China seems to work very well for anything planned. Take every projects mentioned in the five year plans. The recreation of entire semiconductor supply chain is no small feat, and arguably more difficult than the reusable rocket development. China had oxygen rich staged combustion engine well in the 2010s, the basics of falcon 9 level of rocket development was not that far off from the tech stack that China had during those time. It feels that the lack of development was and still due to the oversized influence of state owned companies in the aerospace sector, who are better at accomplishing what they are assigned for and not so much for responding to new events and bringing out innovative ideas. While private sectors in US can push the boundaries and set new rules and explore wildly, this relative lack of freedom seems to have hampered the development.
I think you are greatly underestimating the gap of industrial and technology base in rocketry between the US and China in the 2010s.
SpaceX was rightfully able to push the boundaries in the US beyond what existing US contractors were able to do --- but the efforts of SpaceX was a reflection of the existing infrastructure, human resourcing and technological reserves the US already had in its possession at the time. OTOH, the PRC's rocketry infrastructure, human resourcing and technological reserves were far behind the US until recently.
This isn't a case of private sectors being more innovative, but rather that innovation can only occur after:
-sufficient mastery of prerequisite capabilities and technologies and infrastructure
-viable market/customer base/demand
-sufficient time elapsed from funding/technological scarcity
For the PRC's rocket industry, those domains only really occurred in the last half decade plus. There's no need to handwave the idea of innovation as if it is dependent on some nebulous idea of freedom or culture rather than boiling down the material prerequisites first.
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