How China mismanaged its economy

Telegraph:

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... China is being forced to learn the hard way what traditional practitioners of market-based economics have known all along – that you cannot buck the markets and that economic development never proceeds in a straight line. The belief that China’s own peculiar form of authoritarian, state-sponsored capitalism could somehow defy the usual laws of economics always did look deluded.

What’s more, the prescribed transition China is attempting to make from an export/investment-heavy economy to one more dependent on domestic consumption is proving exceptionally problematic. The one seems to be slowing much more quickly than the other can grow.

Unable to stomach any pronounced setback, and the threat this might pose to Communist Party legitimacy, China has met every economic mishap by simply inflating another bubble. In the wake of the Western financial crisis, China unleashed a fiscal stimulus of unprecedented size and duration; when this began to fade, it encouraged a massive expansion of credit, much of which went into the housing market. And when this started to cool, it recklessly sponsored a stock market boom. Many investors came to believe that their money was in some way underwritten by the state.
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The Chinese do seem to have mastered the laws of supply and demand, or even basic feasibility studies that would determine whether there was actually a market for the housing and manufacuring they were investing in.