The results of creativity spreading to the economy can be hampered by the government. But I strongly disagree that creativity and innovation can't flourish under authoritative regime.
Educational system does not create or remove creativity, it's just a common myth. The reason why Chinese students look so mediocre is because they value science and engineering so much. It's seen as a path to good live. The creative people are still there, but there is more mediocrity because there are so many of them.
China: 4.7 million STEM graduates per year = 34 per ten thousand.
US: 0.56 million STEM graduates per year = 17 per ten thousand.
Chinese have adopted market mechanism and Chinese companies compete on global free markets. Government is just coordinating and supporting the industry just like DARPA is doing in the US.