Major issues facing China

A rapidly aging population: China will be the first major economy to go gray before it gets rich, placing
huge strains on working-age people who will have to effectively pay for pensions and healthcare for a
disproportionate number of non-working elderly citizens. For a nominally socialist country, the weave of
China's social safety net is woefully loose, and badly frayed in parts--most notably the healthcare system.
This is often cited as a major cause of the high savings rate--something that chokes off consumption and
contributes to the imbalance in China's economy.

Gender imbalance: Preference for male children, with deep cultural roots, has skewed the percentage of
male to female children dangerously. Though the one-child policy has been substantially relaxed in rural
areas, and though sex-selective abortion is outlawed and physicians are forbidden from disclosing the
gender of a fetus to parents, the gender balance does not appear to have improved. It may well be that
social ills like increased criminality will arise when large unmarried male populations.

Income inequality: Income disparity is continuing to grow, and while China does not have quite the Gini
coefficient of some other major countries, it has increased very rapidly throughout three decades of
reform and opening. This manifests itself perhaps most immediately in the housing crisis, where prices
have risen so fast that they've put home ownership out of realistic reach of many working class Chinese.

Environmental degradation: Polluted air, desertification, toxic waterways, soil erosion--China suffers a
long, long litany of man-made environmental problems, much of it related to its coal addiction.
Anthropogenic global warming is contributing to this problem, and to water shortages as glaciers melt at
an alarming rate.

Dependence on fossil fuels: Coal is still far and away the source of electric power in China, and China's
addiction to this is contributing to global warming, to pollution (and thus to health costs, to shrinking
agricultural land because of acid rain, and to a generally lower quality of life).

An imbalanced economy, too dependent still on export with a relatively low share of GDP from domestic
consumption compared to most developed nations. This also leads to chronic overcapacity, which
exacerbates China's trade imbalance with certain major trading partners and is a perennial cause for
tension in bilateral relations with, most significantly, the U.S.

Water shortages: Particularly in North China, water is in chronically short supply. Water tables beneath
major metropolitan areas like Beijing have dropped precipitously. Enormous hydrological projects like the
South North Water Transfer Project, which would convey water from the relatively well-watered South to
the arid North in three systems of canals and pipelines, have hit snags and caused considerable
controversy.

Ethnic tensions: Tibet, Xinjiang, and to a lesser extent Inner Mongolia all have active separatist
movements, and ethnic tensions have boiled over in recent years in China's Tibetan Autonomous Region
and other parts of western China where Tibetans live (in March 2008) and in the Xinjiang Uighur
Autonomous Region (in July 2009)

Corruption: While China is by no means among the world's most corrupt countries, corruption certainly
does remain a problem. The perception of corruption is a major factor in social unrest in China.

Lack of participatory channels: China's increasingly wealthy "middle class" wants, not surprisingly, a
greater voice in policymaking. Informal channels like Internet public opinion may be stopgaps, but they
are not a long-term substitute for more direct participatory mechanisms.

Eroding trust in government leadership: While a full-blown legitimacy crisis doesn't seem to be
looming at present (polls actually show a remarkably high level of support for the government), there are
important segments of society that have become deeply distrustful and cynical about political authority in
China. The Internet has created a de facto public sphere where civil society can coalesce around any of
the many issues laid out above; around unaddressed grievances (mothers of people killed in June 89,
parents of children killed in the Sichuan Earthquake of 2008 due to shoddy school construction, people
calling for a full accounting of the horrors of the Great Famine, the list is long). Internet censorship is
another issue around which activists have coalesced. This is a very significant challenge to the Chinese
leadership.