Most obvious is a deepening gulf between winners and losers. A recent study from Peking University found that China has become one of the most unequal countries in the world. The richest 1 percent of households own a third of total wealth. As the government tries to transition away from coal and steel and toward tech and finance, this divergence is likely to worsen.
In fact, it's already starting to. Regionally, the differences between China's old and new economies couldn't be starker. The rustbelt province of Liaoning, long reliant on steel mills, is now in recession. In finance-focused, high-tech Shenzhen, real-estate prices have risen by more than 60 percent in a year, the fastest rate in the world. [...]
Yet in many ways, China remains a developing country. More than 600 million Chinese -- some 44 percent of the population -- are classified as rural residents, with an average nominal yearly income of $1,620. An urban worker earns nearly three times as much, enjoys better public benefits like schooling, and gets an enormous wealth boost from real-estate appreciation.
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