China to a large extent is following the Japanese and South Korean playbooks, to the point where the Chinese financial system runs under the concept of window guidance invented by the Japanese: https://en.wikipedia.org/wiki/Window_guidance

The question is whether or not this blows up in China’s face when they stop accurately picking winners. We are already seeing the property bubble collapse in a manner similar to Japan’s.

> the question is whether or not this blows up in China’s face

Japan didn't "blow up" due to picking wrong. The US and allies negotiated the value of the yen up (the plaza accords) when the trade imbalance started to rack up against the US. This popped japan's bubble, which ultimately caused their lost decade.

China, on the other hand, would be unlikely to sign any sort of similar treaty with the US. Their property bubble collapsed, but i dont think to the same extend as the japanese one. Not to mention that it was triggered by gov't, so it popped earlier than japan's one in the lifecycle - therefore, it must be the case that it's less bad.

https://old.reddit.com/r/japan/comments/rvid0x/why_did_japan... has some details in the comments.

I think there are different ways of defining bad. In Tokyo in 1990, the ratio of median house price to median income was 15. In Shanghai when the bubble popped, that figure was above 40, and even today it is at 36.

To put this in perspective, San Fransisco, a city considered to have a housing crisis, has a ratio of 9.

Yeah, but the mortgage rate in China is around 3%. Individual income taxes are under 10% [0]. And there's your multiplier for affordability comparisons.

[0] https://taxfoundation.org/blog/us-china-tax-policy/

IIRC the Soviets got that done with a lot of help from the US.