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This Study is about the changing role of the Chinese State during the transition from central planning to a civil society with a market economy. One of the biggest challenges facing China in that complex journey is the need to forge a new role for the government. A modern society with a "mixed" economy assigns the government a role very different from the one associated with the central planning regime that China inherited from the Soviet Union in the early 1950s. This discussion as a whole supports the case for a Chinese State that is vigorous and active, but in different ways than in the past. The study sees the state continuing to withdraw from direct control of production and further relaxing its control over the development of the normal institutions of civil society. Government needs to master the tools of regulation and macroeconomics policy to influence economic events. It is responsible for providing an essential institutional foundation for the operation of a mixed market economy. Moreover, when it comes to human development, the state needs to play a bigger role, doing what the market cannot do adequately to combat poverty, promote education, health care, social equity, and preservation of China's threatened natural environment. For this the government needs a modern fiscal capability, which in turn requires that the proliferation of extra-budgetary revenue resources be brought within the formal budget mechanism, and thus within the scope of public policy. Also, the tax base must be broadened and tax compliance improved in order to generate a tax revenue commensurate with the government's essential responsiblities. Statistical tables are appended which contain the most up-to-date Human Development Index (HDI) numbers for China's provinces. The Gender Development Index is estimated for the second time, and a number of indicators throw light on gender differences in various aspects of human development, such as employment, illiteracy and the allocation of time.