Is There A Bubble In China?

I read an interesting report about China:
China’s Investment Boom: the Great Leap into the Unknown

The idea is that capital spending in China cannot continue at this rate. The coming slowdown will have global consequences.
Let's see the main points supporting this thesis:
- China' s investment boom is unprecedented with growth highly dependent on capital spending. However, decreasing marginal returns on investment will lead to a pullback in capital expenditures. This can happen in a soft landing scenario or a hard landing one where a banking crisis would occur.
- Credit has played an important role in Chinese growth. Credit has expanded 50% more than GDP. If loans continue at this rate, in 2010 credit to GDP ratio will be 200% (similar to Japan in 1991 and US in 2008). Credit is going to luxury property and stocks, but not much into the real economy.
- Some say that China can afford this level of spending because of the low debt (23% of GDP) and huge reserves. However, the size of debt is understated. There are also other off-balance sheet liabilities that would bring the debt to GDP ratio to 62%. Moreover, inflows of money into China cannot fuel further capital expenditures.
- Capital expenditures went into manufacturing, real estate and infrastructure in the past years. Further expansion will not impact as much on growth as in the past.
- The manufacturing capacity is at developed country levels. The manufacturing base is mature with few areas for further expansion especially in traditional sectors (steel, cement, aluminium, energy). There is excess capacity in many sectors.
- Urbanisation rate is actually low in China. Moreover, the lending boom has boosted housing construction. There is an excess housing construction compared to the household formation. The price to income ratios are at extreme levels.

- China infrastructure is relatively well developed. Economic justification behind latest infrastructure projects is questionable.
- Consunption growth cannot replace the investment boom. Private consumption would have to grow 3 to 4 faster than in the past decade to compensate for the imminent retraction in investment.