Changing politics and economic policy in China is without a doubt the ultimate prisoner's dilemma. The economy must be able to scale the value chain to increase the quality of growth. Power and influence struggles within the CPC and social stability on the domestic level encapsulates the core political risks that Beijing fears could place the country on a turbulent path. Ironically, today's markets reward risk and look down on complacency in an international investment environment where capital flows in the direction of innovation, government predictability and societies that place the rule of law above all else. While China may not be ready to fully embrace the rule of law because of individual and political interests, it also must be careful to not get left behind, wallowing in the middle-income trap’s no man's land.

Paul Burgman Jr. holds an M.A. from the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore, where he studied the Chinese economy and Chinese foreign policy. He currently lives and works in China. Andrew M. Friedle holds an M.A. in economics with specialties in public choice and urban economics. He currently lives and works in China with his wife and son.

Image: Flickr/Michael Abshear.