Today's story about garbage threatening the Three Gorges Dam could be seen as a metaphor of all things going on in China. China is huge. It's got a gigantic, expanding economy, which also yields huge amounts of trash, toxic waste, and social pressures.

China is hyped by the mainstream press and many investment gurus, including hedge-fund ace Jim Rogers. Sometimes it reads as if China is the golden growth story. But a lot of this hype is overdone, and ignores many serious problems within both the Chinese economy and political-social landscape.

This doesn't mean I don't like China. It's an incredibly complex country. It has immense cultural and political history, and an a deep culture -- not to mention good wonton soup. But, China's got issues.

In the interest of being the Devil's Advocate, let me point to a bunch of the problems with the Chinese business and political climate. Let's look at some of the challenges of China:

1) Non-transparency. You actually never know at any given time what's really happening in Chinese business world. That's because it's not a free society, and the information is controlled by the government. There is substantially less transparency than there is in Western markets. Transparency is fundamental to normally functioning financial markets -- perhaps that is why things went so wrong in the on-transparent mortgage market. Do we really expect markets in a country like this to function normally?

2) "Asymmetrical Capitalism." China is practicing what I call "Asymmetrical Capitalism. That is, it lets markets do what they want, when they do what China wants. But when they don't go the right way, China can step in and manipulate to its hearts content. In  China, the government is the market. It controls all the levers. How do you integrate this kind of market into global capitalism? You can't.

3) Property Bubble. I am always skeptical of "Build it and They Will Come" strategies which often seem to fail. This appears to be what's happening in China. There are millions of unoccupied buildings in China. Imagine Las Vegas, many times over. This is the product of forced regional investment. Jim Chanos has laid out the case very well.

4) Regional financial problems. Why are so many of China's regional managers committing suicide? Because the government forced them into huge amount of debt that can't be paid back.

5) Piracy. China regularly steals intellectual property from everybody. There is no fundamental rule of law protecting business interests from this. How do you do business in a country with no intellectual property protection?

6) Pollution. Above, you have the Three Gorges problem. But it's bigger than that. China is one of the largest markets for toxic waste. And it has a serious water problem, with a lack of clean drinking water to meet its population needs.

7) Mercantilism. China has a history of mercantilism. It's part of the reason whey we are struggling with this huge imbalance of trade, which is pretty much impossible to fix since China fixes its currency against the world. It is arguably one of the most destabilizing forces in the global financial world, because while in normal situation currency markets would fix imbalances by revaluing, there is no fix when a country pegs its currency and can control the cost of its own money.

8) Working conditions. How good could things be when a dozen workers commit suicide? Answer: Not that great.

That's just my starter list.

Of course, there are many long-term trends in place which will continue to put China at the forefront of global economic activity and making them a growing influence in the world. There's one particularly big one you have to pay attention to: Population.

But we can't get carried away worshipping the Chinese success story when there are so many unsolved economic, social, political, and environmental issues to solve.