Their wages are rising rapidly and they have a very limited window to make the shift from cheap labor based industry to high tech, value added industry. This will be a daunting task given that Chinese urbanization rate is only 60% and it still hasn't fully become a developed industrial society like the US.

Maybe. Many predictions of doom and reckoning by the capitalist brain trust have been made about the Chinese economy for 20 years now. They have repeatedly shown that conventional capitalist wisdom poorly predicts the reality and outcomes of the Chinese model, which should have collapsed a dozen times over from various credit/liquidity/overproduction crisis according to them. China continues to defy their models and propaganda, with at least some of the negative outlooks on the Chinese economy being motivated by ideological opposition to the Chinese "socialist" system (state capitalist-mixed market model).

The demographic crisis however is inevitable and severe.