By Dan Carroll
The Motley Fool
Much has been made of China's rapid economic growth in recent years. The world's second-leading economy has grown from an average regional player 30 years ago into a powerhouse today, commanding a gross domestic product of more than $12 trillion when adjusted for purchasing power. According to the OECD, China's GDP will overtake the U.S.' for the top spot worldwide by 2016.
But is China really the economic superpower many have been hyping it as? A closer look reveals a country facing numerous challenges in the years ahead -- and a nation that isn't ready yet to take its place at the world's economic peak. Investors caught up in this growth story shouldn't overlook a Chinese future fraught with risks.
A rising middle class brings problems
The rise of China's middle class is one of the pivotal demographic shifts of the early 21st century. The OECD currently estimates that about 10% of China's population is in the middle class -- a number that could grow to as high as 40% by 2020. With that rise comes a bevy of problems that threaten to derail the government's lofty growth predictions.