This paper reviews recent foreign trade reforms and examines the impact on both the Chinese economy and future U.S. exports to China. The report lists and briefly discusses major foreign trade reforms implemented since 1991. The paper also identifies individual products and sectors expected to be adversely affected by the requirements of the U.S.-China Memorandum of Understanding and future GATT membership. Reasons for China's lack of competitiveness are explored. Next, the major strategies China is employing to cope with future foreign competition are outlined. The paper summarizes the status of economic reform in other sectors of the economy that are linked to successful foreign trade reform. Factors affecting U.S. trade prospects with China also are analyzed. Finally, the paper concludes with a discussion of the sustainability of China's foreign trade reforms and the benefits of freer trade to China's consumers, producers, and government.