Reliance on these models led to a myopic focus within institutions that ignored the risk of a significant disruption to the financial system if everyone reacted to a large shock in the same way. Consequently, when significant problems emerged, and correlations between asset-price movements moved towards unity, institutions were often ill-prepared to cope, because they had not developed effective contingency plans.
From a somewhat long-term perspective, the most important point is whether China would succeed in making a smooth transition from high economic growth to moderate growth. The high-growth period in Japan started in the middle of the 1950s and ended at the beginning of the 1970s.