I was under the impression that the surprise is that their authoritarian political system doesn't stifle the conditions required for this level of innovation.
China proves that you don't need 100 times return on capital to get potential innovators to take risk. 100% may be enough. People say China couldn't innovate due to its weak IPR protection, but it is turning out that you don't need to be an absolutist. Sure outright theft is bad, but imitation can be good for competition. You want to give the innovators a head start so they can profit from their efforts, but you don't want to make the protection so tight that they can sit on their initial efforts and profit for years to come without further innovation.
It's authoritarian in some ways - don't criticize the government etc - but I think they are fairly laissez faire in terms of most businesses doing their thing.
