China's Reform and Opening-Up (gaige kaifang) is the decades-long transformation, launched in 1978, that turned China from a centrally planned economy into a market-oriented, state-directed one while keeping the Communist Party firmly in power. It began with the decollectivization of farming and the opening of coastal Special Economic Zones, and over roughly four decades it lifted close to 800 million people above the international extreme-poverty line, by the World Bank's measure the largest such reduction on record. It also generated deep inequality, mass layoffs, corruption, and severe environmental damage, and its appetite for bold experiment has narrowed under Xi Jinping.
One night in late 1978, eighteen farmers in the Anhui village of Xiaogang crowded into a mud-walled hut and signed a secret contract, pressing their red fingerprints onto the paper. They agreed to break up the collective and farm their own plots, an act that could have sent them to prison as counter-revolutionaries. They even swore that if any of them were executed for it, the others would raise his children. The harvest that followed outstripped anything the commune had grown in years. Farmers elsewhere were quietly testing much the same idea. After years of struggle at the top over whether to permit it, the Party folded such local experiments into national policy, and later enshrined Xiaogang as the reform era's founding legend.