We can look at the question from the following perspective. If we accept the premise that China operates under state capitalism, what implications does that hold? At its core, capitalism is defined by private ownership of capital, where individuals or entities control labor's objectives and structure. Enterprises under this system exist primarily to expand their owners' wealth, with any societal benefits emerging only as incidental byproducts.

State-owned industries, however, serve a fundamentally different purpose, even if their organizational structure superficially mirrors private enterprises. Their primary aim is to mobilize labor toward socially beneficial objectives such as constructing infrastructure, expanding housing, ensuring food security, and similar public goods. Crucially, capital accumulation by private individuals is absent in this model. Profits generated by state industries are reinvested directly into public services, infrastructure, and long-term national development.

While valid critiques can be made about organization of SOEs or potential worker alienation within their hierarchies, the system's focus on collective welfare, rather than private profit, makes it fundamentally different from actual capitalism. When evaluated by its capacity to prioritize societal needs over individual wealth extraction, this framework is clearly superior.

As for, roughly half the enterprise being owned privately. First thing to point out is that it's not true. The percentage of private ownership continued to drop in 2024, accounting for just over 30% now. And of course, the other question is what type of industry is privately owned. The party sits at the commanding heights of the economy, and controls all the essential industries. Capitalist enterprise is strictly supplemental to that, and it very clearly exists in the service of the state as well. The difference in the way AI is applied in China compared to the west is a great concrete example of that.

https://www.piie.com/research/piie-charts/2024/chinas-private-sector-has-lost-ground-state-sector-has-gained-share-among