There are some distortions in the economy, especially in real estate, but its not a universal by any means. You get some districts/towns/buildings being built where there is no demand but someone can scrounge up land and capital, these are very under utilized, but in the boom regions space is still at a premium.

There are also distortions in residential real estate, easy access to credit + no property taxes (just one upfront sales tax) means that many people by properties speculatively without intending to rent it out or flip them in a timely manner. This means many empty apartments even in cities like Beijing and Shanghai where rents keep rising.