China's biggest problem? It's turning into America.

Just look at that inequality

China is experiencing changes that the U.S. has already gone through.
(Image credit: REUTERS/Bobby Yip BY/SH)

China has problems. Its economy is slowing, its exports are falling, and U.S. dollars are fleeing its shores as its economy and various state-run enterprises pay off enormous amounts of debt overhang. But if you want a pithy, counterintuitive, big-picture phrase to sum up what's going on over there, I'd put it this way: China's problem is it's turning into America.

China remains a very poor country: Its economic output per person is still far, far, far below that of the United States. And despite the slowdown, it's still probably growing considerably faster than the U.S. has in decades. As nations develop and become richer, they go through a shift where their economy moves from being mostly manufacturing and heavy industry to being mostly services. America went through this transition decades ago, but China is still in the midst of it. And it includes a slowdown for the economy: Because you're richer, you have more wealth per person to go around, so growth qua growth becomes less important, and distribution becomes more important.

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