And while the country may pat itself on the back for successes in 2015 – such as the yuan’s inclusion in the International Monetary Fund’s Special Drawing Rights currency basket and the formation of the China-led Asian Infrastructure Investment Bank – the long-held belief that a powerful state can be a panacea for all economic ills is fading, fast.

From the stock market meltdown in August to the jitters caused by a modest but surprising yuan devaluation, to the persistent slowdown, scrutiny of Beijing’s capability to manage the economy is growing ever greater.

READ MORE - For China’s struggling economy, 2016 may be worse than 2015

“What has now come into question is the competence of China’s economic management, the lack of a modernisation road map, the politicisation of policy and the negative impact of the anti-corruption campaign,” said Jonathan Fenby, a managing director at Trusted Sources, a London-based consultancy focusing on emerging markets.

“[Also being questioned] is the basic contradiction between the modernisation of the economy and the strengthening of political control.”

Fenby, the author of Will China Dominate the 21st Century?, added that China’s economic growth model was increasingly ineffective as it was “too closely linked to heavy industry, which is in decline, and insufficiently linked to services, which are growing”.

The Chinese leadership, headed by President Xi Jinping (習近平), is seeking a new recipe for growth.

The latest central economic work conference, an annual gathering of top Communist Party cadres to map out economic policies, endorsed “supply-side reform”, a concept only vaguely defined, as a catchphrase for the country’s new policy direction, suggesting a move away from the “demand-side” strategies of capital investment and exports.

As part of this reform, authorities plan to reduce property inventory, cut corporate burden through tax breaks, eliminate outdated industrial production and modernise agriculture, according to state news agency Xinhua.

The move comes at a critical time for the economy, which is facing challenges that originate from both home and abroad.

READ MORE - China’s zombie war: can Xi Jinping win the battle to eradicate industrial overcapacity?

The first rate increase by the US Federal Reserve in almost a decade this month is seen as adding to depreciation and outflow risks for China, while economic weakness at home is drying up local fiscal revenues in hard-hit regions and prompting worker unrest.

“As China progresses with its structural reform, 2016 will be a year of important changes and significant volatility,” said Hao Hong, chief China strategist and managing director of Research at Bocom International Holdings in Hong Kong.

“It will be a watershed year of reform and opening that transcends the Chinese economy, and everyone in it,” Hong said.

However, whether such concepts can translate into gains on the ground is a matter of debate.

“Supply economics is nothing but tax cuts and deregulation to free up businesses,” said Li Weisen, an economics professor with Fudan University in Shanghai. “But it seems China’s leadership still sees the state as more important than the market.

“Economic activities can recover in a natural way if the government just leaves businesses alone.

“But in China’s slowdown, the government is just scrambling to give new orders and directions – like a drowning person struggling uselessly.”

Unlike the early days of China’s economic liberalisation under Deng Xiaoping in the early 1980s when starving peasants took political risks to carve up land from people’s communes and government employees gave up their “iron rice bowl” jobs in favour of starting their own businesses, China’s extensive state apparatus today is deeply entwined with economic activities.

READ MORE - Domestic supply reforms seen as key to growth in China

This is forcing the government to walk a tight rope between introducing free market policies to solve long existing structural problems and continuing with its deeply engrained habit of state intervention.

“The leadership is now talking about shutting down excessive [industrial] capacity, it seems they forgot that much excessive capacity today is actually created by the government itself,” said Sheng Hong, the director of Unirule Institute in Beijing, a private think-tank.

“When the state was trying to boost growth, it showered state companies with money encouraging them to start new plants, and the plants quickly grew to excess capacity even before they were built up,” Sheng said.

“Who should decide whether a plant is needed or excessive? The market. But in China, it’s always the state.”

China International Capital Corporation, or CICC, chief economist Liang Hong cited a sizable depreciation of the yuan, a sharp economic slowdown and a “disorder deleveraging due to capacity consolidation in heavy industrial sectors” as economic priorities for China in 2016.

“The old China is clearly not working anymore, but the road to the new China is full of uncertainties,” economists from Natixis Economic Research wrote in a research note.

Decades-long state-centric economic management, especially post-2008 stimulus spending, has resulted in huge amounts of bad debt in state banks, overcapacity in many industries, a large number of zombie companies and widespread corruption.

Solar power is one example. In 2010 it was one of the “strategic emerging industries” named in a state plan as the future of the national economy. But the industry suffered a quick boom and bust.

Earlier this year, Hanergy Thin Film Power chairman Li Hejun – once China’s richest man who rode high on China’s solar power wave – agreed to sell HK$537 million worth of the firm’s shares at a 94.5 per cent discount as the firm struggled amid a regulatory probe.

The Hanergy boss’s pain – so-called “flesh-cutting”, a stock market term to describe selling stocks at losses – was shared by China’s 100 million stock market investors this year when a rout wiped out trillions of dollars in just a few weeks.

A widely-circulated blog in August provided a startlingly detailed record of how the blogger, with 8.5 million yuan in principal and another 8.5 million yuan in borrowed funds, was washed out in a few weeks.

“The stock market rout has made a whole generation lose faith in the China Dream,” claimed the blog, which was later deleted from many websites.

The authorities made clumsy efforts to help, with new announcements almost daily in late June and early July, but almost every new policy announcement was followed by another deep fall the next trading day.

The Chinese authorities’ response to the stock market rout, and its sudden devaluation of the yuan by 2 per cent in August, contributed to “radical shifts in perceptions about what’s occurring in China” and undermined Beijing’s credibility as a can-do government, said William Daniel Garst, a senior research fellow with the Centre for China and Globalisation, a research agency.

“[The devaluation] was a good move that needed to be done, but it wasn’t done in the right way,” Garst said.

The government has yet to provide an official review of the fiasco, although it is arresting securities house brokers and senior officials within the securities market watchdog as well as private fund managers, claiming they are responsible for the market plunge.

However, a semi-official report produced by a group led by former central bank deputy governor Wu Xiaoling, now a lawmaker, blamed China’s poorly-designed stock market infrastructure and hot-headed investors, not any particular “bad guys”, as reasons for the stock market fall.

Xi’s anti-corruption campaign, meanwhile, is sweeping public and private businesses alike. Guo Guangchang, a Shanghai-based tycoon, recently became “uncontactable” for at least two days due to his involvement in undisclosed investigations, reminding China’s business elites how vulnerable they are in front of a powerful state machine despite their riches.

Meanwhile Chang Xiaobing, the boss of state-owned China Telecom, has become the latest state company executive to be put under investigation.

China’s economic weakness and its opaque ways of managing the economy may also undermine the confidence of the rest of the world in Beijing’s growth model just months before the country hosts the G20 summit next year in Hanzhou, the capital city of Zhejiang.

“China is certainly going to have a slower growing economy and [will need to take] painful steps for readjustment,” said Garst.

Louis Kuijs, head of Asia economics at Oxford Economics in Hong Kong, said China's leadership saw the market as "a means to an end, not as an end in itself".

Wording in official documents such as the state-owned enterprise reform blueprint reflected Chinese leaders' deep-rooted discrimination against a hands-off free market, which "is important in understanding the tension that sometimes surrounds policymaking", he said.

Jin Canrong, an international relations professor at Renmin University, said that China’s state-centric model remained appealing to less-developed countries.

“The world is not just the US, EU and Japan, there are billions of people on the planet that will find the China model attractive,” said Jin. “If you look around the globe, China is still one of the fastest growing major economies.”