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.
Exhibit 1: China Target vs. Real GDP Growth Rates
Sources: Central People's Government of the People's Republic of China, IMF; as of 03/05/2012. IMF estimated growth rates are based on constant 1990 prices in Chinese yuan.
Sources: Thomson Reuters, IMF; as of 03/05/2012. Dollar GDP growth is measured in 2011 dollars, with the current exchange rate held constant. As we've written, 2012 is a Chinese "election" year -- citizens elect new local leaders (China having a one-party system, they choose between communists and communists), and the party elite select the new president and premier. Planned transitions have the potential to sow dissent --the party factions passed over for promotion could launch a power struggle, and civil unrest could erupt. Careful economic management can mitigate these risks, though. If growth is robust and inflation under control, citizens are likely to be a lot more content, top to bottom. Also, despite 35-plus years of liberalization, China's is a command economy, so officials can use available throttles to manipulate the economy fairly well to suit their aims. Last year they reined in inflation (which required allowing growth to slow), likely setting the stage for a planned acceleration during the transition -- matching what China's done during prior power transitions.