China's war of the oligarchs
THE death of an Englishman in Chongqing has acquired all the
intrigue of a John le Carré novel, with none of its charms.
Despite the occasionally romantic descriptions of the
disgraced leader Bo Xilai as a charismatic man of the people challenging the
prerogatives of Beijing's bureaucratic leadership, this is a story without
heroes in which no one's hands are clean.
For all the elements of murder, mystery and missing fortunes
occupying the Western press, in China today the focus of the country's
political and economic leaders is on the cascading power struggle that is in
progress and what it holds for the future management of the world's
A year of leadership change that should have been defined by
a smooth, almost seamless transition is instead shaping up to be a turning
point in the direction – and ownership – of the political economy of China.
Two years of plotting, positioning and manoeuvering on the
part of tens of thousands of party officials have been thrown into disarray by
Bo's fall, with few now confident of where their allies and masters will find
themselves at the conclusion of this upheaval.
Combine this with the unresolved elite debate about the
cause of China's economic miracle – the process of reform and liberalisation,
on the one hand; or, on the other, the still-powerful grip of the state on the
means of production – and what you have are all the elements of a perfect storm
for the Chinese Communist Party.
Beneath the past month's surface impression of a resilient
party able to manage with speed – and unprecedented candour – the exit of one
of its princelings, two visions of China's future are battling it out more
fiercely than ever, in Beijing and throughout the provincial capitals.
On one side is a movement often but inaccurately described
as "neo-Maoist", led by Bo Xilai's faction and dedicated to
maintaining the dominance of the party in the service of the masses left behind
by the rapid growth in the major cities.
On the other, closely identified with outgoing Premier Wen
Jiabao is the faction dedicated to accelerating economic and political reform
designed to ensure long-term sustainable growth. What they share, rhetorically,
is a commitment to addressing rapidly widening income inequality.
What the factions share, equally, is a reputation for
corruption and family privilege of immense proportions at their leadership
What to date has distinguished China's rise from, say,
Russia's, has been a generation-long elite social compact where the wider
interests of the state enjoyed at least equal priority with the personal
financial interests of those guiding it.
The danger is that an oligarchy – however discreet,
distinctive and still grounded in the party's programme – will tip the balance
of decision making decisively toward an irreversibly corrupted political
It is one thing for technocratic managers faced with the
immense challenge of guiding China towards a consumption-based economy to make
errors of capital allocation in good faith.
It is quite another if, for example, the 10th commercial
airport in Shanghai is built because a princeling member of the leadership
stands to gain a personal fortune from the investment.
To this pivotal question, the answer does not lie in which
faction of the Politburo – Wen's or Bo's – prevails. Yes, China must continue
to integrate itself carefully into the global economy.
What will matter far more, however, is to prevent the
capture of the state by leaders devoted more to their own and their families'
interests than those of the hundreds of millions of Chinese still living in
In the meantime, the struggle for power is paralysing
decision making across a vast range of centres – even to the extent that some
observers now believe it to be contributing to the economic slowdown in ways
that are outside central control.
China's leaders know what they don't want – Western-style
liberal democracy. They remain profoundly unresolved about they do want by way
of a central organising principle for their state.
In the absence of decisive leadership, the vacuum is in
danger of being filled by the acquisition of oligarchical power that will be
extremely difficult to reverse.
A deeply consequential reordering of Chinese politics has
begun – and the path to a new equilibrium will be defined by a struggle for
personal power and privilege as the vision of the ultimate destination.
For investors, diplomats and analysts accustomed to weighing
endlessly the quantitative evidence of a hard or soft landing for China's
growth story, this is the "landing" that ultimately will matter.
* Nader Mousavizadeh is CEO of global analysis and advisory
firm Oxford Analytica. Previously, he was an investment banker at Goldman