During the past 27 years, China's economy and relationship with the outside world has been transformed. The magnitude of annual economic growth and rapid increase in the volume of output of goods and services raise unsettling questions about potential threats to the sustainability of current growth levels and implications for economic and political stability. This paper examines the sources of economic growth and concludes the strong state system, high rates of saving and investment and demographic structure will sustain growth. Chinese authorities must be aware that a failure to maintain the process of financial and political institutional reform or to address the widening regional income inequalities poses potential domestic threats to sustainable growth. Tensions remain in China's international relationships, forcing China to consider further adjustment and accommodation in its regional security and economic relationships.