I wouldn't say China has embraced aspects capitalism, but rather reforms have created a market economy environment... but unlike a pure market economy, the power of money (especially special interests) can never be more powerful than that of the people. In other words China has engaged market economy on its own terms.
No country has a pure market economy, mostly because a pure market economy is not a stable system. When left on its own, market economies inevitably collapse into monopolies and oligarchies. This is why most nations have anti-monopoly laws.
The other myth about market economy is supply and demand. Take the labor market for example. Why do supposedly capitalist countries have such a thing as minimum wage? That is a supremely disruptive interference on price of the labor market (i.e. wages), and by extension, a host of other goods and services.
Well, the minimum wage exists because welfare exists. Welfare says the government will pay you X amount of money if you have no income. That means nobody is going to work for any wage less than what welfare pays. Therefore, if the government wants to have people in the labor force instead of being on welfare, they have to force employers to pay a minimum amount of wage.
So now why does welfare exist? Well, a lot of arguments can be made about that, but one observation is certain: people who collect welfare can predominantly characterized by a lack of education and some kind of substance abuse. These people usually have no wish to better their lives (since that would require work). Therefore, I would argue that welfare is another tool for Capitalists to enforce social control.