Bloomberg News

Bo Expelled From Party as Leaders Clear Way for Changes

September 29, 2012

Former Politburo Member Bo Xilai

Former Politburo member Bo Xilai was the party chief of southwestern China’s Chongqing Municipality until he was ousted in March. Photographer: Nelson Ching/Bloomberg

Sept. 29 (Bloomberg) --China’s Communist Party expelled former Politburo member Bo Xilai yesterday and said he will face criminal charges, reaching consensus on a murder scandal that roiled the political elite and clearing the way for a once-in-a- decade transition of power in November.

Bo abused his power, bore “major responsibility” in the murder of British businessman Neil Heywood and had improper sexual relations with several women, the official Xinhua News Agency said. China’s Politburo removed him from public office and transfered his case to the judicial system, Xinhua said.

“They’ve thrown the kitchen sink at him,” said Steven Tsang, director of the China Policy Institute at the University of Nottingham in the U.K. The announcement “means the party has a basic lineup for the leadership. It’s a good thing for them. They’ve reached agreement on the succession,” Tsang said.

The decision is part of an effort by China’s leaders to deal decisively with a scandal that embarrassed the Communist Party, saw Bo’s wife convicted of murder and upset plans for a smooth transition of power set for this year. The condemnation of Bo, son of one of the founders of the People’s Republic of China, aims to paint his case as an aberration at a time when the party is trying to bolster its legitimacy amid a widening wealth gap and rising unrest.

In a separate Xinhua announcement, the Politburo decided it would hold the 18th Communist Party Congress, where China’s next generation of leaders will be anointed, beginning Nov. 8.

Party Chief

Bo was the party chief of southwestern China’s Chongqing Municipality until he was ousted in March. He was suspended from China’s Politburo in April and accused of serious disciplinary violations, as his wife, Gu Kailai, was accused in the murder of British businessman Neil Heywood.

Bo’s wrongdoing dates back to his time as mayor of Dalian, governor of Liaoning province and minister of commerce, Xinhua said. It said investigators had “found clues to his suspected involvement in other crimes.”

Gu was convicted Aug. 20 and sentenced to death with a two- year reprieve after she confessed in a one-day trial to poisoning Neil Heywood in a hotel room because she believed he posed a threat to her son as a result of a financial dispute.

A month later, Wang Lijun, the former Chongqing police chief and Bo protege who exposed evidence of Gu’s crime to U.S. diplomats, was convicted on all four charges connected to the case, including bribe-taking and abuse of power. Prosecutors said he tried to cover up the murder.

Wang’s Trial

A Sept. 19 Xinhua account of Wang’s trial recounted how Chongqing’s most senior official slapped Wang across the face when he presented evidence that Gu was involved in the murder. Although Bo was not identified by name, he was the most-senior official in the city at the time.

Bo’s behavior “badly undermined” the reputation of the Party and the country, created a “very negative impact at home and abroad,” and significantly damaged the cause of the Party and people, Xinhua said.

“This outcome shows that for all its attempts to show a better nature, the Party remains at heart ruthlessly focused on power, and absolutely unforgiving to those who are seen as impeding this by making the Party weak,” said Kerry Brown, a professor at the University of Sydney who served as a British diplomat in Beijing.

Slowing Growth

China’s new leaders face a slowing economy and also have to contend with public discontent over official corruption and a widening wealth gap. The economy may struggle to reach its 7.5 percent expansion target this year, according to data from areas including production and exports, compared with growth exceeding 9 percent when President Hu Jintao and Premier Wen Jiabao took power in 2003.

The leadership transition also follows the worst quarterly loss for Shanghai stocks this year. The Shanghai Composite (SHCOMP) Index lost 6.3 percent this quarter, the most since the three months ended December, on concern the slowdown is deepening. The gauge is valued at 9.7 times estimated earnings, compared with the average of 17.9 since Bloomberg began compiling the weekly data in 2006.

Yesterday’s news is “quite positive to the economy and markets for two reasons,” Lu Ting, chief Greater China economist at Bank of America Corp. in Hong Kong, wrote in a note to clients. “One, it will significantly reduce perceived political and economic risks; two, it will help end policy paralysis.”

Family Wealth

Bo’s ouster has focused attention on the accumulation of wealth by politically-connected families. The extended families of Bo and Gu, for example, accumulated at least $136 million in company shares and property, according to regulatory and corporate filings.

At a briefing days before he was ousted, Bo denied that his son Bo Guagua, who attended Oxford and Harvard University’s John F. Kennedy School of Government, drove a Ferrari. Bo Guagua graduated from Harvard with a master’s degree this year.

The severity of the charges against Bo fits a past pattern “wherein the party decided that no one should be portrayed as having elements of both good and evil within them -- they were either wholly devoted to the party and the people or wholly evil and against them,” said June Teufel Dreyer, a professor of political science at the University of Miami who focuses on China. “A domestic version of Mao’s ‘whoever is not with us is against us’ in foreign policy.”

‘Strike Black’

A former commerce minister, Bo, 63, rose to prominence for his moves in Chongqing to boost social spending and state-led financing, and revive songs and slogans from the era of Chairman Mao Zedong. Bo’s crackdown on organized crime, called “da hei,” or “strike black,” was a cornerstone of his tenure.

While in Chongqing, a municipality whose population of 29 million is larger than that of any U.S. state except California, Bo sought to balance the fastest municipal growth rate in the country with measures to stop millions of rural migrants being left behind by China’s industrial boom.

The number of so-called mass incidents -- strikes, protests and riots -- doubled nationwide in the period from 2006 to 2010 to 180,000 a year, Sun Liping, a sociologist at Beijing’s Tsinghua University, wrote last year.

Bo was touted as a possible candidate for the Politburo Standing Committee, the country’s most powerful ruling body, whose new membership will be unveiled at the end of the 18th Communist Party Congress.

Police Chief

Bo’s downfall was set in motion by Wang, who led his battle against organized crime in Chongqing. In early February, Wang fled to the U.S. Consulate in Chengdu, where he outlined to American officials a plot of money laundering, betrayal and murder involving Gu, according to current and former U.S. officials briefed on the matter.

Wen hinted at a rift when he told a briefing in Beijing a day before Bo was ousted as Chongqing party secretary that the city’s leaders must reflect on Wang’s flight to the U.S. consulate. In an indication of deeper ideological differences with Bo, Wen warned of the dangers of returning to the chaos of the 1966-76 Cultural Revolution, which Mao spearheaded.

Bo’s isn’t the first case of a Politburo member to be referred to the criminal justice system. Former Beijing party chief Chen Xitong was imprisoned for corruption following his 1995 Politburo expulsion and former Shanghai party boss Chen Liangyu was sentenced to 18 years in prison in 2008 for taking bribes after he was expelled from the Politburo in 2006.

Chen was replaced in Shanghai by Xi Jinping, the current vice president, who is forecast to take over the top party and government positions within the next year.

To contact Bloomberg News staff for this story: Kevin Hamlin in Beijing at khamlin@bloomberg.net; Michael Forsythe in Beijing at mforsythe@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


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