More like market socialism, i.e. a market economy broadly directed by the state for the benefit of regular people, including when that goes against capitalists' interests.

Kinda similar to how the USSR functioned in its first 20 years under Lenin's NEP.

Also, you should look up what those terms mean first. China isn't "communist" (yet?); it's not a stateless, classless, moneyless society. It's socialist; the transitional stage between capitalism and communism where the state serves workers' interests instead of capitalists'.

The Chinese state has been allowing some limited amount of capitalism, which it is slowly whittling away, and this article shows an example of that whittling. But that isn’t state capitalism.

State capitalism seems to have a variety of contradictory meanings. The Chinese state itself doesn’t run under the capitalist mode of production, because it has fiat monetary sovereignty. It has no need to extract surplus value from workers to make a profit, because it has the ability to create money out of thin air and to destroy money through taxation. This also means that it isn’t subject to the boom & bust business cycle, at least not directly: it’s affected by the (again limited and dwindling) indigenous private capitalist business cycle and by the business cycles of other capitalist countries.