Where you and I differ (greatly) is in which represents the "true" China. I agree there is all sorts of capitalism going on in China as well as occurred in the USSR in the black market (as there is in every society at some level or another) that does not mean it is either "official" economic policy nor is it an indicator of where the society is heading, any more than the fact that there might be a lot of speeders on I-75 is an indication that the speed limit is changing. All it means is that for now, the government is tolerating it.
To me, the most important thing is that the MOMENT the Chinese government suspects that this "capitalist" base is viewed as a threat to the regime, it will vanish in the same amount of time that it took Stalin to eradicate the vibrant Kulak agricultural sector. Remember, Hitler used Jews in various positions as long as they contributed to the ends of Naziism.
Nope, the government is embracing its capitalistic base. Why else would they break down the barriers between A and B shares or strip the military of its control over industry. The party is only interested in political power which can be enhanced by a powerful commercial base. Economic power has a way of becoming political power, and you have to enfranchise the population to create a powerful economy. This is where they are likely to lose control.