As an extreme example, in order to make government quotas, steel factories used to make steel so bad that no one could use it. That was because the government cared only about the amount, not the quality, and poor quality steel was easier to produce. When the factories didn't have to worry about quotas, but only how much profit they made, they started paying attention to what people would actually buy.

There is still more state control of the economy of China than in most developed countries, but there is much less than there used to be.

And it is generally recognized that this economic liberalization has been the primary cause of the China's economic growth.

At the same time, China has been smarter about those parts of the economy that the government still does control: managing foreign exchange; encouraging foreign investment; making investments for raw materials all over the world; etc.