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Communist Party Princelings Fear Dirty Tricks After Businessman’s Death

The furor over the death of Neil Hayward is seen by some in China as a conspiracy to halt the rise of Bo Xilai. If so, it's got many of the party’s rising stars worried about their own skeletons.

The arrest of former Chongqing party chief Bo Xilai and his wife Gu Kailai is the result of a political power struggle that few China experts foresaw. It shows that despite years of economic reforms, China’s one-party rule political system largely remains opaque and closed off to outside input, foremost from the grassroots that make up China’s nearly 1.4 billion citizens.

The investigation by the party into Bo and Gu, a successful lawyer turned businesswoman, for allegedly murdering British businessman Neil Hayward in November, carries tremendous downside risk for the party down the road, experts say. They add that the investigation also has implications for future power struggles as Bo, the son of Bo Yibo, a leader of the 1949 revolution that brought the party to power, has many allies and supporters within the military and securities organs of China.

A "princeling" — the offspring of a senior revolutionary leader — Bo also has a solid political track record, rising from success in the 1990s as mayor of the northern port city of Dalian to become minister of commerce in 2004, before eventually becoming party chief of China’s most populous city, Chongqing, in 2007. It is also common knowledge in China that Bo is not the only senior party leader who has family members who have leveraged upon a relative’s political clout to create vast wealth.

For instance, it is common knowledge that Premier Wen Jiabao’s wife Zhang Peili is very successful as an equity investor and founder of the China Diamond Exchange, while his son Winston is very successful in private equity. President Hu Jintao’s son Hu Haifeng is successful in the aviation security equipment business.

“With few exceptions, the children of all revolutionary leaders and many Chinese leaders have turned family political clout into lucrative business dealings,” says a Beijing-based investment banker who has done business with many so-called princelings. “In China, all major business deals relate to the Party at some stage and require political blessing.”

Come October, China’s ruling Communist Party will hold its 18th Party Congress, and President Hu is expected to pass the first of his three titles, party general secretary, to Vice President Xi Jinping, himself the son of Xi Zhongxun, who also was one of the leaders of the 1949 revolution.

“No public announcements have been made, but it is well known within the party that former Chongqing party chief Bo made a power play for the top job when he didn’t have adequate support and that he offended many rivals in the process,” says another Beijing-based investment banker with links to the leadership. “He was perhaps too greedy. He would have for sure risen to the Politburo Standing Committee next year and more than likely would have taken over the security portfolio had he not bid to rival Xi Jinping for the top job.”

Nevertheless, Chinese executives with links to the leadership say Bo still retains many supporters who are lying low at the moment. Bo and Gu are being investigated for allegedly masterminding the poisoning of Hayward, who apparently was caught in an alleged money-laundering dispute with Gu. Hayward was a close friend of both Bo and Gu, working with Gu on many international business deals. He met the couple in the 1980s when he first taught English to their son, Bo Guagua, who currently is a graduate student at Harvard’s Kennedy School of Government.

“Many of Bo’s allies want to come to his aid, but they can’t,” says a Beijing-based businessman who has ties to the leadership. “That’s because of the murder charges. It’s common knowledge that many Chinese politicians sleep with girls or are corrupt, but very few have charges of alleged murder against them. There’s not much you can do to help Bo if he really was involved with the murder.”

No one knows for sure if Bo and his wife were masterminds of a murder after a failed money-laundering effort, or if the charges are trumped up in an effort to frame Bo and prevent him from rising into more senior leadership.

A source with high-level ties says the Party “has already decided to take the toughest measures possible against Bo, much tougher than former Shanghai Party secretary Chen Liangyu or former Beijing Party secretary Chen Xitong.”

Chen Liangyu was sentenced to 18 years in prison in 2008 after being found guilty of corruption, while former Chen Xitong was sentenced to 16 years in prison after being found guilty of corruption and having an extramarital affair, which is against Party rules. It is common knowledge that Chen Liangyu publicly challenged President Hu’s rule, while Chen Xitong publicly challenged the rule of former president Jiang Zemin.

Unlike in previous political scandals, both foreign media and even Chinese media are digging into sordid details of Bo’s downfall and are getting away with their investigative reporting without much official censorship.

There is one positive aspect to the Bo and Gu affair, says Victor Shih, an associate professor of political science at Northwestern University. “I think this event has made the underbelly of Chinese politics more transparent,” Shih says. “Going forward, people will not be satisfied with sanitized versions of an event.” Still, no one can say for sure when the allies of Bo may come back with a counterattack. When they do, the public should not be surprised if charges are made against the son, wife or relative of a current or former leader.

At the end of the day, Chinese politicians don’t have a primary system where they openly sling mud against each other in order to garner for votes from the electorate. In China, politicians still resort to the same rules that applied when emperors ruled, says a veteran Chinese investment banker: “Come up with criminal charges against your enemy so he can be conveniently sidelined. This way, you’re sure to rise to the top. Problem is people like Bo Xilai have supporters. They have children with political ambitions and they will seek revenge when the time is ripe.”

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