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Bo Xilai fall shows divisions among China’s leaders

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The Communist Party official’s fate tells us more than the headlines may suggest, argues Charlie Hore
Issue 2300

The British press has been full of lurid stories about Bo Xilai, the Chinese politician who has just fallen from grace.

Much of the coverage has focused on his wife’s possible complicity in the murder of a British businessman.

But his fate tells us a lot more about the state of China today.

Bo Xilai was the Communist Party boss of Chongqing, a province in southwestern China, and very much a high flyer.

Later this year the Chinese Communist Party will hold a congress to announce its strategy for the next five years.

Bo was expected to be one of the nine men picked there for the Communist Party’s leading committee.

He had made a name for himself as a populist, attacking official corruption and harking back to the “good old days” of the Cultural Revolution.

His fall is the biggest public split among China’s leaders since 1989.

In that year, the death of a popular leader triggered a nationwide revolt from below.

It only ended when the army shot several thousand protesters in the centre of Beijing.

Bo is strongly identified with the “princelings”—people who have got to where they are today by virtue of their fathers.

They occupy a great many leading positions inside the Communist Party, industry, the bureaucracy and the army.

They are not a faction in the sense of being united around particular policies, however.

Bo’s fall is more to do with his being overambitious, rather than being about any key policy disputes.

But this has opened up a wider discussion about corruption among other senior leaders, and has exposed very large divisions among China’s upper echelons.

The crucial division is over their future economic strategy.

The Chinese economy is still growing much faster than almost every other country. Yet there are major problems ahead.

The Chinese economy has grown over the last 20 years mainly through producing cheap consumer goods for export to Western economies—especially the US.

Throughout the 1990s and 2000s the economy grew by more than

10 percent a year.

But the economic crash of 2008 showed that this could not last.

The government’s response was to invest massively in building— houses, roads, railways and airports. It spent large amounts to keep factories working and ensure that growth continued.

This has worked, but at a very high price.

China now has a huge housing bubble and local governments have massive debts which they cannot repay.

The economy is still growing but the rate of growth has been slowing for several years.

This trend has been made worse by the collapse of European economies that China relies on.

Most economists think China’s best option for growth is to increase consumption inside the country itself.

There is plenty of room for such an expansion.

In 1983 wages made up 56 percent of China’s GDP (total production), while in 2005 they had dropped to just 38 percent.

The problem for China’s leaders is what effect this might have on an already restive population.

So-called “mass group incidents”—the official term for strikes, riots, demonstrations and other protests—have been on the increase since the 1990s.

Last year there were probably over 100,000—the government no longer publishes figures. This is not a national movement building towards a decisive clash.

Each protest is triggered by a very particular situation, and is mostly limited to the immediate group of people involved.

But the underlying causes—corrupt officials, pollution, low pay—are common to all of China.

There is no telling when one particular incident may spark a much wider movement of revolt.

Bo Xilai was trying to surf that wave of discontent—and has come a cropper.

Some leaders are talking of political reforms to try to channel mass anger, including making strikes fully legal.

But others are worried that reforms could open the floodgates to serious revolt, as happened in Russia after 1989.

They are determined to ensure China doesn’t go down the same path.

The stakes are very high and there are no easy ways out of their dilemma.

Bo Xilai is an early casualty of those divisions. He is unlikely to be the last.

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