You're right in classic economic terms. The SOE system is better than it used to be but still terrible.

I've worked mainly with privately owned export companies in China.

From my experience, I don't know any workforce willing to more readily trade time for money than the Chinese.

In the private sector sector low productivity used result from low wages making the ROI on new equipment purchases a poor investment. As wages have risen and labor supply shrunk, investment in highly productive manufacturing equipment is the norm.