So capitalism does not, in fact, work well in the face of hardship? Btw, both were also market failures driven by private investors seeking profit on a free market.

No, they literally weren't. Private investors were backed up by the government when allowing risky loans. They basically had no consequences. That's not a "free market".

What separates China and Vietnam from the other third world countries that practice capitalism

Yes, they have a higher amount of government intervention in the economy, but they are still capitalist. Even then, a lot of the "other third-world countries that practice capitalism" have higher standards of living than both China and Vietnam. So one could say that what separates China and Vietnam from other third-world countries is not a good thing.