China has achieved remarkable economic growth and transformation over the last three decades. Starting from the implementation of the reform and opening-up policy by then Chinese leader Deng Xiaoping in 1978, China has gradually transformed from a centrally planned economy to a market-based one. 

According to the World Bank, China's per capita GDP (measured on a purchasing power parity (PPP) basis adjusting for price differences, in constant 2005 international dollars) increased from $523.95 in 1980 to $7,417.89 in 2011. China is now the world's second largest economy after the US, having overtaken Japan in 2010.

A series of economic and social reforms contributed to the significant achievements of the Chinese economy: transformation from an agrarian society to an industrialized one, conversion from a centrally planned to market-based economy, the creation of private sectors, the integration of domestic, as well as global market, and the development of domestic financial industry.

These measures led to China achieving an average annual real per capita GDP growth rate of 8.93 percent over the last 31 years.

Despite the rapid economic growth, in terms of real GDP per capita, China is still far below the US level.  Chinese GDP per capita has climbed gradually since the 1990s from less than $1,000 to above $8,000, while in the same period the US went from around $30,000 to $42,000. If China continued growing at 8.93 percent while the US, as a developed economy, remained at 1.7 percent, then China would overtake the US in real GDP per capita in 2037.

In real life, of course, such smooth and facile projections mean nothing, and the growth rates of the past 30 years will be radically altered or hindered by a changing development environment.

The roaring growth of early development will curve off into the slower growth of a developed economy. But there are also other challenges that China may face, some of which we can anticipate by looking at current figures.

According to 2010 World Bank data, China's capital formation is rather high, at 48.45 percent, and its external debt is low at 9.29 percent. Industrial production accounts for 46.67 percent of the total value added. The current account surplus is slightly lower than in previous years due to the global financial crisis but international trade remains important.

From the figures, one of the biggest challenges China faces on the economic front is imbalance. Investment as a share of GDP is still very high, at over 50 percent, and such high levels of investment are not sustainable in the long term. Lower investment will mean lower GDP growth.

Other areas where China could potentially enhance its performance are the general business environment and proportion of high-technology exports.

The 2012 Doing Business index from the World Bank shows China ranked 91st overall, 118th in terms of protecting investors and 153rd for starting a business. These relatively low rankings show that China could improve its regulatory and market environment to attract more investments.

The social and political indicators for China look bleaker than the economic ones. Corruption is another major challenge that might cause further inequality and instability within Chinese society.

There has been a gradual progressive improvement in living conditions, although hidden problems exist.

Chinese standards of living have been vastly improved, benefiting from the huge economic growth, with life expectancy hitting 73 and literacy reaching 94 percent.

But despite the enhancement of living standards, income inequality has also become wider in the past years. And 13.4 percent of the population is still living below the poverty line. Another major challenge China faces is its aging population. The slower growth in labor supply will impede GDP growth.

All these political and social risks affect social stability and therefore the sustainability of economic development could be jeopardized.

Taking into account these challenges and new developments, it would be more realistic for us to assume that China's annual real per capita GDP growth rate will be lower than the historical 8.93 percent in the longer term. If we assume the sustainable annual per capita GDP growth rate to be 7 percent, then China's real GDP per capita will converge with the US in 2047.

The author is a student at the University of Southern California. This article is an excerpt of his recent paper titled China's Present and Future. opinion@globaltimes.com.cn