(1) The fake democracy will inevitably lead to social unrest at some critical point. Ordinary hard-working Chinese people have stayed submissive and obedient in the past 2000 years. The reason, by and large, resides in the Confucius philosophy promoted by the rulers. Confucius ideology claims that the only way to success is to become an official in the government. People therefore worship the government may they be dictators. The Western culture impact on China will soon terminate this worship as more and more young people from China return from overseas. If not carefully handled, China will implode like former USSR. (PS: It explains why a lot of Chinese students were so angry when they saw the westerners accused China of its human right status. Remember that you can NEVER assume all people share the same culture and thus recognition as you do. China has a very tough situation and it is well beyond the understanding for even so-called Chinese experts. )
(2) Corruption is still one of the major issues for the central Chinese government to deal with in the next few decades. Right now, a lot of local Chinese official are not well-educated “half barbarians" or “half-peasants". Their sole purpose to work for the governments is to get corrupted and steal money. That certainly will prevent China from becoming a powerful country that is of the people, by the people and for the people.
(3) Problems in the Chinese educational system. The Chinese students are perfectly well prepared to copy or follow orders instead of to be creative because of the current educational modes. This won't change for a long time. Lack of creativity will be a major issue for the sci-tech advancement for China.
(4) Environmental problems. To develop, China can't rob other peoples like what the British or the Spanish did centuries ago given now we are in a more “civilized era". So China has to rub its own people and its own resources to develop, that has left numerous peasants deprived of their lands, forests cut down to become deserts, and rivers poisoned, etc. Again, if not carefully balanced, the Chinese people are doomed.
(5) The bimodal wealth distribution in China. This is part of (3). I had my undergrad in China, when and where I witnessed poor college kids selling newspapers @5 a. m everyday to support themselves. A lot of kids had $50 to live on for a month. In contrast, a typical dinner for a Chinese local government official costs $150. This is another big problem that can potentially implode China.
Right now I am receiving my higher education as a scientist in the US and what I want to say is we are not that different at all as human beings. Despite the big differences in our governments (and perhaps the same in their inability as we most constantly complain), we are all nice people. I don't see why China and the US can't be more financially supporting each other. I believe in richer and more powerful China and US. Like an old story tells me, if your neighbor is rich, at least you don't have to worry about them wanting to borrow money from you, on the contrary, you can benefit from a rich friend.