> 3. China was not stupid enough to rely solely on the free market to develop strategic industries. A few deliberately old sources:

Yeah, I agree. The US and its allies took the wrong lessons from the economic aspect of the cold war. They saw Western capitalism out-perform Soviet central planning, then let capitalist ideologues run amok.

China has the advantage: since it's not run by capitalist ideologues it better able to correct the deficiencies of capitalism AND it can exploit predictable capitalist behavior for strategic advantage.