There is no shortage of critics who confidently attribute China’s rise to the forceful intervention of the state in the economy. But the ranks of policy makers and commentators decrying Beijing’s brand of state capitalism are wrong – and, worse, they risk provoking short-sighted and counterproductive responses.

The reality is that China’s rapid economic ascent is the result of the expanding role of the market and the rise of private businesses. Private companies now account for more than two-thirds of output, up from nothing when reform began in 1978, in an economy that has expanded 25 times in real terms. They account for almost all employment growth in the same period. Private companies are also increasingly the leading contributors to export growth.

State companies’ shrinking role has been particularly rapid in manufacturing, which opened up to competition from private businesses in the 1980s. State enterprises’ share of output in the sector is now only a fifth, compared with four-fifths in 1978. Conventional wisdom says state industrial companies have enjoyed a resurgence since the onset of the global financial crisis. In fact, the growth in output of private businesses since 2008 has averaged 18 per cent, twice the pace of expansion of state businesses.