The pace and scope of the socioeconomic transformation now under way in China defies exaggeration. Consider, for example, the fact that since Deng Xiaoping's first experiments with market reforms, in the early 1980s, about 400 million Chinese have left the ranks of the impoverished. Or that in the past decade alone about 120 million people—twice the population of France—abandoned agriculture in search of the economic opportunity created by China's dual embrace of urbanization and industry. An additional 60 million to 70 million people will join them by 2010.

Yet profound social challenges have accompanied the benefits of economic reform. The dismantling of state-owned enterprises (SOEs) and rural collectives has left hundreds of millions of people in China's impoverished countryside to fend for themselves when it comes to health care, old-age pensions, and education. Recognizing that such inequalities heighten the potential for social unrest, the government recently stepped up its efforts to address the needs of the rural poor.

But even as China's leaders undertake the daunting task of searching for ways to aid the rural population, they must prepare for the urbanized society that China is fast becoming. Indeed, within only 20 to 25 years, some two-thirds of China's 1.3 billion people will live in cities, up from around one-third today. In an increasingly urbanized society, smoldering resentment—over corruption and unequal access to social services, for example—that now seems manageable could turn more volatile and disruptive to public order, particularly if rapid economic growth falters. Greater urbanization will increase crime and poverty and youth underemployment and alienation, and housing pressures. These issues will in turn magnify the potential for social instability.

The challenge for China's leaders, then, goes beyond managing the pace of growth and ameliorating problems in the hinterlands. They must also make it possible for the country to develop the skills and institutions that will extend the benefits and opportunities of reform equitably to all people. The exhibits that follow sketch a portrait of the key social challenges, highlighting areas where improvements will most benefit the daily lives of the Chinese. Together, they show the challenges the country has overcome as well as those it has yet to face.