No, you're just wrong for thinking that it's more efficient than a free market economy is.
If American businesses can't compete with Chinese ones (and I'm not sure if that premise is correct or not), then it's not because all the things the Chinese government does enables its workers to make more for less, it's because all the things our government does hinders our ability to make more for less. We shouldn't be asking, "Why are they allowed to have sweatshops over there?" We should be asking, "Why aren't we allowed to have them here?"