So basically the article is describing it as some sort of anarcho-capitalist paradise, whereas in reality it's some sort of anarcho-capitalist dystopia.
The mafias and anarchist dystopia described by GP exists in China. In my nearly 9 years here I have received some reflections of this (random pick: I have spent a night near a children factory near Hong-Kong).
But saying that China, or even Wenzhou is an anarchist dystopia is wrong. It is similar to describing New-York with a picture from the Bronx during a "bad day".
On the opposite, saying that Wenzhou and other places are economic paradise where anyone can do whatever they want without the central government even being aware of this is false. These coastal regions have been set up as an experiment on economic opening by Deng Xiaoping, and Jiang Zemin and Hu Jintao have been in fact "chosen" by him, in order to continue in the same tracks. You can count on the current government to care about these places, and to be ready to do whatever is needed if it goes too far.
What is happening in China right now is impressive, and such a fast mutation is probably unseen in the world history at this scale.
It will have a great impact on the world. Will it be for the best or for the worst? I can't be sure, but what I know is that knowing better each other, increasing exchanges between West and East, is the best and only way we have to push a little, just a little bit, away from the worst case scenario.
"IT WAS the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way."
It is not necessarily relative absence of government that is creating some negative fallout. The same sort of things you mentioned do happen all over China, even in Beijing and Shanghai where government police presence is substantially larger.
Keep in mind that westernization of China over last 30 years should be considered as a brand new phenomenon in historical context. China is still learning. Experimenting with market capitalism ensured China that it would grow at a tremendous pace, but it also resulted in a huge environmental, social and legal errors along the way. But what else would you expect from a country that is just starting to wake up from monarchical and communist despotism for several millennial?
All I can say for now is, give it more time.
You ask what changed? You seriously underestimate the kind of China has gone through. China over last 30 years has seen changes that were monumental. Literally, millions and millions of people can now feed themselves with 3 meals a day. China has never been as prosperous as this before, and things are getting better.
Keep in mind that all the horrible things you mentioned are not unique phenomena historically. All those things were there in abundance long before industrialization took place in China. Therefore, these phenomena are not results of industrialization. In fact, more industrialization, more modernization, freer market, removal of notoriously bureaucratic China's communist government regulatory hurdles are what would make China prosperous.
During the next 2 years will be the handover of gov't to the next president and it will be up to him where China goes: the way of Brazil and many African countries with a Gini-Index of 70 and above, or a society with more social equality like the US or even Europe.
However, I have become rather pessimistic in the past two years if there is even a chance for the next president to push China towards more equality. Because that would mean paying taxes and rule of law for the rich. And the rich will not like that.
I think the chances are not too low that there will be revolution kind of change. Maybe cultural, maybe not with weapons and that stuff. But the Chinese people know too much about the wealth of their rich comrades, of their big cities and of the western countries.