After closing its all-important “third plenum” with a watery and disappointing communique earlier in the week, China’s communist party surprised nearly everyone yesterday by announcing reform measures of remarkable specificity and substance. The 60-point document ranged from easing the one-child policy to criminal-justice reforms, but the underlying theme was that the market will have a much bigger role in determining who gets money, when and at what price.
That’s huge—mainly because the government now sets all of those things. But it’s also why many are skeptical that president Xi Jinping and his team have the muscle to push these changes through.
Whether they do or not, the coming decade is likely to bring upheavals even bigger than the last one, which itself was no snoozer. Success of even half of the mooted market reforms—e.g. deregulation, privatization, lifting controls on interest rates, letting the yuan trade freely—will usher the country into a chaotic wilderness with a far more volatile financial system than any China’s ever seen. Meanwhile the tensions between the need for growth on the one hand and an aging population, shrinking workforce and worsening environmental problems on the other hand will erupt in unpredictable ways.
However, failure to push through any reforms will mean more and more bad debt builds up in the financial system, eventually triggering a collapse. In order to get capital flowing once again, the party leaders will have no choice but to eventually give the market a much greater role in the economy. It’s just a matter of timing.
The upshot? Get ready for a much wilder East than we’ve seen recently—or maybe even ever.—Gwynn Guilford
Five things on Quartz we especially liked
How far the art market has truly fallen. Alexander Keefe on how this week’s record-breaking art auction at Christie’s completes a cycle begun 40 years ago and marks the final triumph of the art collector as profiteer over the utopian vision of the collector as the artist’s partner.
Americans have fallen out of love with credit cards. It’s the biggest change in the US economy since the recession that nobody is talking about, says Matt Phillips—and a good thing, a sign they’re straightening out their finances. Mind you, he also says the great deleveraging is just about over.
What the NSA spying scandal could do to US companies. Cisco reported a disastrous quarter, and it blamed a big fall in demand for its equipment in emerging markets over fears about US surveillance. Christopher Mims analyzes a trend that may just be beginning.
Don’t believe what you read in the papers. When journalists break stories that a big merger or acquisition deal is in the works, there’s a good chance it’s not true. John McDuling looks at research showing that many such stories are leaked by bankers to gain the upper hand in a negotiation.
The complete guide to getting your money’s worth out of conferences. Why you shouldn’t go to the talks, where to wear your badge, and how to interrupt a conversation. Siraj Datoo and Gideon Lichfield assemble tips from professional conference-goers.
Five things elsewhere that made us smarter
Can parents ever know better than doctors? This mammoth interactive report by Amy Dockser Marcus in the Wall Street Journal looks at the wrenching ethical dilemmas that arose as parents of children with a rare disease tried to persuade the scientific establishment to let them try out experimental treatments.
How Colorado made a young man insane. Not only will you be smarter, you’ll be angrier after reading Andrew Cohen’s account in the Atlantic of how the justice system jailed an 18-year-old without parole for murder on flimsy evidence, where 16 years in mostly solitary confinement has driven him into psychosis.
Should the government pay you for existing? Switzerland is debating whether to give every single citizen a monthly stipend. The idea, says Annie Lowrey in the New York Times, is attracting admirers across the ideological spectrum because it promises to eliminate poverty and complicated social programs—and tackle technology-driven wage stagnation.
The pros and cons of extreme baby monitoring. Anxious parents now have ever more gadgets to give them early warning of things that might be wrong with their new born children. The question, asks Rebecca Greenfield in Fast Company, is “do you really want to treat your child like a Tamagotchi?”
How the Beatles got to be the Beatles. In yet another entry in the Malcolm Gladwell “10,000 hours of practice” debate, Andrew Romano in the Daily Beast argues that the Fab Four became megastars not through perseverance but through “talent, ambition and a lot of arrogance.”
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