New data showing the toll trade tensions are taking on China’s economy are merely a symptom of a more serious malaise: The country’s state-led growth model is running out of gas. A recession or crisis may not be imminent, but the long-run implications are just as serious. Absent a change in direction, China may never become rich.

The economy’s growth slowed to 6.2% in the second quarter, a near-three-decade low. That’s still pretty good for a middle-income country with per-capita gross domestic product of $14,000 to $18,000...