Adapted from contributions to the Britannica Book of the Year--1989, this essay presents overviews of the political, social, and economic climates in China and Taiwan in 1988. The reform programs of the Chinese leadership encountered major problems and uncertainties. An inflationary spiral led to the reimposition of stricter central economic controls and a curtailing of plans for price reform. Despite these domestic difficulties, China further enhanced its external ties, including continued improvements in Sino-Soviet relations. In Taiwan, the death of Chiang Ching-kuo in January was followed by a smooth transition of leadership that assured the continuation of political reforms and of economic vibrancy.