China's Inflation Pressures Government

Still, dealing with a country with such strong state control makes possible outcomes variable. Rather than pushing initiatives through using a democratic process, China can simply order action. That allows for nimble response to problems, but also some governmental decisions that are difficult for those in the West to predict. Investors need to be willing to gamble a bit when placing bets on the country.

All is not rosy for the red dragon, but the government's response to quicker inflation could make certain investments attractive. As with any opportunity, the risks are real and, with China, the outcome is cloudier than usual. Either way, China is likely to be one of the fastest-growing economies for a long time to come, so weigh the risks, but consider the possibilities.

-- Reported by David MacDougall in Boston.

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