The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK ( TheStreet) -- If propaganda were music, the Chinese Communist Party (CCP) would be a symphony. But it's not. If CCP hype and censorship were peeled back, behind flattering copy would be disturbing trends rooted in CCP policies that are demotivating or motivating the wrong behaviors needed for healthy economic growth.
Growth comes easy when it's fueled by cheap labor and investments, especially when they are measured in billions and trillions, as they have been in China. Unfortunately for the CCP, those salad days are numbered. The next leg of growth requires increasing productivity and innovation to support increasing wages that will drive domestic demand and create attractive products for export. This new formula won't be easy to execute, particularly in a Socialist system with unique Chinese characteristics.
The Chinese media won't be spoiling this anniversary party with any cautionary notes on possible kinks in executing the new formula. The media is under a directive to sing praise for the CCP, socialism, and the Great Mother Country.The media will discuss President Hu's Harmonious Socialist Society, which has at its core a middle class society. The possible kink from rising income inequality won't pass the censors. Business Week recently estimated that when unreported income is included, the rich in China are 65 times wealthier than the poor. This is world class inequality. High-income inequality, particularly, in a nation where citizens are expected to place the common good before individual interests, can motivate social unrest from marginalized workers and peasants, many who have been uprooted and/or lost their land for the common good, and now feel deceived. The CCP is on top of this. The 2011 to 2015 plan calls for "increasing the low, stabilizing the middle, and curbing the high." Policies to address this will inevitably lead to inefficient income redistributions, using welfare, subsidies, taxes and income caps. These measures not only do not motivate productivity or innovation, they could be widely demotivating, encourage unrest among the not-low income earners, and encourage cheating the system. Also censored is an account of the woeful CCP record on defending the constitutionally-guaranteed freedoms of speech, religion, unlawful detention and assembly. The CCP's longevity depends on instilling fear in the people. Freedoms interfere with this.