With the yuan floating who knows where and China's markets looking for a bottom, investors, analysts, and economists worry the country is headed into a time of volatile swings in public policy.

To supplant the U.S. as the No. 1 world economy, China has to overhaul its own. Yet its rulers are caught between the desire for far-reaching reforms and a deeply ingrained instinct to shelve them when things go wrong. So the yuan's recent surprise devaluation gave China's exports an edge—even though President Xi Jinping and his advisers have stated their desire to make consumption, not exports, the main engine of the economy. And the government intervened to stem the slide in stocks—while financial reforms were meant to build a stock exchange that responds to market forces.