"Failed for the reason we'd expect from communist state: its officials don't understand free market economics."
I think you're missing some of the global picture here. If this were true then how come that China is one of the largest fund suppliers for the US? When looking at the US national debt you'll notice that China sits very high on that list, and quite frankly I don't believe that China has supplied those funds and bonds simply from the bottom of their hearts.
Personally I think they understand all too well how Western economics works and are very carefully exploiting it to some extend. After all, money is power, that's the way it goes over here. And amazingly enough; it seems a lot of that is also sitting with the Chinese.
I don't think this issue is as black and white as you portrait it.