I'd like to think that extreme racism, homophobia, and other forms of bigotry won't be a winning recipe. A lot of the advantages China has in their government is beneficial for competing with other nations but will eventually eat itself from within.
Have you read the news about the "west" lately? US politics and Brexit are two biggies that seem to fall in line with this.
In the west, problems of racism and homophobia get put out into the sunlight so they might be addressed. It leads to people exerting their democratic right to manifest against injustice and root out inequality.
In China, racism and homophobia doesn't exist because any mention of it gets wiped off the internet, and "different" people get shipped off into camps.
I wonder what percentage of people that make your argument are doing so in bad faith.
Side-stepping for a moment the humanitarian and ethical costs for a brief moment, an enforced homogeneity of ideology leaves little room for independent thinking. At some point, you end up passing down every decision down and idea down a party line like a bucket through a fire brigade. That severely stifles innovation and creates an incredibly narrow view of your options.
But I promised we'd come back to the humanitarian and ethical costs. Diversity is strength. It's more than twee corporate advertising, it's a truth. It's hard to approach new problems when everyone is reading off the same song sheet. Strengths become reinforced, but weaknesses become far more weak; it's a very brittle strength.
I think the free society model is failing given how easy to dissipate false information, especially the kind that get people riled up against each other. It's not a surprise the US feels so divided today despite all the progress made in civil rights. Our enemies/adversaries know that. They know our weak spot. And they made it their strength. China found a way to do it without compromising other aspects of its society too much.
This pandemic has been a comical caricature of how people have been living lately; siloed in their own homes, only interacting through an internet connection. This has made us incredibly susceptible to realities distorted by interested parties.
Again, a free society is our only way out of this. When I get my vaccine in the coming months, I'll be dedicating as much time I can to building strong communities. I encourage all to do the same, no matter how silly it seems. Join a hackerspace, a rock climbing group, volunteer at food shelters, become a scout leader... anything, so long as you promote community and togetherness in doing so!
It's hard to know if you're talking about China or about the US here
It worked just fine in/for the US though. Look back at the US's rise to where it is today and it was pretty bad. Another example is that it is still pretty bad in the US today and it is top dog anyways. I doubt it will make any difference in PRC either.
+ The US has decriminalized homosexuality and was one of the first countries to have same sex marriage
+ Has had robust hate crime laws and strong equal rights protections
+ Is slowly but consistently rolling back low level drug offenses
We always have to compare to our peers, not some unicorn standard. The US had continually been an extremely liberal and accepting society even with it's faults and missteps.