China faces macroeconomic challenges including surplus labor and capital, price distortions, and volatility in property and stock markets. There are around 481 million unskilled rural and migrant workers in China who face unemployment if they cannot find jobs in cities. China also has surplus capital due to price controls and state ownership in many sectors that lead to overinvestment. China's inflation and currency appreciation act as substitutes to gradually increase its domestic price levels relative to other nations over the long run. An "inflation-first, appreciation-second" strategy would help China avoid risks of deflation or excessive inflation as its economy develops.