A lot of people are confused about China's economic model. Is it socialist/communist or capitalist? The answer is that it is a hybrid that doesn't comport easily with the simplistic dichotomies we have become accustomed to using in the West. My take on it is as follows (thread):

China's model is still somewhat socialist/communist in the sense that the country has a strong belief in desirability of top-down government management/supervision/social engineering to ensure that economy achieves desirable social, economic, and geopolitical ends (strength).

However, they have changed the means by which they seek to achieve that outcome. After the failed communist experiment under Mao, which made China weak & poor, they realised that they needed markets, capitalism, private incentives etc, to drive productivity & wealth accumulation.

They have therefore allowed a lot of 'capitalism' to de facto prevail. However, the difference with the Western model of capitalism is West sees freedom and private wealth accumulation as ends in themselves, whereas China sees it as a means to end of furthering national interest.

Consequently, entrepreneurial activity is allowed/encouraged, but only to the extent that it does not clash with what is seen as the national interest. Private wealth accumulation is fine so long as it is not coming at the expense of perceived desirable social ends.

What happened with Ant for eg, is that China felt it was straying into private wealth accumulation via a means that were increasing risks of destabilizing the financial system. They were right in that respect IMO; Ma has demonstrated a complete lack of awareness of risks/issues.

When Tencent faced delays in gaming approvals, it was because the government felt its addictive games were consuming too much time of youths which was not for the greater good of society, so it's private goals clashed with desirable social ends/the national interest.

In the West, we prioritize private/individual rights. We believe people should have the right to do things & make money even if they lead to undesirable outcomes for broader society. In China they believe interests of the individual should be subordinated to national interest.

Much like with Japan, there is a notion of doing your 'national duty'. You are expected to play a role that furthers the interests of China Inc. You can make money privately, but only in a way that comports with your duty to play your appropriate role in China's overall interests

Some of the concepts are not that foreign to Western modes of thinking. The notion of patriotism, and duty to serve your country in war, is not dissimilar to this Chinese/Japanese notion of duty. And 'corporate social responsibility' is not too dissimilar to 'national service'.

What is different is the mode of political representation & competition. The riskiest thing about China's model is its authoritarian nature, such that success relies heavily on inspired leadership to work. The 'national interest' can easily become 'the interest of party leaders'.

The primary benefit of democracy is not that it inevitably generates better leadership, policies, or economic outcomes, but that it provides a mechanism to kick really bad administrations out of power (like Mao) & quickly. When authoritarianism goes bad it goes really bad.

However, democracies also have considerable disadvantages as well from economic standpoint. A lack of long term thinking/planning; system selects for people good at getting votes rather than good at governing; and its susceptibility to populism.

There is no inevitability an authoritarian system will necessarily produce worse leadership than a democracy. What China seems to have been able to do well is create 'internal' competition within the party, attracting talent and promoting people based on track record & results.

In other words, the state functions more like a corporation in selecting/promoting. If you run a city well (i.e. a division), you get promoted to region. If you run a small SOE well, you get promoted to bigger SOE. The West doesn't promotion on merit well in public sector.

This has led to high quality and competent people in Chinese state, and the results of quality leadership are readily apparent. This is how stuff gets done in China, and fast. There is of course a risk of this model being corrupted, but so far it is has worked spectacularly well.

The real lesson here is that the world is not simple and black and white. Capitalism vs. socialism and democracy vs. authoritarianism are too simplistic dichotomies. Ultimately, economic success is determined by policies which succeed in generating long term productivity growth.

In China's case, it has been a mix of private profit-seeking capitalism; state-directed co-ordination of activity to maintain stability & development; meritocracy & competent leadership in civil service; all aided by a pervasive sense of duty to serve China's national interest.