Editorial Board

After Bo Xilai, Which Way Is China’s Red Ferrari Headed?

“Seek truth from facts,” goes an old Chinese saying favored by Deng Xiaoping. That injunction should also apply to the story of Bo Xilai, the recently ousted party chief of Chongqing whose fall has become something of a morality tale.

To hear some tea-leaf readers tell it, the high-flying Bo was the creator of the “Chongqing model,” a program that melded support for state-owned enterprises and measures to help the poor with a relentless campaign against crime and corruption and a rekindling of revolutionary fervor. But his zeal in these latter two areas made the authorities in Beijing nervous. When his comeuppance came, it represented a victory for reformist liberals led by outgoing Premier Wen Jiabao, proof that even a “princeling” -- in this case, the son of Bo Yibo, one of Mao Zedong’s revolutionary comrades -- could be brought to heel.

Although no tears should be shed at Bo’s downfall, that narrative is flawed. First, Bo was more an opportunist than an ideologue. To the extent there was a “Chongqing model,” it was largely self-serving: As a big-city mayor and former provincial governor, Bo knew that higher gross domestic product and foreign direct investment were what won attention and plaudits, and he did his best to boost both. He favored state-owned enterprises because that’s where the money was.

Fighting crime and corruption -- something that did not dominate his earlier tenure in crime-ridden Liaoning Province -- were an excuse to confiscate property and resources, and to tar the reputation of Wang Yang, his rival and predecessor in Chongqing. His resort to Maoism was particularly cynical: Bo’s family suffered during the Cultural Revolution, and his son has spent more time on the swards of Harrow, Oxford and Harvard than the pig farms of Zhejiang.

Rather than a story about conservatives versus reformers in which the “good guys” won, the tale of Bo is no different than that of a smart, flashy and ruthless Chicago ward boss who stepped on too many toes in his climb to the top. In fact, if Bo’s police chief had not run to the U.S. consulate last month seeking asylum and telling tales of Bo’s misdeeds, Bo would probably still be in his post, angling for a seat on the nine-member Standing Committee that sets policy for the country.

The real lesson of Bo’s downfall is that the Communist Party as a whole is losing its ability to stay on top of public disaffection with widespread corruption and rising inequality. Bo was able to tap that disaffection to fuel his political ascent (never mind that his own downfall was reportedly precipitated by his effort to quash an investigation of his own family). His popularity testifies not only to the level of public disgust, but also to the possibility of fissures within the ruling elite over the handling of such challenges.

The best remedy for corruption, of course, is sunlight. That’s never been one of the Communist Party’s likes, especially when it comes to corruption and wealth. In fact, a few days after Bo’s demotion, the authorities reportedly censored news of a grisly crash in Beijing involving a Ferrari, a favored ride of nouveau riche princelings (including Bo’s son). News of Bo’s removal was heavily controlled on the Internet, and new regulations have been put into place requiring microbloggers to register with their real identities. As political rumors ricocheted around the Internet earlier this week, they helped to spark the biggest rise in credit default swaps for Chinese bonds in four months.

Not all of Bo’s initiatives were bad. His effort in Chongqing to loosen China’s infamous residence permit system helped poor workers move to find better jobs -- an idea whose broad outlines were endorsed at the National People’s Congress. We can’t speak so kindly of Bo’s embrace of the gigantic state-owned enterprises that have sucked up capital and distorted economic development. Why not get them to channel part of their outsize profits back to the central government, which would enable Beijing to move to a less regressive tax structure and create a pot of money -- 2 percent to 3 percent of GDP -- for use on social programs?

The day before Bo’s defenestration, Wen spoke of the need for political reform -- as he has in previous years, to little seeming effect. Look for deeds, not words. Let’s see if Bo faces charges for his behavior. And let’s see if his predecessor in Chongqing, Wang Yang, who is credited for his deft handling of the uprising late last year in the village of Wukan, is elevated to the Standing Committee this fall. That might actually be a victory for reformers.

    To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net .

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