Since 1978, China has adopted a new approach to economic development. The essential elements of the new approach are market-oriented reforms and opening up to the outside world. Sustained economic growth and significant improvement of the Chinese people’s living standards over the past two decades have fully vindicated this approach. Owing to the Asian financial crisis in 1997-98, China slowed its pace of capital liberalization for a short period. However, following the recovery of the Asian economies, and with negotiations for its accession to the World Trade Organization (WTO), China has reinvigorated its efforts to integrate itself into the global economy.