China's Great Economic Rebalancing, Part 1: The Problems

China's economic rise over the past four decades has been nothing short of remarkable. With economic growth averaging nearly 10% annually since 1980, Chinese policymakers have proved adaptable and effective, in part due to China's state-capitalist economic system. This system offers a closed capital account, extensive state ownership and a prominent -- even dominant -- government position in the economy. As a result, policymakers can intervene forcefully and quickly to safeguard financial stability and maintain high economic growth....