I think thats misunderstanding. China studied the US and learned from the US, the funding is almost the same way except the state funding has objectives other than returns. US has the best financial system, (well most effective and powerful). There is no way China can do better than the US, what we are seeing is that the objectives are very different.

Which isn't at all accurate. Venture capital specifically exists to fund first, in the pursuit of success later - and the US has been by a dramatic margin the leader in doing that for the past ~60-70 years.

VC still requires startups to find themselves and prove something first. China basically has a program to do X and anyone can sign up to be a part of that program. All are funded and the winners emerge. I’m broadly generalizing that process but that’s not how VC approaches it.

So instead of "Come pitch us your varied and unique ideas and convince us how our investment will 1000x the returns" it's more like "we need this capability in this industry. Here is a pool of money for you to start figuring it out. We'll focus on the more successful companies over time until they can stand on their own and compete internationally."

I can't imagine why China is so dominant in so many areas when they explicitly plan and invest in capabilities they want to have instead of just relying on the market to "naturally" provide these capabilities or constantly relying on the same handful of inept and corrupt companies to deliver on national needs.

China has this process at the city state level. They can leverage their pegged currency to keep their citizen’s purchasing power lower than it should be to fund anything.

A downside is that their consumption economy is low, all their geo neighbors view them as a threat (reducing exports long term), and this contributes to high unemployment as productivity increases.

That sounds more like Europe than America.