The hotel room looks great – it is much better than expected. The TV is a flat screen with digital quality picture. The bathroom is very modern. The only real problem is my reading light doesn’t work.

I’m in a very attractive looking hotel in Beijing, China, after spending the day doing volunteer teaching at a vocational school in China. While here, I’m trying to gain some insights into the economy and attractiveness of the stock market.

KFCs are everywhere. There are four within walking distance of the hotel. Most importantly, they serve cheap ice cream. The mall down the street is of very high quality. The stores are nice and many offer upper-end merchandise. The streets are very smooth and well paved, except for the big holes in the middle, which are part of a subway construction project. There are so many cars. Hyundai seems to be the most popular brand and they dominate the local taxi business. Buildings are under construction. People are moving everywhere and things seem very vibrant.

By the end of my trip, I start to notice other things as well. Some the buildings have big signs draped over them with phone numbers next to the Chinese writing. I don’t read or speak Chinese (interpreters are wonderful), but a lot of the buildings appear empty and my guess is the signs say the Chinese equivalent of “For Rent”.

The sheen wears off the hotel as well. One of the treadmills downstairs doesn’t work. Neither does the stair stepper. The air conditioning in our room isn’t in the right place. My fellow volunteers in a second room require maintenance to come up three times to fix the air in their room. One of them had stayed in my room six months earlier. The reading light didn’t work then either.

The buildings and the hotel room reinforce my two central concerns about China. The first is that the growth is being fueled by massive infrastructure spending that doesn’t have solid long-term value. Putting up a building or a bridge is great in the short-term, but if it doesn’t promote growth then the taxes and income aren’t there to support the financing costs. While many praise China’s leaders for their wise control of the economy, capital spending driven by political concerns is often wasteful and ends badly. A big trade surplus and control of the financial system allows building to go on for a long time, but eventually it ends.

The second concern is modern China, which like the hotel, looks attractive at first, but the quality isn’t near as high as the first glance would indicate. The Chinese have excelled at manufacturing but seem to be missing the service component which makes higher-end manufactured products valuable. They look competitive, but may be entering a phase where they are more expensive than the cheapest and not as good as the best.

I may be wrong – China may continue to grow quickly and transition toward the first world. It bears watching. These are enough thoughts for today. It is time to sit down and read a little before going to sleep.

I forgot; the reading light doesn’t work.