LONDON -- Chinese leaders have been urging the Japanese to see China as an opportunity, not a threat.
The Chinese economy continues to grow quickly and the potential Chinese market is vast, but how solid is the structure? The imbalance between the growing cities and some inland rural areas remains huge. Inefficient state industries continue to burden the economy and significant privatization has yet to be achieved. The Chinese banking system is fragile. Corruption is a serious problem in all sectors, and developments are being made without adequate thought being given to economic viability or environmental impact.
China's political system looks stable, but the ability of the Chinese Communist Party to renew itself and overcome ideological prejudices against a market economy is questionable. The absence of democratic and accountable institutions and of a proper legal system with a fully independent judiciary is not conducive to stable government. There is bound to be pressure for greater democracy from China's growing middle classes. Thus there are real contradictions and tensions in China that make for potential instability.