"President Obama's recent trip to China reflects a symbiotic relationship at the heart of the global economy: China uses American spending power to enlarge its private sector, while America uses Chinese lending power to exapnd its public sector. Yet this arrangement may unravel in a dangerous way, and if if does, the most likely culprit will be Chinese economic overcapacity. ... To help make this work, the Chinese government has subsidized its exporters by pegging the renmibi at an unnaturally low rate to the dollar. This has supported relatively high-paying export jobs; additional subsidies have included direct credit allocation and preferential treatment for coastal enterprises. ... Those same subsidies, however, have spurred excess capacity and created a dangerous political dynamic in which these investments have to be propped up at all cost. China has been building factories and production capacity in virtually every sector of its economy, but it's not clear that the latest round of investments will be profitable anytime soon. Automobiles, steel, semiconductors, cement, aluminum and real estate all show sign of too much capacity. ... Regional officials have an inventive to prop up local enterprises and production statistics, even if it mean supporting projects or accounting practices that are not sustainable. For an individual business, the standard way to get more capital resources is to put forward a plan for growth. Because few sectors are mature, and growth has been so widespread, everyone can promise to be profitable in the future. ... China's statistics on its gross domestic product are based more on recorded production activity than on what is actually sold. Chinese fiscal and credit policies are geared toward jobs and political stability, and thus the authorities shy away from revealing which projects are most troubled or should be canceled. ... History has shown that no major economy has grown into maturity without bubbles, crises and possibly even civil strife or civil wars along the way. Is China exempt from this broader pattern?", my emphasis, Tyler Cowen (TC) at the NYT, 29 November 2009, link: http://www.nytimes.com/2009/11/29/business/economy/29view.html.
During the 1920s the Fed supported the British pound. This led to the roaring 20s. Similarly China is supporting the dollar now. China is an economic disaster waiting to happen.
Is this true of all "centrally run" economies, the US included? The US depression in the 1930s was more severe than Europe's, so I expect China to have a more severe depression in the next few years. Chinese shares should prove disastrous investments for the next five or so years.