Japan was different in that it never became the world's factory, and then, manufacturing skills hadn't atrophied in the west, so it's a little different now. Even so, past performance is no guarantee for future results.

> But even more so, markets enforce discipline on capital that state directed firms don't have

I struggle to reconcile this with stock buy-backs.

Also, China seems to have deployed a hybrid strategy: the national and regional governments provide incentives to industries, but the individual companies compete against each other. Product-wise, US defense contractors have done surprisingly well under a more extreme version of this regime (cost-plus contracts) for decades.

> I struggle to reconcile this with stock buy-backs.

Would it offend your sensibilities less if they paid dividends with that money?

Buybacks are simply a more tax advantageous means of returning profits to share holders.

Similarly debt financed buybacks are a morally neutral way to change the capital structure of the firm by replacing equity with debt.