds of people every year and for failing to stop torture. The country is keen to stamp down on what it sees as dissent among its ethnic minorities, including Muslim Uighurs in the north-west. The authorities have targeted the Falun Gong spiritual movement, which they designate an “evil cult”.

Chinese rule over Tibet is controversial. Human rights groups accuse the authorities of the systematic destruction of Tibetan Buddhist culture and the persecution of monks loyal to the Dalai Lama, the exiled spiritual leader who is campaigning for autonomy within China.

Source: BBC World Country Profiles (http://news.bbc.co.uk/2/hi/country_profiles/default.stm)