You saw this particularly clearly with Putin. Anyone whose wealth was combined with any sort of political ambition got destroyed. He only had that problem because he inherited some rich and comparatively untamed people from the previous administration. You couldn't get rich in Russia today without already being a Putin loyalist. I suspect it is the same in China.
As for as economic intrusion goes, China is really a unique case. They've invented a new form of capitalism that works very well -- the state government owns some companies, the state government owns shares in other publicly traded companies, local governments own some companies or shares in companies, and some companies have no government ownership. They all compete against each other in the marketplace. There are 3 or 4 different Chinese state construction companies and they competitively bid against each other for projects.
There is indeed a meme in academic literature on China saying that their lack of freedoms and institutions will hold back innovation. This meme never seems to be very well sourced. Tsinghua University graduates engineers as capable as anywhere else in Asia. So far, Chinese engineers have lacked innovation, but if any country can prove that totalitarian rule does not stifle innovation it will be China.
Compared to what? Compared to a system of city-states? Compared to total anarchy? Or anarcho-capitalism?
