I think the main point many classic western economic analyses' of China miss is that while yes, SOE's are horribly unproductive, the value of the infrastructure they mainly build was so high for so many years it completely blew away the inefficiency. And of course, Western economists following Friedman's laissez-faire stuff starting in the 70's forgot that private companies don't often make massive investments into fixed-assets with very long-term payoffs like infrastructure, that is usually government-driven (internal improvements in Henry Clay's American system in the 19th century, the interstate highway system in the 1950's, etc, with rail in the late 19th century being an exception although the opportunity to connect the world's most productive farmland to markets was so obvious private capital got in on it).

So SOE's were good for a while because they forced China to build much needed infrastructure. Now that that infrastructure has already been built, SOE's are a crushing drag on the economy because their function has been filled and they are essentially useless. That conundrum is a rare piece of good news for the US on the competition/struggle with China.