China: The fall of Bo Xilai

For the first time in two decades an open power struggle erupts within China’s one-party state

Dramatic events are unfolding as China’s once-in-a-decade leadership transition gets underway. A serious schism in the Chinese Communist Party’s (CCP) top ranks has come into full public view – something unprecedented since the mass anti-government protests of 1989. Bo Xilai, standard-bearer of the neo-Maoist ‘new left’, has been dismissed as provincial party chief of Chongqing.

While dramatic, these developments are not completely unexpected. As we explained last year on, “Still, the [populist] campaign of Bo is an important development signifying that the relative cohesion of the ruling group – in public at least – since the 1989 Beijing massacre is beginning to unravel.” (China: Repression or ‘reform’?, 11 July 2011).

Bo’s exit follows a major scandal resulting in the arrest of his former right-hand man, Wang Lijun, who until six weeks ago was vice-mayor and police chief of Chongqing. Wang has been labelled a ‘traitor’ by the regime after what was possibly a defection attempt at the US Consulate in Chengdu on 6 February. He is also widely suspected of corruption. “The Wang Lijun saga has evolved into one of the biggest political scandals over the past 60 years,” argues political commentator Chen Ziming. The fall of both men is part of a wider power struggle within the regime, rather than merely an anti-corruption ‘clean up’.

Former vice-mayor and police chief of Chongqing Wang Lijun

Beijing tilts to the right

The Washington Post describes the purging of Bo Xilai as a “stinging defeat” for China’s neo-Maoists. His fall undoubtedly marks a strengthening of the proponents of economic ‘reform’ (market liberalism) within the commanding group against the nationalist and state interventionist ‘left’, although to leave matters there would mean simplifying what is an extremely complex power struggle.

“This is an earthquake before the 18th Party Congress,” said scholar Wu Jiaxiang, referring to the autumn meeting at which a new leadership will take over from the current team led by Hu Jintao and Wen Jiabao. Premier Wen is the main proponent of ‘reform’ within the regime, and his blistering attack – without naming Bo – on the “Chongqing party committee” made on live television from Wednesday’s closing scene at the 10-day National People’s Congress (NPC), presaged Bo’s formal dismissal, which followed a few hours later. Another prominent figure in the reform camp is Guangdong party boss Wang Yang, seen publicly as the nemesis of Bo Xilai (much energy has been expended debating the rival Guangdong and Chongqing models). Wang’s slogan is “small government, great society”.

Wang’s chances of promotion at the autumn congress have clearly been boosted by Bo’s sudden demise, but also by Wang’s perceived role in brokering a peaceful settlement to the Wukan conflict. Wukan, where villagers achieved tentative concessions through well-organised mass struggle, has been hi-jacked for publicity and factional purposes by Wang and the reform wing. Despite well-publicised elections earlier this month that resulted in protest leaders winning positions in Wukan’s village committee, state repression, surveillance and threats especially against youth activists, are on the increase inside the village.

‘Revolution’ warning

In the same speech that lambasted Chongqing over the Wang Lijun affair, Wen warned, “Without the success of political structural reform… a historical tragedy like the Cultural Revolution could occur again.” These comments reflect the deep insecurity of the ruling group and their fear of revolutionary upheavals given China’s widening wealth gap and mounting popular discontent. But it is today’s events in Egypt, Russia, and the US ‘Occupy’ movement, rather than a repeat of the chaotic 1960s, that really terrifies China’s elite. An incredible opinion poll conducted in seven cities during the NPC meeting by the English-language Global Times, a top government mouthpiece, showed that almost half the population (49.4 percent) believed China was “close” or “maybe close” to a revolution.

“In [Wen’s] nine years in office, China’s electricity generation has tripled, its steel production has quadrupled and the number of cars and trucks manufactured each year has increased nearly sixfold,” noted the South China Morning Post (14 March 2012). But as this newspaper then added, “China’s Gini coefficient, a widely followed measure of income inequality, has shot up from a level similar to America’s when Wen took over, to a level today closer to Swaziland’s.”

Wen’s public attack on the Chongqing model and the decision to purge Bo, reflect a consensus within the top group of state leaders including not just president Hu Jintao, an opponent of Bo, but also Bo’s ally Zhou Yongkang, who is China’s top security official, and president-in-waiting Xi Jinping. Both Xi and Bo are princelings – the sons of former top party officials who enjoy inherited privileges within the party-state apparatus.

Factional struggles

There are some earlier precedents for the removal of a senior provincial leader in this fashion. In 2006, Chen Liangyu the party boss of Shanghai was sacked and subsequently sentenced to 18 years imprisonment for corruption. This was part of an internal power struggle between the ‘Shanghai gang’ of ex-president Jiang Zemin and ‘Tuanpai faction’ of Hu Jintao, who’s move against Chen was aimed at curbing the powers of the former, and affording greater freedom of action to Hu himself.

In general, and this also seems to apply in Bo’s case, purges at senior level are achieved through negotiations and horse-trading between the factions. Chen was replaced as head of Shanghai’s party apparatus by a factional ally – Xi Jinping. A delicate balance must be maintained to prevent an all-out factional war erupting. For this reason, it is vice-premier Zhang Dejiang, who like Bo is a protégé of ex-president Jiang, who takes over as head of Chongqing’s government. Thus factional ‘balance’ is maintained.

But Bo’s case is of a different order to the Shanghai purge of 2006, involving someone who is famous on the national stage and with a considerable base of support outside the government apparatus. After Hu and Wen, Bo is unquestionably the most well known political figure in China. He has used his control of Chongqing as a platform to conduct the nearest thing to an election campaign within the framework of the authoritarian state. The Chongqing model (examined below) has been massively hyped by Bo to back up his quest for a seat on the nine-member Politburo Standing Committee, which is the summit of power within the Chinese state.

That dream is almost certainly over for Bo, based on the current balance of forces. But Bo’s removal can trigger important and unforeseen political repercussions. This is especially the case within the neo-Maoist ‘new left’, most of whom still harbour illusions in the CCP-state and adore Bo, while opposing today’s “neo-liberal capitalist” leadership. At the time of writing, Maoist online groups are calling for protesters to go to Chongqing. Security forces in all major cities have been placed on alert and PAP (paramilitary) units have been moved from Hubei province to Chongqing – signs that the regime does not rule out the possibility of protests. Even if no such street protests materialise, the removal of Bo raises the prospect of a more turbulent and infected leadership transition process.

Much is still unclear, and much will remain murky given the nature of CCP internal power games. But the timing of Bo’s dismissal was also remarkable. Senior party figures were informed of Bo’s dismissal late on Wednesday night (14 March) as the NPC ended. A one-line announcement was issued the next morning by the official Xinhua news agency.

It is possible that the decision to purge Bo was not taken until very late in the NPC proceedings, after he hosted a packed press conference on Friday 9 March, at which he pledged to continue the Chongqing model. This lack of humility – further evidence of Bo’s independent style – undoubtedly angered the central leadership. Further measures against Bo, including criminal charges, cannot be excluded given the ongoing investigation of Wang Lijun, which is pregnant with political surprises. But this will mainly depend on the logic of the power struggle, not on the strength – or lack thereof – of any evidence implicating Bo.

The NPC meeting showed that Bo still enjoys significant support within the state apparatus, including the military. This speaks against any further measures. It is instead possible Bo will keep his Politburo seat (not to be confused with the more powerful Politburo Standing Committee) and may be shunted to a ceremonial position elsewhere within the state. As one commentator said a “soft landing” looks possible for Bo.

Strike against the ‘left’

In a parallel development, to limit protests over Bo’s removal, four left-leaning (neo-Maoist) websites were closed down by the authorities. This therefore represents a broader attack on the ‘nationalist left’ or ‘new left’ by the central party leadership, not just on Bo’s person.

The websites under attack include the influential Maoist site Utopia, which sometimes carries articles from and the CWI (Committee for a Workers’ International), but nonetheless represents a very different, and increasingly nationalistic, political standpoint from our own. Notwithstanding these political differences, we unreservedly protest against this undemocratic crackdown, which also exposes the emptiness of talk about ‘political reform’ and openness from Wen and the CCP’s liberal wing.

Maoist groupings like those around Utopia have acted as cheerleaders for Bo Xilai, despite the lack of anything concrete to suggest he represents a real alternative to the current pro-capitalist leadership. Some neo-Maoists have hailed Chongqing as a “liberated zone within a capitalist China” and the “Yan’an of the century” (a reference to the area of northern China under CCP control during the civil war).

Bo Xilai leads changhong singing red campaign

Chongqing model – myth and reality

But as CWI supporter Zhang Shujie, who comes from Chongqing, points out, “The so-called Chongqing model seems to hold more attraction for people outside Chongqing, looking and hoping for an alternative to the CCP’s capitalist policies, than for people who live there. Bo Xilai’s government has not been fundamentally different to the CCP elsewhere, but he has a populist style which alarms the leadership. In fact, foreign investment has increased faster than any other province under Bo’s rule and his government has adopted one of the most radical programmes for privatising farm land.”

Apart from Bo’s ‘red culture’ campaign, involving choirs singing Mao-era songs (but significantly not The Internationale which is identified with anti-government protests, as in 1989), and text messages with Mao quotations, his policies have more in common with ‘social democracy’ than Maoism. Bo has promoted “social fairness and market economics” and “modern communitarian values that resonate with Chinese culture’s Confucian roots,” according to his supporter, Shanghai-based venture capitalist Eric Li.

Pointing out that Bo suffered during the Cultural Revolution (his family were imprisoned for five years) the Financial Times (Red Alert, 3 June 2011) concluded that his invocation of Maoist themes “is more about style than substance – an attempt to tap into a sense of nostalgia by resurrecting the trappings of Maoism without reviving any of the disastrous policies associated with it.”

Without taking any responsibility for Mao’s bureaucratic policies, we would point out this newspaper’s viewpoint is typically distorted: clearly the “sense of nostalgia” for the Mao years must be based on something – and that is a very understandable backlash against the “disastrous policies” of today’s CCP, which include privatising healthcare, schooling and housing, with a concomitant surge in inequality.

Chongqing is the largest city in Western China, and has experienced one of the strongest GDP growth rates of all provinces, reaching 16.4 percent last year. Since 2007, when Bo took the helm, the share of Chongqing’s GDP coming from the private sector has risen from just 25 percent to 60 percent. Chongqing’s mayor and Bo sidekick, Huang Qifan, who looks (for now at least) as if he will keep his job, famously said of these policies, “We are pursuing the Reagan-Thatcher model of the 1980s.” Clearly, therefore, the Chongqing model does not represent an anti-capitalist alternative.

Populist and authoritarian

Supporters of Bo Xilai point to social reforms such as the public housing plan, launched in 2010, to build 800,000 low-cost units for low-income families squeezed out of the mass housing market, which is almost entirely privatised. Even this programme, however, falls far short of a genuine plan to house the needy. Since last year, the central government has launched its own mega-plan for public housing, taking its cue (unaccredited of course) from Chongqing. The national plan is reproducing on a larger scale all the deficiencies of the Chongqing prototype.

Critics say Chongqing’s new public housing units are too small and too far away from the city. They resemble “dormitories for individual workers, rather than permanent housing for urban families,” claimed a report by research firm GaveKal Dragonomics, entitled Chongqing’s Public Housing Predicament. The aim of the projects was to attract investors to build factories near Chongqing rather than provide decent housing, this report concluded.

Bo’s policies can be summarised as limited social populism combined with authoritarianism. “Some of his supporters see him as the Vladimir Putin of China. Mr Bo is a populist with an iron fist,” commented The Economist, predicting he could become police chief in the central government. (China’s new leaders, 23 June 2011).

Perhaps more significant than the ‘red culture’ campaign in propelling Bo into the national spotlight, was his controversial ‘smash the black’ anti-gang crackdown. This campaign, spearheaded by the now disgraced Wang Lijun, led to 2,000 arrests, 500 prosecutions, and 13 executions, including the former top judicial official of Chongqing, Wen Qiang. The extent of gangster control in China’s cities left many aghast at the audacity and ruthlessness of the Chongqing authorities’ campaign.

It was estimated that criminal syndicates (known in China as triads) employed 200,000 people in Chongqing. As in other cities, organised crime had penetrated the police force and the government and, in Chongqing, enjoyed the protection of Wen Qiang. An important factor in Bo’s anti-crime drive was to embarrass his factional rival Wang Yang, who preceded Bo as Chongqing’s party chief before moving to Guangdong. By implication, Wang had tolerated ‘the black’ during his tenure. Not surprisingly, the apparent success of the Chongqing campaign irritated many in the central leadership. Allegations of torture, forced confessions, and ignoring ‘due process’ have surfaced, becoming a factor in the downfall of both Wang Lijun and Bo Xilai.

Why was Bo purged?

The most important reasons for the dismissal of Bo flow from the nature of the Chinese regime and the fear of a mounting backlash to its capitalist-restorationist policies. It was distrust of Bo’s unpredictable methods, rather than any alleged alternative political or economic platform, that brought him down.

As we explained previously on “China manifests a peculiar form of ‘Bonapartism’ – by committee, rather than in the person of a ‘strongman’. This too is not accidental. The experience of Mao’s rule and also Deng Xiaoping’s, with erratic swings and accompanying social upheavals, produced the current ‘compromise’ system in which the powers of the leading group are subject to ‘checks and balances’ realised through an exhaustive process of negotiations and trade-offs between factions, provincial governments, and business-based clans.” (China: Repression or ‘reform’?, 11 July 2011,

Bo Xilai attempted for reasons of his own pursuit of power to bypass this rigid system. Unchecked, this could have set a dangerous example for others to follow. Susan Shirk, former Deputy Assistant Secretary of State under Bill Clinton, offered this view: “Bo’s open campaigning for power, and his use of the media to mobilize popular support, shattered the facade of unity at the top of the party. That campaigning, not any of the things he did in Chongqing, was the reason they had to get rid of him. Ever since Tiananmen Square [the 1989 revolt] they have tried to keep leadership in a black box.”

The princelings

Bo is a princeling, the son of Bi Yibo, one of ‘the eight immortals’ who helped Deng Xiaoping launch China’s pro-market turn in the years following Mao’s death. In today’s class-ridden China, the princelings are the new nobility, with vast inherited power and wealth. Bo, as Time magazine (25 July 2011) commented, “is hardly a revolutionary: he favours luxury cars and suits and sent his son to Harrow [an elite private school in England] and Oxford [university]”. The younger Bo, a third-generation princeling, joined Oxford’s Adam Smith Institute.

The princelings have acquired enormous power in China’s ‘state capitalist’ economy, both in private business and as heads of powerful state monopoly enterprises, which are often run as clan fiefdoms. As a Wikileaks report revealed, based on a 2009 cable from the US embassy in Beijing, it was “well known” that former Chinese premier Li Peng and his family controlled China’s electric power interests, while the country’s police chief Zhou Yongkang controlled the state monopoly of the oil sector. The wife of China’s premier Wen Jiabao is said to control China’s precious gems sector, the cable stated.

The ‘party of princelings’ enjoys great influence within the CCP, but more as a network of family-based loyalties than a political faction. Xi Jinping and Bo Xilai are both princelings but Xi is seen as an economic liberal, for example when he ran Zhejiang province, seen as a stronghold of private capitalism in China. But tensions within the CCP between the princelings and other officials are becoming sharper. The same Wikileaks report claimed that princeling officials derided officials from grassroots backgrounds as ‘shopkeepers’.

The ‘Tuanpai’ party faction around president Hu Jintao (which takes its name from the Communist Youth League from where many of its members originate), wants to limit the power of the princelings who form the core of the ‘vested interests’ seen as blocking ‘reform’. The moves against Bo therefore also reflect an attempt by Hu and the ‘Tuanpai’ to weaken princeling influence ahead of the autumn succession. Xi, a princeling, will replace Hu as party chief and next year also as president. This was decided at the last congress in 2007, and represented a setback for Hu’s faction, whose preferred candidate was Hu protégé Li Keqiang. Li will instead assume Wen’s responsibilities as Premier, a lesser role.

The seat that Bo seemed set to take on the Politburo Standing Committee (PSC) will now almost certainly be taken by another supporter of ex-president Jiang (another princeling), possibly Bo’s successor in Chongqing, Zhang Dejiang. But Bo’s dismissal is undoubtedly also indirectly aimed at checking the ‘party of princelings’ and their designs on the new leadership, especially the nine-member PSC. The implications of this conflict therefore go beyond the rise or fall of the Chongqing model. As the global capitalist crisis deepens and China’s economy falters, sharp divisions within the party-state will increasingly burst into the open. Making an example of Bo Xilai will not repair the facade of ‘party unity’ other than perhaps for a temporary period.

Local government debt as share of GDP

Economic ‘reform’

The recent NPC meeting was “a house of representatives of officials and businesspeople” according to Wang Guixi, a professor at the Central Party School in Beijing. As reported on last week, the richest 70 NPC members – with an astonishing combined wealth of 565.8 billion yuan (US$85 billion) – are more than ten times wealthier than the 535 members of the US government, Congress, and Supreme Court. Internet commentators called the NPC session a “wealth-showing-off-party” and published photos of the luxury goods adorning various delegates. The chairman of Evergrande Real Estate Group, Xu Jiayin, was spotted wearing a 6,000 yuan waist belt – almost a year’s income for the average farmer (6.977 yuan). The daughter of former premier Li Peng (the Butcher of Beijing), Li Xiaolin, who is CEO of China Power International Development, was photographed in a pink Emilio Pucci suit valued at 12,000 yuan.

In his two-hour opening work report, Premier Wen used the word ‘reform’ 70 times. But rather than political reform (which he did mention in his attack on Bo Xilai ten days later), Wen was referring only to economic so-called ‘reform’, which is code for more pro-capitalist measures.

Prior to the NPC, a joint report by the World Bank and several Chinese government agencies was unveiled, calling for sweeping deregulation, privatization and break-up of state monopolies. This 470-page document is remarkable not just for its proposals, unlikely ever to be fully realised, but because of the degree of coordination between the World Bank, in which China is now the third largest shareholder, and the Beijing regime. The full title of the report, China 2030: Building a Modern, Harmonious, and Creative High Income Society, gives the game away. The word ‘harmonious’ is a buzzword of Hu Jintao’s and unlikely to have originated from outside of the CCP. Notably, the word ‘democracy’ is not mentioned once in the document.

The conclusions of this document, rightly slammed as a ‘neo-liberal manifesto’ by left commentators, were echoed by Premier Wen in his work report to the NPC. He promised to “break up monopolies” and bring more “non-governmental investment in railways, public utilities, finance, energy, telecommunications, education and medical care”. Wen again pledged greater support for small and medium-sized enterprises (SMEs). A recurring theme at the NPC meeting was the need for tax cuts on businesses and to boost the spending of the middle-class. It remains to be seen how much of this renewed push for economic ‘restructuring and reform’ materialises. But what is clear is that the CCP leaders are deeply alarmed by the real economic situation in China, hidden behind the dazzle of its GDP figures. The debt mountain accumulated especially by local governments since the massive 2008 stimulus package (see chart above – although the full scale of this indebtedness may be much worse than official figures suggest), means they must attempt to break from the current economic model with its crushing dependence on debt-financed investment, which is also creating monumental overcapacity. The crisis in the housing market is one sign of wider problems, with the current value of vacant properties being held by developers and speculators worth over 100 percent of China’s GDP.

The reform camp want to ‘unleash the dragon’ of consumer spending to reduce the economy’s lopsided dependence on exports and investment. But China’s anaemic consumption-to-GDP ratio (far lower than in Brazil, India and Russia) flows from its current economic model, based on low-wage, low-tech and low-profit manufacturing and assembly. To shift away from this model they want to subject the state-owned giants to greater competition from private capital, opening up former monopoly sectors while not relinquishing control fully. The government is considering legalising the underground banks and liberalizing interest rates (allowing banks to set so-called market rates) in order for capital to be allocated ‘more efficiently’ (i.e. where profits are highest). Such classical liberal economic nostrums are the best the current CCP leaders can come up with, despite the evident failure of these ideas in practise everywhere around the world.

These policies are a recipe for massive social unrest, as many NPC delegates openly recognised. To sugar this nasty pill, the government, again echoing the World Bank report, pledges to step up provision of medical insurance, pensions, and other rudimentary forms of welfare, all of which – in theory – should spur more consumer spending. But such promises have been made before, with few real improvements reaching the mass of poor Chinese. It is not the central government, which for example only funds around one-tenth of the cost of the country’s healthcare, but local governments that must fund any expansion of social security and welfare spending. But as we have seen, these local governments are grappling with an unprecedented debt overhang.

Political reform?

When Wen and his supporters speak of ‘political reform’ and this being ‘inseparable from’ economic reform, they are not speaking about elections, freedom of association, the right to strike, or other democratic freedoms. With views not radically different from Bo Xilai and the neo-authoritarian wing of the CCP, the reformers want to preserve the one-party dictatorship, while making ‘improvements’. A gradualist and controlled approach reflects the deep-seated fears of the Chinese elite of ‘chaos’ should the masses be allowed to engage in politics. Their main focus, rather than democracy, is a more independent judiciary (so called rule of law), greater press freedoms, and a bigger role for (approved) NGOs.

The aim of such measures is to exert pressure – by select groups rather than the masses – upon government and government-owned companies to reduce corruption and abuses. Rather than democracy of any description, this is about giving private economic interests greater possibilities to challenge and compete with state-owned ‘vested interests’ and in this way compel the latter to adopt more efficient, market-based, less corrupt, practices. Again, this is a chimera. Capitalist regimes everywhere, of both the democratic and authoritarian type, have shown themselves incapable of using society’s resources in a rational way. If the liberal refomers are right, why are European and US capitalism in deep crisis today?

Beijing’s attempts ahead of the leadership transition to talk up its reform ambitions are therefore clearly linked to the purge of Bo Xilai, and the blow thus delivered to the ‘new left’. Zhang Ming, a political science professor at Beijing’s Renmin University told the Washington Post: “The Chongqing model is also over, and the chance of [China] turning leftward is finished.”

The last part of this statement will be disproved by events, and sooner rather than later, with inevitable and massive leftward shifts among the masses. In contrast to the neo-Maoists who saw Bo’s policies as an alternative to the capitalist policies of the central government, Marxists and the supporters of stress the need for a genuine left alternative. For this we must look outside the corrupt business-dominated structures of the CCP and all its factions. There can be no illusions in either the ‘reformers’ of the Wen Jiabao-Wang Yang School or the authoritarian ‘left’ of Bo Xilai.

An alternative must be built from below and based on mass grassroots struggle, not on the cult of a ‘new Mao’. It must learn from and interact with international workers’ struggles, eschewing the Great China nationalism of sections of the neo-Maoist left. A real alternative requires the building of a fighting working class party committed to socialism and genuine grassroots democracy. This is what the supporters of the CWI are fighting for.

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March 2012