The People's Republic of China has a developing mixed socialist market economy, incorporating industrial policies and strategic five-year plans. China has the world's second-largest economy by nominal GDP and since 2016 has been the world's largest economy when measured by purchasing power parity (PPP). China accounted for 19% of the global economy in 2022 in PPP terms, and around 18% in nominal terms in 2022. The economy consists of state-owned enterprises (SOEs) and mixed-ownership enterprises, as well as a large domestic private sector which contribute approximately 60% of the GDP, 80% of urban employment and 90% of new jobs; the system also consist of a high degree of openness to foreign businesses.

China is the world's largest manufacturing industrial economy and exporter of goods. China is widely regarded as the "powerhouse of manufacturing", "the factory of the world" and the world's "manufacturing superpower". Its production exceeds that of the nine next largest manufacturers combined. However, exports as a percentage of GDP have steadily dropped to just around 20%, reflecting its decreasing importance to the Chinese economy. Nevertheless, it remains the largest trading nation in the world and plays a prominent role in international trade. Manufacturing has been transitioning toward high-tech industries such as electric vehicles, renewable energy, telecommunications and IT equipment, and services has also grown as a percentage of GDP. China is the world's largest high technology exporter. As of 2021^[update], the country spends around 2.43% of GDP to advance research and development across various sectors of the economy. It is also the world's fastest-growing consumer market and second-largest importer of goods. China is also the world's largest consumer of numerous commodities, and accounts for about half of global consumption of metals. China is a net importer of services products.

China has bilateral free trade agreements with many nations and is a member of the Regional Comprehensive Economic Partnership (RCEP). Of the world's 500 largest companies, 142 are headquartered in China. It has three of the world's top ten most competitive financial centers and three of the world's ten largest stock exchanges (both by market capitalization and by trade volume). China has the second-largest financial assets in the world, valued at $17.9 trillion as of 2021. China was the largest recipient of foreign direct investment (FDI) in the world as of 2020, receiving inflows of $163 billion. but more recently, inbound FDI has fallen sharply to negative levels. It has the second largest outbound FDI, at US$136.91 billion for 2019. China's economic growth is slowing down in the 2020s as it deals with a range of challenges from a rapidly aging population, higher youth unemployment and a property crisis.

With 791 million workers, the Chinese labor force was the world's largest as of 2021, according to The World Factbook. As of 2022^[update], China was second in the world in total number of billionaires. and second in millionaires with 6.2 million. China has the largest middle-class in the world, with over 500 million people earning over RMB 120,000 a year. Public social expenditure in China was around 10% of GDP.

Historically, China was one of the world's foremost economic powers for most of the two-millennia Pax Sinica from the 1st until the 19th century. China accounted for around one-quarter to one-third of global GDP until the mid-1800s. China's share of global GDP was one-third in 1820 as the Industrial Revolution was beginning in Great Britain. China's GDP in 1820 was six times as large as Britain's, the largest economy in Europe – and almost twenty times the GDP of the nascent United States.

At the end of the Chinese Civil War, the economy was devastated. As the defeated Nationalists fled to Taiwan, they stripped China of liquid assets including gold, silver, and the country's dollar reserves. By the time the KMT was defeated, commerce had been destroyed, the national currency rendered valueless, and the economy was based on barter.

The People's Republic of China's development from one of the poorest countries to one of the largest economies was the quickest of any country. From 1949 until the Chinese economic reform in 1978, a self-sufficient and self-reliant economy was established that was state-led and focused on rapid industrialization with market activity remaining underground. Economic reforms began under Deng Xiaoping. China subsequently became the world's fastest-growing major economy, with growth rates averaging 10% over 30 years. Many scholars consider the Chinese economic model as an example of authoritarian capitalism, state capitalism or party-state capitalism under the general secretaryship of Xi Jinping.

China brought more people out of extreme poverty than any other country in history—between 1978 and 2018, China reduced extreme poverty by 800 million. Between 1981 and 2019, the percentage of the population living in extreme poverty decreased from 88.1% to 0.2%. Its current account surplus increased by a factor of 53 between 1982 and 2021, from $5.67 billion to $317 billion. During this time, China also became an industrial powerhouse, moving beyond initial successes in low-wage sectors like clothing and footwear to the increasingly sophisticated production of computers, pharmaceuticals, and automobiles. China's factories generated $3.7 trillion real manufacturing value added, more than the US, South Korea, Germany and the UK combined. China's manufacturing sector benefits from one of the world's largest domestic markets, immense manufacturing scale, and highly developed manufacturing supply chains. It also has two (Shenzhen-Hong Kong-Guangzhou and Beijing in the 2nd and 3rd spots respectively) of the global top 5 science and technology clusters, which is more than any other country.