Beijing Shakes As Bo Xilai Suspended From Politburo

As aftershocks go, this will have stronger reverberations than even the original earthquake. Bo Xilai, the sacked Party boss of Chongqing, has been suspended from the Politburo and the Central Committee for suspected “serious violations of discipline”. His wife, Gu Kailai, has been placed under judicial investigation, along with a family employee, Zhang Xiaojun, in connection with the death of a British businessman and long-time family associate, Neil Heyward, who was found dead in a hotel room in the city last November. State media say police are now considering it to be a murder case.

Bo’s fall from grace has already sent tremors through Chinese politics in the run up to a leadership transition in which he had been expected to be promoted to the Party’s ruling inner sanctum, the Politburo standing committee. One of the Party’s rising leaders and, like his wife, a princeling, the charismatic and popular Bo’s sacking triggered–or was triggered by, it is hard to be sure in the opaque world of Party politicking at the highest level–the biggest political crisis since 1989 and the days of Tiananmen Square.

What comes next is anyone’s guess, or at least of anyone outside Zhongnanhai, the leaders’ compound in Beijing. There is a deep, if not clean factional divide between those who want the Party’s legitimacy to monopoly rule to be based on ideology derived from the mandate of Mao (in which camp Bo and his supporters fall), and those who wish to continue to base that legitimacy on the Party’s ability to go on delivering rising living standards for all Chinese, a course that now turns on scaling back the state’s role in the economy and giving the private sector more scope to expand. That raises, first, the question of how far can the Party scale back its economic control without yielding political control, and, second, how to deal with the challenge economic reform poses to many of the vested interests among the princelings and the military who derive their power, money and influence from the institutions and honeypots of a heavily state-directed economy.

Bo’s suspension from the Politburo means he has now lost all his key Party posts. As such it marks an important turn in that debate. How its consequences will shake out, and particularly if there will be a wider purge of the old guard — Zhou Yongkang, the Party’s security head and considered a Bo ally, may be the key figure to watch in this regard — takes a braver observer than this Bystander to hazard guesses at at this point. The political ground in Beijing is still shaking, and we are yet to see who else will be rattled.

5 Comments

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5 responses to “Beijing Shakes As Bo Xilai Suspended From Politburo

  1. dan berg

    I suggest this article gives us a hint of “how to deal with economic reform”; http://www.bloomberg.com/news/2012-04-10/shadow-banks-on-trial-as-china-s-rich-sister-faces-death.html

    • China Bystander

      The Wenzhou experiment is, as you point out, one option. We wrote about this last month, http://chinabystander.wordpress.com/2012/03/28/bringing-wenzhous-lenders-out-of-the-shadows/. What is being proposed fits Wenzhou’s circumstances well enough. The question is how difficult it would be to translate the successful bits to a national scale. Not easy, we suspect. Our thought is that what is most likely to happen is that more unofficial lenders are likely to be brought into the regulated banking system by being allowed to become regional banks, foreign banks will (cautiously) be given a bigger role in domestic commercial banking and the Postal Savings Bank, which already has an SMEs and rural mandate (and 40,000+ branches) will be expanded. –CB

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