Why China Doesn’t Innovate

We read a lot about China’s dynamicism, but listen to this from an article in the Harvard Business Review:  

“The Communist Party requires a representative to be present in every company with more than 50 employees.Every firm with more than 100 employees must have a Party cell, whose leader reports directly to the Party in the municipality or province.”

So, in Chinese companies of any size, who do you think the “real boss” is?