China Confidential suggests that Western journalists tend to report on China’s miracle economy while the Japanese tend to see China as a bubble economy that’s ready to burst.

While Western news media still use words like miracle and boom to describe China’s fast-growing economy–the world’s fastest–Japanese newspapers are increasingly inclined to see it as a bubble bound to burst. An opinion article “Could China’s Red-Hot Economy Collapse?” in the Feb 11 Asahi Shimbun is an interesting example. The article, attributed to Professor Lim Hua Sing at Waseda University’s Graduate School of Asia-Pacific Studies, draws parallels between the current overheated, asset-based Chinese economy and Japan’s fatal boom of 15 years ago. Excerpts appear below.

The Chinese economy has been steaming ahead for several years, fueled mainly by a construction boom and rapid growth in the auto industry. A lot of momentum is also coming from strong exports (especially to the United States) and two big upcoming national events: the 2008 Olympics in Beijing and the world exposition in Shanghai in 2010.

Observers have been warning for some time about the overheating of investment in the construction and auto sectors. Many point out that Chinese industry is awash in excess capacity, causing a large output gap between actual and potential production. The Chinese steel industry, for instance, produced 350 million tons of steel in 2005 but has the capacity to produce 470 million tons annually. When new plants currently under construction go online, production capacity will top 600 million tons.

Being somewhat of a bear, AsiaPundit does not agree with the assessment that the Western press unilaterally view China as a miracle. While State-side reporters may overplay both the China promise and threat, other China hands would consider the notion of China’s booming marketplace as risible.

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