I agree that social surplus is appropriated by capitalists, be they capitalists within capitalism or socialism. Regardless of the overall system, capitalists definitionally appropriate surplus. My bigger point is that in capitalism, both the public and the private sector reinforce and support capitalists, while in socialism both the private and public sector support and reinforce the proletariat. As you said of capitalism, even state-run social services shouldn’t really be thought of as socialist. My point is that the reverse is true of marketization in socialist economies, as they ultimately are under the control and dominance of the proletariat through the socialist state, and are employed for their progressive utility in socializing the productive forces, preparing the base for more developed socialism.

Ultimately, though, this is largely semantics. Capitalists exist in China, and they profit immensely. They differ from their western counterparts, however, in the fact that they have no political power, do not form an organized class, and are constantly working towards their own erosion as a class as they centralize and socialize the productive forces. This is the mirror of how state-services in the US, including the military and welfare stage, both ultimately prop up imperialism and protect the rule of capitalism.

Still, I suppose it might be helpful for those entirely unaware of dialectics to simply see them as “socialist” and “capitalist” sectors, but I do think that this deeper nuance is required to establish why reformism and simply expanding the public sector in capitalism is not socialism, and why marketization was not a move towards capitalism but towards higher developed socialism in China.