The mainland's astonishing pace of economic development over the past few years has been achieved largely by increasing capital investment and a rapidly growing workforce.
But according to a new study, if the country follows the same growth model into the next decade, it will risk economic disaster. Growth will stall, inflation run rampant, and bursting asset bubbles will threaten to wipe out corporate profits and household wealth.
Although avoiding this nightmare scenario is relatively straightforward in principle, it is likely to prove difficult in practice. That is because, according to the report's author, the key reform needed to shift economic trajectory to a sustainable path will be to clear the government out of business once and for all.
Yuwa Hedrick-Wong, an economic adviser to Mastercard Worldwide, bases his conclusions on an analysis of mainland growth conducted by Fan Gang of China's National Economic Research Institute. This splits the drivers of the country's economic growth into two broad categories: input growth and productivity growth.
Input growth comes simply from adding more resources, either in the form of labour or investment capital. Productivity growth (or 'total factor productivity' in economist jargon) comes from using those resources more effectively.
As the chart below shows, the mainland's impressive 9.11 per cent average growth rate between 1999 and 2005 was driven largely by the addition of more capital and labour - more people working with more stuff. Despite hefty individual productivity gains, making better use of resources - for instance, by concentrating workers in urban areas or by improving infrastructure - played a relatively minor role.