When the People's Republic was founded in 1949, the Chinese electricity industry, with only 1.85 GW installed capacity, was primitive. It has since grown into the second largest in the world, with installed capacity rising to 353 GW in 2002. The number of people who have no access to electricity has been reduced to less than 2 percent of a population of 1.26 billion. On a per capita basis, installed capacity has edged up to one half of the world's average. Development has been particularly impressive since the 1980s thanks to increased investment in the sector. According to industry accounts, an estimated RMB 1,107 billion ($US 134 billion) was invested between 1981 and 2001 in new generation and delivery capacity. Additional investment was also made in retrofitting and upgrading the system, reaching over RMB 100 billion ($12 - 15 billion) per annum in the past seven years. Three quarters of this sectoral capital came from domestic sources, with foreign investment making up the rest. This remarkable power sector growth and financing have been achieved through an ongoing, unsystematic process of electricity industry reforms initiated in the mid 1980s. Further system expansion, projected at about 25 GW per year for the next two decades, challenges the Chinese government to continue and deepen this reform process.