Since the inception of economic reforms in 1979, China's economic performance has been nothing short of spectacular. Between 1979 and 1994, China's real growth rate has averaged more than 9 percent annually. Agriculture has been decollectivized, the management of state-controlled firms has been decentralized, and property rights reforms have facilitated an explosion of businesses outside central government control. Goods and factor markets have been liberalized to a significant extent: most prices are now determined by markets, state control of labor markets has been reduced, and previously repressed capital markets have experienced rapid, if uneven, development. China nevertheless retains a significant state-owned sector, and problems associated with lack of reform in this sector, combined with the relatively primitive nature of macroeconomic policy instruments, has lead to a stop-start pattern of growth and problems with inflation. The time path of Chinese economic growth is subject to considerable uncertainty.