[...printing money.]
The Party aristocracy gets free shares in companies that come to them for protection. https://www.nytimes.com/2015/10/31/world/asia/chinese-tycoon-wang-jianlin-defends-xis-relatives-and-himself-on-business-deal.html It’s basically a gigantic shakedown racket that, while mild by African standards, is off-the-charts corrupt by Japanese or South Korean standards, let alone European or American standards.
“They’re not printing money. They’re using the same thing the Japanese did - easy credit.”
I didn’t mean physically printing paper money - I used the colloquialism for expanding the money supply (creating more total money). That is done by “loaning” more money to banks, which they can then loan out/invest (within the limits of what their regulators allow). It is just a ledger entry adjustment, rather than a pallet of cash, but it is just creating wealth by fiat - by make believe.
They have widely convinced themselves that this can go on forever (as Governments have so many times before), that that have a new magic formula of some sort. So when these tariffs hit, they will likely just do more of the same. They will just go to a bank and say “raise your asset sheet another billion Yuan, and make a loan to my nephew for 150 million to build another white elephant.”
As for the economic efficiency of their “investments? You pegged it with “off-the-charts corrupt”. If anything, it will probably be worse this time around, as more insiders will likely assess that the (economic) party is coming to an end, and this might be their last chance for a really big score, to flee the country with.
The Japanese had a “Lost Decade” that dragged on for about 20 years of economic stagnation after their bubble burst, but China has a bigger imbalance to correct, in percentage terms.