“China is already beyond the point where the law of diminishing returns starts biting,” said Xu Xiaonian, an economist who teaches at the China Europe International Business School in Shanghai.

Mr. Xu argues that China risks repeating the mistakes Japan made in the 1980s and early 1990s, when it relied too long on a predominantly export economy, neglected domestic markets and allowed real estate prices to soar. Since Japan’s bubble burst in the mid-1990s, its economy has never really recovered.

“If we don’t change, we will follow those same footsteps,” Mr. Xu said. “We have already seen the early signs of what we might call the Japanese disease. China invests more and more, but those investments generate less and less growth.”

PREDICTIONS FOR CHANGE

A Radical Overhaul,

But Within Reach

Some economists predict major changes, noting that the Chinese government has the cash and the power to alter course as drastically as it did in the late ’90s, this time in the people’s favor.

“China has faced more daunting challenges in the past,” said Wei Shangjin, a professor at the Columbia Business School. “I don’t doubt that they want to do it. The question is, Can they successfully engineer such a major restructuring of the economy?”

Certainly, multinationals like McDonald’s, Nike and Procter & Gamble are still betting billions of dollars that China will grow into the world’s biggest consumer market within a few decades.

But raising consumption will require a radical overhaul of the Chinese economy — not just weaning state banks off household subsidies but forcing state-run firms to pay much higher borrowing rates. It would also mean letting the currency rise closer to whatever value it might naturally reach. It would mean, in other words, a significant dismantling of the state capitalism that has enabled China to come so far so fast. “To get consumption to surge,” said Mr. Pettis, the Peking University lecturer, “you need to stop taking money from the household sector.”