In 1921, the Chinese Communist Party emerged as a study group operating under the framework of the First United Front in collaboration with the Nationalist Party. In 1949, Mao Zedong, the leader of the CCP, announced the creation of the People's Republic of China. This caused tension between the Communist Party and the Nationalist Party, eventually leading to a civil war. The CCP, with a stronger military at the time, defeated the Nationalist Government, forcing them to flee to Taiwan and set up a new government, the Republic of China, claiming that it would rightfully represent the country. The West wasn't very fond of the PRC, and distrust grew between them. After taking opposite sides during the Korean War, it appeared that relations between China and the US would be impossible. And the US recognized the Republic of China, in Taiwan, as China's official government until the 1970s.

However, tension with the US didn't stop China from making trade and investment agreements with other nations. The People's Republic of China has bilateral investment agreements with over 100 countries and economies. These include Austria, the Belgium-Luxembourg Economic Union, Canada, France, Germany, Italy, Japan, South Korea, Spain, and more. China's agreements cover expropriation, arbitration, and most-favored nation treatment, and repatriation of investment proceeds.

Additionally, China has 17 Free Trade Agreements (also known as FTAs) with its trade and investment partners and is negotiating and implementing an additional eight FTAs. China's FTA partners include Singapore, Pakistan, New Zealand, Chile, Peru, Costa Rica, Iceland, Switzerland, the Maldives, Mauritius, Georgia, South Korea, Australia, Cambodia, Hong Kong, and Macao. In November 2020, China and 14 other countries signed the Regional Comprehensive Economic Partnership. China also announced the validation of the agreement in early 2021.

In the early 1900s, peasants made up the majority of the Chinese population. They lived in extreme poverty and usually died due to diseases and famines. There were also about 2 million urban workers who were unskilled and lived in poverty. Merchants weren't able to modernize due to a lack of resources, as the West dominated the economy and trade.

  After the CCP gained power, they received a lot of support from the peasants who wanted a new system where they wouldn't have to work under wealthy landlords. Mao Zedong wanted to redistribute land and resources as well as modernize. However, this required a complete reform of Chinese society. He started by telling peasants to take over the land owned by the wealthy landlords so that it could be redistributed. However, this led to the wealthy encountering a lot of humiliation and violence, and even caused thousands of deaths. Zedong also believed that women had an important role in society and should be given equal rights; he gave them the opportunity and encouragement to start working. The PRC began to industrialize, removing work limits on factories and encouraging people to make steel at home to help grow China's industries. However, occasionally, China wouldn't be able to get food due to weather conditions, causing famines and killing millions.