From my experience, the quality and the quantity of the scientific research articles from China has been increasing dramatically in the last five years. To verify this impression, I crunched some numbers. In the general field where I am most active (Information Systems), China dominates in the total number of research articles published whereas it did not even register before 2003:
Moreover, while Chinese articles are still less cited than American articles, China is catching up. Back in 2005, the average American research article was cited three times as much as the Chinese article. The ratio was 1.75 in 2009.
Conclusion: Whatever policies China is putting in place, it has a dramatic effect on its scientific output.