> when organized with their largely capitalistic system.

Their system is almost the exact opposite of capitalistic in fact. It's a mercantalist, hyper-nationalist, hyper-protectionist, quasi-fascist economic system, with de facto state control of all businesses, lives and property.

You can't have the state controlling and owning all your major industries, and claim that it's primarily capitalist.

Fascism typically presents a fake veneer of private property and Communism doesn't bother with the veneer. China is ok with pretending you own a business or a condo, until or unless they decide your ownership is no longer in their strategic interest or you upset the wrong powerful member of the party. Thus their economic system is more like a traditional fascist one, as opposed to a communist approach that doesn't pretend you have a right to property at all.

They have few property rights protections and the ones they supposedly have, are not real (which gets demonstrated constantly). It's almost entirely illegal to own farm land, and farming is entirely state controlled. The banking system is almost entirely owned by the state, the rest is aggressively controlled by it. Your property can be taken from you at any time by the central government, for any reason it decides to invent; you will not get it back, and you will not win in court. You have no freedom of speech / press / expression, which is a critical requirement for a market economy; without those things, you cannot properly argue in the realm of ideas, which is needed to maximize all forms of research, innovation, trade and economic action (without it, you're handicapping your potential dramatically, which is going to inherently restrict China's ability to innovate). The economy is overflowing with operate-by-bribe requirements, you can't do anything economically in China without bribing people (at the beginning, during, and or throughout); that's a top to bottom, systemtic failure of property rights and judicial + political integrity. You can't pretend you have a capitalist system when your competitors can trivially destroy you by using the state (and no, pointing out that this happens occasionally in market systems in the West, is not a proper rebuttal; it's the difference between a system that operates routinely that way, versus one where that's considered a crime or scandal).

Xi's crackdowns the last few years perfectly illuminate that no rights in China are solid. They can be removed at any time and for any reason. There can be no functioning market economic system in that type of atmosphere. You can't be at all confident that your property rights will exist tomorrow or 20 years from now, which means you can't really make confident long-term business plans, you can only shrug and keep going regardless, hoping some powerful person doesn't randomly destroy you. This is why Chinese capital is so desperate to flee the nation (so desperate that China had to almost entirely lock it down, so you can't get your wealth out of China any longer; that's a hostage situation, not a capitalist system).

What China has is economic activity on a tight leash. They gave a lot more slack to the leash thanks to Deng, and Xi has pulled in the leash a lot.