Beijing can afford structural experiments

The pace and scope of innovation in China has begun to increase. How has this happened, and why is it happening now?

The answer lies in the unprecedented challenges that China faces, including corruption, pollution, unsustainable local debts, ghost towns, shadow banking, inefficient State-owned enterprises and excessive government control over the economy. Certainly, no one would argue that these are positive developments for China; nonetheless, they have arguably been a blessing in disguise. They have imbued reform efforts with a degree of urgency that has had a far-reaching impact; indeed, conventional GDP data do not reflect the scale of the transformation that they are driving.

Of course, China has long been committed to market-driven structural reforms, from the national to the municipal levels. It could not have become the world's second-largest economy otherwise. But the key to China's success has been constant experimentation, and the pursuit of that credo appears to have intensified.