"...not a general comparison of Japan to China, rather that China's "growth" has a component to it which is artificial." - yes, exactly.
The example of the cities being built is just a symptom of the unsound economic decisions being made by the authorities in China. The cities aren't being built to satisfy demand, but rather to keep the unemployment rate artificially low. In a western-style democracy, those cities would never be built as there would be no demand for the apartment at the prices being offered. A company who made such investments would go out of business sooner or later. No such qualms in a centrally-planned economy.
Also, I'm watching this video at the moment by a guy called Jim Rogers. He makes some interesting points about why the Chinese economy may be over-hyped. Examples he uses include locals digging a new canal using picks and shovels instead of modern heavy machinery - the purpose of the exercise is to keep them employed. He also talks about what he calls the disturbingly consistent nature of the offical GDP growth rate, which seems too good to be true.
EDIT: I realise that this all makes it sound like I'm totally down on China. I'm not - I don't have skin in the game either way. To me, it just seems too good to be true.
" ... a symptom of the unsound economic decisions being made by the authorities in China."
I would caution you to be careful about how you define 'soundness'. If China is doing these things, then it would be unsound to apply modelling weights to those events that were similar to the weights you would apply in a free market. Whereas the appropriateness, or inappropriateness, of the actions the Chinese government has taken with respect to its economy can only be evaluated in terms of the goals of the government with respect to its economy.
If the goal is full unemployment as a means of satisfying citizens desire to work, spending GDP on works projects can certainly achieve that goal. It would be unsound on the other hand to sit on the capital and allow unrest to foment in the general population. Economics is simply about the allocation of resources, it doesn't really judge those decisions until you have all of the decisions, the goals, and the results.
For example, many argued that it was 'unsound' to for the Federal Government to create TARP at the time it was created. However, the US economy has bumped and creaked but it has kept operating which was the goal. So now a couple of years past the decision, and knowing the goal, and evaluating the result, the decisions seem if not sound at least reasonable.
Presumably the Chinese have studied the Soviet handling of the economy and won't make the exact same mistakes they did. One notable difference is that the Soviet economy had a tremendous difficulty making competitive products for export on the world market, that does not seem to be the case for China so far.
Comments
"...not a general comparison of Japan to China, rather that China's "growth" has a component to it which is artificial." - yes, exactly.
The example of the cities being built is just a symptom of the unsound economic decisions being made by the authorities in China. The cities aren't being built to satisfy demand, but rather to keep the unemployment rate artificially low. In a western-style democracy, those cities would never be built as there would be no demand for the apartment at the prices being offered. A company who made such investments would go out of business sooner or later. No such qualms in a centrally-planned economy.
Also, I'm watching this video at the moment by a guy called Jim Rogers. He makes some interesting points about why the Chinese economy may be over-hyped. Examples he uses include locals digging a new canal using picks and shovels instead of modern heavy machinery - the purpose of the exercise is to keep them employed. He also talks about what he calls the disturbingly consistent nature of the offical GDP growth rate, which seems too good to be true.
http://news.ycombinator.com/item?id=2387093
EDIT: I realise that this all makes it sound like I'm totally down on China. I'm not - I don't have skin in the game either way. To me, it just seems too good to be true.
" ... a symptom of the unsound economic decisions being made by the authorities in China."
I would caution you to be careful about how you define 'soundness'. If China is doing these things, then it would be unsound to apply modelling weights to those events that were similar to the weights you would apply in a free market. Whereas the appropriateness, or inappropriateness, of the actions the Chinese government has taken with respect to its economy can only be evaluated in terms of the goals of the government with respect to its economy.
If the goal is full unemployment as a means of satisfying citizens desire to work, spending GDP on works projects can certainly achieve that goal. It would be unsound on the other hand to sit on the capital and allow unrest to foment in the general population. Economics is simply about the allocation of resources, it doesn't really judge those decisions until you have all of the decisions, the goals, and the results.
For example, many argued that it was 'unsound' to for the Federal Government to create TARP at the time it was created. However, the US economy has bumped and creaked but it has kept operating which was the goal. So now a couple of years past the decision, and knowing the goal, and evaluating the result, the decisions seem if not sound at least reasonable.
Presumably the Chinese have studied the Soviet handling of the economy and won't make the exact same mistakes they did. One notable difference is that the Soviet economy had a tremendous difficulty making competitive products for export on the world market, that does not seem to be the case for China so far.