Chinese miracle or mirage?

I recently added Marginal Revolution to my "blogs I follow" list and read a post on "Totally false and ridiculous claims about Chinese bubbles".

It refers to an article on China's Bubble. A few quotes -

Finally, China can force government-owned corporate entities to borrow and spend, and spend quickly itself. This isn't some slow-moving, touchy-feely democracy. If the Chinese government decides to build a highway, it simply draws a straight line on the map...

...But don't confuse fast growth with sustainable growth. Much of China's growth over the past decade has come from lending to the United States. The country suffers from real overcapacity. And now growth comes from borrowing -- and hundreds of billion-dollar decisions made on the fly don't inspire a lot of confidence. For example, a nearly completed, 13-story building in Shanghai collapsed in June due to the poor quality of its construction.

This growth will result in a huge pile of bad debt -- as forced lending is bad lending. The list of negative consequences is very long, but the bottom line is simple: There is no miracle in the Chinese miracle growth, and China will pay a price. The only question is when and how much.

What do you guys think? I really like the Lucent illustration in the article.

Something else that this article sparked. There is this consistent "price of democracy" that India pays and the reason we lag our bigger neighbor. Is that really accurate? Why is democracy treated as a governor on the Indian engine? How did Western Europe flourish under democracy leaving Eastern Europe behind in the dust?