Just when you think China is starting to behave more like other large economies, something leaps out to remind you that it is not so. The latest reality check is the news that the Communist party is insinuating itself more deeply into business by setting up committees in many of the country’s 80m-odd private companies.

At first sight, this looks like turning the clock back. In the past 25 years, reforms have loosened the stifling grip of the state – or, more accurately, of the party – on Chinese industry and unleashed the energies of private entrepreneurs, who by some estimates now generate two-thirds of national output. Is all that now threatened by a bureaucratic land-grab?

The answer turns out to be more complex. The cosying-up between political power and private capital is the latest step in a process that began in 2002. In one of those volte-faces at which it is remarkably adept, the party called an end to decades of stigmatising entrepreneurs as enemies of the people and officially welcomed them into its ranks. Tens of thousands snapped up the invitation.

The party’s motives are not hard to fathom. Its priority, undoubtedly, is to keep tabs on the new class of wealth creators and ensure that they do not one day become a source of opposition to a leadership obsessed with quelling any potential threat to its monopoly on power. Identifying itself with modernising forces also enables the party to add a dash of pizzazz to its unglamorous public image and to claim credit for their successes.

A more interesting question is what private companies get out of the deal. The simple answer is that it is good for business. That says much about the limits of China’s market-based reforms to date. Its economy may have been opened up, rigid central planning phased out, competition unchained and shares in state companies sold off. But critical levers of control remain firmly in official hands. Do you need a bank loan, foreign exchange, a site for a new plant or access to scarce raw materials? Then, in China, you need friends in the right places. They do not come bigger than the party.

In one sense, companies are behaving like capitalists everywhere, working the system for their own ends. It is just that in China the system is bigger and more encompassing. Western bankers and businessmen grasp that and the importance of fawning shamelessly to the authorities in order to gain or keep footholds in its market.

Yet there is another difference. Most western businessmen recognise, at some level, a separation between a government’s role as referee and their own role as players. That creates an intrinsic tension in their relationship. The distinction is far fuzzier in China, Revealingly, one of the few systematic surveys of its private entrepreneurs, published by a US academic in 2003, found that most regarded themselves not as adversaries but as partners of the state, working in unison for the same overall purpose.

The common interest uniting them is material enrichment. Ideologically threadbare, the legitimacy – indeed, survival – of Communist party rule is measured by its ability to deliver an ever-rising gross domestic product to a nation eager for self-improvement. Private entrepreneurs, the most dynamic means to that end, want profits and growth.

Furthermore, China’s businessmen seem content, indeed determined, to remain predominantly economic animals. A foreign professor who has taught at a leading Chinese business school says he is struck by how narrowly his students’ horizons are bounded by their career ambitions and by their unquestioning acceptance of the established political order. For all the party’s paranoia about potential challengers, no Chinese equivalent of a Mikhail Khodorkovsky is lurking in the wings, nor does one seem likely to emerge.

That is sobering news for those foreign observers who believe rising prosperity and the growth of an urban middle class will in time lead inexorably to pressures for political reform, as they have done in South Korea, Taiwan and other parts of east Asia. “No bourgeoisie, no democracy”, the much-quoted precept of American sociologist Barrington Moore, seems to have met its match in China.

Nonetheless, there are risks to the new corporatism. One is that it will lead to increased corruption, cronyism and the erosion of managers’ incentives to perform. Equally, the party’s enthusiastic embrace of a privileged and moneyed minority could trigger a political backlash at a time when rapidly growing income inequalities are creating social tensions and protests.

The biggest weakness of the arrangement, however, may be that it will succeed too well. China’s achievement in lifting vast numbers of people out of poverty is laudable. But there is something peculiarly soulless about its relentless pursuit of material gain and the pervasive get-rich-quick mentality it has engendered.

A state that offers little else, while curtailing other personal liberties, creates a vacuum in its citizens’ lives. One way or another, they will seek to fill it. One symptom is the rapid growth of religious worship in China – where it is permitted. There is no reason yet to suppose the trend presages an upsurge of demands for political freedom. But it does suggest growing numbers of Chinese yearn for a system of governance that provides more than rising incomes, born out of a marriage of convenience between communism and capitalism.

Comment on this column