China also faces the challenge of transition from a mostly export-driven economy to a more balanced domestic consumer-based economy. "China has been doing well for several decades, but they've done so using a very specific model. It's been all export-driven," says Russ Koesterich, iShares global chief investment strategist. "They'd like a greater percentage of growth to be not from exporting to the rest of the world, but from domestic consumption."
To achieve that, Koesterich says inflation-adjusted wages will have to rise as well as the availability of consumer credit products such as mortgages, car loans, and credit cards. "When you compare China to the United States, it's still very much a developing country," he says.