But the PRC has significant challenges to face. Its population is rapidly aging, partly as a result of the longstanding "one-child policy". The economic transition is still incomplete, and the Chinese economy remains excessively dependent on export; while domestic markets are still to consolidate. Moreover, preserving the economic growth is of paramount importance for the Communist Party of China (CPC), since its legitimacy as the governing and only political party in the country is largely based on its ability to ensure economic development and improve the living conditions of its citizens. But sustaining growth poses several problems, apart from the "natural" difficulty in constantly maintaining a strong GDP increase rate and the uncertainties over the sustainability of China's economic model and the stability of its financial markets. First, it demands huge amounts of energy, making China very dependent on hydrocarbons imports from abroad. Second, a too rapid development (literally fueled by coal) resulted in terrible levels of pollution, whose effects are double fold: on the one hand, it harms the health of Chinese people, which results in higher sanitary expanses; on the other hand, it deteriorates the environment, and this also translates in huge costs to sustain.
Moreover, some of China's greatest challenges have a geopolitical and security dimension. The PRC is involved in territorial disputes with much of its neighbors and is surrounded by potential threats; and as mentioned above it is America's main strategic rival, thus creating tensions between the two. In this regard, Beijing still lags behind Washington in terms of economic and military power; still, it enjoys the advantage of concentrating all its power in East-Asia or the Asia-Pacific, while the latter is engaged in many other regions). To the east and south, China finds the open sea, an essential element for its export-based economy. However, this also poses significant problems. The maritime flow of goods and energy can be easily cut in case of war, especially on chokepoints such as the Malacca Strait; and this would be devastating for China. Additionally, the coast (where much of China's population, cities and economic activities are concentrated) is vulnerable to attacks; and the free access of Chinese naval forces to the Ocean is (potentially) affected by the presence of US forces and those of other countries like Japan or Taiwan.
Moreover, the situation in the area is complex. The Korean peninsula, where the DPRK is pursuing a military nuclear program and where the South hosts important US troops, is a source of instability; and Beijing wants to avoid an escalation that could result in a war so close to its borders, and which may end with US or allied troops reaching the Chinese border, a prospect that the PRC is determined to avoid. Tensions exist with Japan as well, due to historical resentments, nationalist discourses, a dispute over the Senkaku / Diaoyu islands and the presence of consistent American military forces in Japan, a key US ally in the region. Again, China claims its sovereignty over Taiwan and considers the de facto independent island as part of its territory; and any move by the Taiwanese to formal independence would trigger a Chinese military response that, in turn, would likely result in a major conflct involving the United States. Territorial disputes exists also in the South China Sea (notably over the Spratlys); thus creating tensions with Vietnam, the Philippines and once more the US.