Bo Xilai for Chongqing?

October 25, 2007 Posted by China Briefing Reading Time: 4 minutes

BEIJING, Oct. 25 – With the world’s media and China political reporters covering the 17th National People’s Congress this past week, much has been made of the new-look Poliburo Standing Committee and its four new members. Two of them, He Guiqiang and Li Keqiang are known personally to Dezan Shira & Associates – the firm spends a lot of time with senior Chinese government officials as can be seen here. However, the story that is doing the rounds at Beijing’s elite business clubs, such as the prestigious Capital Club, is what has happened with Madame Wu Yi and current Minister of Commerce Bo Xilai. Both have been somewhat noticeable by their absence from the usual political rhetoric that most of the press picked up on.

Madame Wu Yi, known for taking on much of the country’s problems and dealing with them head on – such as correcting the near fatal stalled attempt to secure WTO status at the near conclusion of the accession talks and taking over the Ministry of Health during SARS – is retiring, so no surprises there. She will, however be sorely missed as a charismatic leader and the sole female member of what has always proven to be a somewhat gray and ultra-conservative leadership when it comes to dealing with international issues. She was in fact named as the “second most powerful woman in the world” by Forbes magazine earlier this year, but her star will wane as she looks forward to a quieter life.

However, the next steps for Bo Xilai, current Minister of Commerce and long considered a potential future premier, have been overlooked by the media in the wake of the “apparent” choices of either Xi Jinping, the current Shanghai Communist Party Secretary, or Li Keqiang, Communist Party Secretary of Liaoning Province. Both have been widely tipped as the next Premier, with Bo Xilai somewhat pushed to the sidelines, by the media at least.

Dezan Shira & Associates doesn’t usually comment (in public, anyway) on political matters in China, however we are well connected as a firm (it is why I am based in Beijing) and have long had relations with the most senior officials. This stems from the very early days of the practice and a concerted (and successful) attempt to get to know, on a national basis, China’s provincial governors and city mayors. That has been immensely useful to our clients in obtaining the ability to know which door to knock on when a foreign direct investment issue needs to be addressed on behalf of a client, or to understand and clarify various issues concerning national policy over FDI. Many of those have retired, or moved on, however our annual series of meetings and relationships now run 13 years deep. However, on this occasion we feel Bo Xilai has been somewhat overlooked as the Chinese reporters try and second guess the next leadership in order to try and ascertain who to cosy up to next in the arcane world of Chinese guanxi.

Minister Bo, himself a protégé of Madame Wu Yi, has an interesting background. His father, Bo Yibo, was one of the Party elders and a highly respected Chinese politician, and Bo has always enjoyed an image amongst foreign businessmen in particular as someone you could deal with. His rise from mayor of Dalian (when we first met, over twelve years ago – see photo) was followed by promotion to provincial governor for Liaoning province, and from there to Minister of Commerce in 2004. It was Governor Bo, as he was then, who directly asked me to establish Dezan Shira & Associates in Dalian, with there being no foreign invested China legal or tax consultancy in the city at that time. Yet his presence this year in political commentary has been slim.

Back at the Capital Club this week, where Dezan Shira & Associates have long been members, the movers and shakers, occasionally joined by various members of Chinese government think tanks close to Zhongnanhai, the seat of China’s political power, had much to talk about Minister Bo. Bo Xilai is a little unorthodox in terms of his background. While China’s leadership is generally made up of engineering graduates, Bo Xilai graduated in journalism. Still young (58), he also has no experience at the real test of Chinese political maneuvering – a position as a Communist Party Secretary. Such roles rank at ministerial level and are superior to those held by city mayors and provincial governors. Minister Bo has also been promoted this week, in a little noticed move, to the Communist Party’s elite decision making body – the Politburo itself. This is likely to bring an end to his tenure as Minister of Commerce, and talk around the Capital Club is that he will be moved instead to Communist Party Secretary of Chongqing, a powerful and politically strategic city in Western China – long the making of Chinese leaders. If that happens, and FDI follows into China’s inland regions as a result – as Minister Bo has so long said is vital for China’s development – then a future tilt at the Premiership may not be ruled out.

Delivering in Chongqing would be a major feather in Bo Xilai’s cap – the city currently runs a deficit of close to US$2 billion per annum, and the Central Government are desperate to both reduce this and get the Central and Western regions moving ahead in their economies. Currently they lag behind and are beset by logistics as well as old Communist monopolies that hinder competitive development. At Dezan Shira & Associates, we believe that Bo Xilai will be installed as Chongqing Party Secretary by next April, and I am expecting another personal request – “Chris – please get over here and open an office.” So much so that we’re making plans for doing just that right now, because in China, you follow where your mentors lead, and we believe Chongqing is the next in the spotlight. China’s Go Inland campaign which we wrote about here may just finally get the impetus it really needs.