"China’s Growing Domestic Economic, Social, and Environmental Challenges: A Review of the Literature" - Wendy Leutert

October 09, 2025

China faces a range of economic, social, and environmental challenges with important implications for its  domestic development, political stability, and international competitiveness. Economically, China’s leaders  are largely prioritizing geopolitical and governance objectives as gross domestic product (GDP) growth slows,  and expanding state influence in public and private sectors to advance a strategy of technology-focused  industrial policy. Socially, record-high youth unemployment, an aging and shrinking population, persistent  gender inequality, and a deep urban-rural divide pose significant risks to long-term economic growth and  social cohesion. Environmentally, resource scarcity, pollution, and climate change could constrain China’s  future development and political stability, despite some recent progress.  This literature review provides an overview of key domestic challenges in China’s economy, society, and  the environment. For each, it discusses current trends and considers their strategic implications for China  and other countries. It concludes by identifying pathways for future research on state-firm linkages, “invisible” topics, linkages among domestic issues and actors, and the international dimensions of domestic challenges. The literature review draws upon a variety of sources in English and Chinese, including academic  studies, policy documents, official speeches, commentary, and news articles.

CHAPTER 3 China’s Growing Domestic Economic, Social, and Environmental Challenges: A Review of the Literature Wendy Leutert


Leutert is the GLP-Ming Z. Mei Chair of Chinese Economics and Trade. Her research focuses on Chinese political economy, specifically the historical evolution and global expansion of China's state-owned enterprises. Other areas of her research include leadership in China's public sector, China’s early reform and opening, corporate governance in state-owned enterprises, and international investment and trade. Her commentary has been featured in media outlets including the Financial Times, New York Times, Reuters, Washington Post, and South China Morning Post. For further details about her research, see: www.wendyleutert.com.


Photo Credit: https://www.rand.org/content/dam/rand/pubs/conf_proceedings/CFA3900/CFA3996-1/RAND_CFA3996-1.pdf#page=27

Wendy Leutert