This issue of the IDS Bulletin asks whether China will be able to maintain cost-effective rural health services as it is transformed into a market economy. The papers were prepared as contributions to an intense debate underway in China. They explore how the re-organisation of the health sector and changes in the economic and institutional context within which it operates have affected the performance of rural health services. They also identify options for reform. Policy-makers in low and middle income countries can learn a great deal from the experience of the decade's most radical experiment in health sector reform.