The Bo Xilai case has brought to the forefront China’s unique model of economic development; namely, the political scandal has exposed to the world the very different philosophical strains driving Chinese politics, a stark contrast to the heretofore monolithic image the Chinese Communist Party has managed to present thus far. State-directed development influenced by socialist tendencies versus a more free-market approach are the two archetypes struggling for primacy within the Politburo, and Bo Xilai was a champion of the former – appropriately called the ‘Chongqing model.’

Chongqing’s city center is filled with massive apartment complexes built specifically for the urban poor using state funds. Such public works were a marquee of Bo Xilai’s big tent style politics that sometimes emphasized style over substance, particularly with regard to his revival of ‘red era’ Maoist songs from the Cultural Revolution. While outwardly projecting the persona of a dedicated communist ideologue, Bo and his wife, Gu Kailai, were anything other than that. She was a lawyer and their son was sent to Harrow, Oxford, and now attends Harvard. ‘Red era’ songs, while politically expedient, are not personally pertinent with regard to Bo Xilai, a man very much given to excesses and hypocrisy if rumors of his downfall are to be believed.

The ‘Guangdong model’ emphasizes economic liberalism and pragmatism in economic decision-making. The purge of Bo from the Politburo signals the end of one struggle between these two camps but does not signify the end of debate about China’s future direction.

The ‘Chongqing model,’ in spite of Bo Xilai’s controversies, has turned out impressive growth numbers for China’s economy. The fastest-growing province, Chongqing’s numbers under Bo’s administration cannot be denied. While liberal critics deplore the revival of Maoist, Cultural Revolution songs, many nonetheless appreciate the considerable level of domestic stability Bo has brought to the table. His crackdown on organized crime, coupled with his championing of state-owned-enterprises (SOE) have endeared him to the local population.

There is a reluctance to openly criticize Bo and his policies for fear of touching off a general wave of criticism against the party and officials in general. Wang Yang, Bo’s predecessor, rightly is given credit for initiating many of the policies that Bo merely continued. Wang is expected to assume a spot on the coveted Standing Committee of the Politburo while Huang Qifan, economic strategist under both men, will continue in his post in Chongqing.

Criticism that Bo was an opportunist rings loudest among political circles. As established earlier, Bo’s reputation as communist ideologue does not match with his real actions. While Bo admired SOE’s, private-ownership grew six-fold between 2003 and 2009.

SOEs contribute considerably to the municipal bottom line with estimates ranging from 15% to 20% of profit being transferred to the state. Huang Qifan has described rates that are the highest in China which has allowed Chongqing to keep up a 15% business tax rate as opposed to 25% elsewhere.

Maintaining such spending either requires robust, consistent growth or the eventual burden of state debt. Indeed, many question how Chongqing can support such levels without eventually adding massive levels of debt in the future.

[The Economist]