Soutik asks some great questions. I'll do my best to answer them. There are token programs, and in some cities, such as Shanghai, they have had moderate success. But this is like trying to empty a river with a toy bucket. Still, economic growth is slowing.
Deflation is a continuing problem, for the third straight year.
Now and in the months to come is a critical time for the Chinese government. The government might yet come up with a brilliant way to defuse it. But as things stand now, it looks rather ominous. As to your question about hardliners vs. reformers in the Chinese government, the reformers pretty much have the upper hand, economically. But many such enterprises are losing so much money that it would actually cost less to shut them down than to have them keep operating at a loss, and draining money from government coffers.