Indeed, the list of challenges is long and daunting. How, for instance, will China, whose demand for energy to fuel its growth is massive, get what it needs? How will the country provide pensions and health care to a rapidly aging population now that the Communist-era social safety net is gone? Problems of disparity - common in market economies -have also surfaced. "The disparity of income has become very rapidly much more unequal," says Lampton. In fact, according to Lampton, the per capita GDP of people in rural areas is $320, while in cities it's over $1,000. There also remains plenty of poverty in rural and urban areas.

The mass of people flocking to the cities, particularly those on the east coast, where investment and development are greatest, is straining urban areas' abilities to cope. "There are just too many people, and there isn't enough housing, roads, or infrastructure," says Dunn. "It's getting very crowded."

Environmental degradation is an increasing concern as well. "The environment in China is under stress on every front. It's not simply a matter of air or water or land - it's everything," says Elizabeth Economy, Director for Asia Studies at the Council on Foreign Relations in New York and author of The River Runs Black: The Environmental Challenges to China's Future. By various estimates, China has 16 of the 20 most polluted cities in the world. According to Economy, the Chinese government believes that 400,000 people die each year prematurely as a result of respiratory diseases related to air pollution. Five of China's seven major river systems are considered highly polluted, and the government estimates that 300 million people drink polluted water each day.