Major combat in the Chinese Civil War ended in 1949 with the Communist Party of China in control of the mainland, and the Kuomintang (KMT) retreating to Taiwan. On October 1, 1949 a grand ceremony was witnessed by 300,000 people on Beijing Tiananmen Square, and Mao Zedong, solemnly proclaimed the establishment of the People's Republic of China (PRC). "The Chinese people have stood up!" declared Mao. The Communist party was under Mao's chairmanship, and the government was headed by Zhou Enlai as premier of the State Administrative Council.

The People's Republic of China was founded on a land ravaged by a century of foreign invasion and civil wars. A new political and economic order modeled on the Soviet was quickly installed, and China experienced relative stability unseen since the Opium War.