"It also encourages huge risk taking in mortgages, which recently has seen home prices go up to 30X average income."

I don't know if the government encourages it, but recently they "banned" third mortgages to cool the market down. House-flipping isn't really a Chinese phenomenon.

"It encourages its citizens to forget about the abysmal living condition by allowing internet game cafes to spread like wildfire and trapping the players in pointless alternative realities. So they don't realize they are doing slave labor at $1/day to make ipads."

Wrong demographics. Factories consist of mostly poor migrant workers from the countrysides, they probably don't have the time/money for gaming. Internet cafes cater to urban middle-class kids who can afford to spend all their free time in LAN parties.