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How Bo Xilai Governed Chongqing
Today Bo Xilai sits in prison. But before that, he governed one of the biggest cities in the world: Chongqing.
His governance - which lasted from 2007 to 2012 - was a throwback to Mao Zedong. He and his supporters campaigned for it to be a blueprint of China’s future development.
The Chongqing model continues a number of previously initiated policies but also brings its own populist flavors. Behind it, a mix of socialist principles, equality minded Keynesian politics, and liberal land reform.
In this newsletter, I want to talk about it.
Chongqing, the Biggest City
Chongqing is a titanic city. Truly deserving of the name of a megacity. Once located within the Sichuan province, it was uniquely turned into a municipality under direct control of the central government in 1997.
This puts Chongqing on the same level as a province like Guangdong or Heilongjiang. Only four megacities enjoy this privilege in China. Beijing, Tianjin, and Shanghai are the others.
All four megacities have more than 20 million people. But Chongqing is the biggest and most populated of the four, with some 33 million people living in an area the size of Austria or the United Arab Emirates.
Chongqing is huge. The city's municipal space of 82,403 km2 is over twice as large as the entirety of Taiwan. The majority of the area though is not a vast urban sprawl a la Tokyo but instead mostly countryside.
Part of the reason the Party elevated Chongqing to a province-level status was due to the belief that China's inner areas were far less economically developed than the richer coastal areas of the Guangdong and Zhejiang provinces and needed help.
Chongqing's population is deeply unequal. 80% of the whole population are farmers living in deep poverty.
The second big cohort is a huge urban underclass laid off after the restructuring of state owned enterprises.
Any incoming Party secretary needed to make substantial progress in overcoming this challenge. That is what Bo was thinking when he unveiled the Chongqing policy model.
The Chongqing Model
The Chongqing model is a governance style branded by Bo's supporters. It runs in contrast to the Guangdong model, China’s biggest province.
Then at the time governed by current Politburo Standing Committee member Wang Yang.
You can break down the Chongqing Model into several pillars and policy focal points. But the key goal is to narrow the income and prosperity gap between the haves and have-nots of China's economic reform age.
The Chongqing Model, Economics
The first policy focal point is to overhaul the household registration system that existed to separate urban and rural dwellers. This "hukou system" as it is called had previously discriminated against migrants. Migrants to areas where they did not have a hukou were not entitled to benefits like healthcare, childrens' schooling, and more.
The hukou system is a relic of the old Mao era. The new Chongqing model would reform the hukou and allow 10 million rural dwellers the opportunity to participate in benefits previously enjoyed by urbanites.
The second policy focal point is the vast expansion of the public sector to encourage Chongqing-based businesses big and small to invest and build.
Chongqing pushed its state owned businesses to grow their assets and stimulate the city economy. Combined city-owned assets vastly expanded in the 10 years from 2001 to 2010, from $24 billion to $176 billion.
This was done through a variety of financial tricks and accounting wizardry. The city acquired a number of underperforming state owned companies, public utilities, and infrastructure assets from the national bank.
These were placed into what is essentially a city-owned wealth fund and thus could be repackaged as collateral for loans.
The city government also unveiled a micro-business program - looking to offer loans to small businesses. This is crucial as small businesses are often under-banked and under-capitalized despite employing the majority of the Chinese population.
Making it easy for people to own a home is the third leg of the model. The public housing rental program - which appears to be a scaled up version of the work Bo did while he was mayor of the northern city of Dailian - involved the creation of some 40 million square meters of housing. The estimated $10 billion construction of these public housing areas would be paid for by a combination of state and private funds.
Low income people would be able to apply for these homes. And by low income, I don't mean San Francisco low income where they make $95K. I mean, actual low income - farmers, former SOE employees, and broke college students. Rent would be targeted as a $1.50 per square meter.
Third and it seems most importantly, Chongqing leveraged its cheaper labor and manufacturing base to attract foreign investment. Hewlett-Packard, BASF, Acer and Asus all built factories there building products for export.
Throughout Bo's tenure, Chongqing GDP grew faster than the national average. Some part of that can be attributed to central government stimulus money.
Part of that can be attributed to the fact that Chongqing citizens were poorer than the rest of the country so they had more room to grow.
Another part of that can be attributed to the immense amount of money the government was putting into its programs - which also led to titanic budget deficits. Money enabled by weird financial tricks like the ones I talked about above.
Chongqing Model Ideology, Smashing the Black
The marketization of the economy had not only created many market losers and unfortunates, but also a group of corrupt officials and criminals.
This new urban migrant economy had left them vulnerable to the predations of organized crime. Much like America's illegal immigrants, these migrants were afraid to go to the police because of their unrecognized status.
With his police chief, Bo Xilai kicked off his tenure in Chongqing with a massive anti-corruption and anti-organized crime push.
This "strike black" or dahei anti-crime program targeted not just organized crime rings, but also the local party officials who sheltered these criminals - thereby entering into a mutualistic symbiotic relationship with them.
There is great controversy about the targeting and intentions behind this anti-crime program. The state got to keep assets seized by the prosecuted, which to me seems like it can lead to funny situations (but at the same time, Americans have this model too, so that says something about how popular it is with city officials).
All in all though, the anti crime push has been generally popular and appreciated by the city’s citizens - something Xi Jinping seemed to have noticed. Why wouldn’t it be? Who wouldn’t want to see rich guys taken down?
By far, the part of the Chongqing Model that most rang peoples' alarms (especially those who lived through the Cultural Revolution) is the "Sing Red" program. Bo Xilai sought to revive the passion and spirit of the Maoist years. Harkening back to those years, Bo believed, would help bind together the people and teach them traditional Communist values.
Bo Xilai reintroduced the revolutionary songs of the Mao-era. He had the public TV channels, radio stations and newspapers show programming relating to classic Party literature and media. He also asked the Chongqing people to sing those songs.
Bo's critics most deeply focused on the ideological parts of the Chongqing model. But it would be a simplification to say that Bo Xilai sang songs and beat on gangsters for the five years he governed a country-sized city.
What Bo taught the Party
Bo Xilai fell from grace and was removed from power. But there are a few remnants of his work in China's public policies today.
Bo's model is explicitly populist, despite the man not needing to stand for popular election. He used the rules of celebrity politics to fashion himself a man of the common people and essentially campaign for a role on the Politburo Standing Committee.
Xi also has no need to stand for popular election, but he has been a very media savvy politician, and his name has appeared in state media more often than any other leader since Mao. He recognizes the power of celebrity politics even in an one-party state.
The most prominent similarity is the Party’s massive anti-corruption drive. The more the people believe that the rich and powerful are gaining at the expense of the poor, the more likely such feelings of resentment create social unrest.
People noticed just how popular the “strike black” program had made Bo Xilai in Chongqing politics despite the fact that many of the targeted people were Party members themselves. Previous anti-corruption drives saw little publicity as they were seen as causing potential damage to the Party’s overall reputation.
Xi’s anti-corruption drive elevates it to a national level, targeting tigers like Zhou Yongkang and flies like local officials, while refining many of the rough edges from when it was implemented in Chongqing.
For example, the Chongqing anti-corruption drive received a lot of negative publicity for essentially being a “witch hunt” without the proper application of the rule of law. This is an impression that Xi’s anti-corruption scandal has carefully worked to avoid. PR talking points have worked to emphasize that the proper procedures and rules of law are being followed. Of course, PR and reality often differ - but in general the drive has had its intended effect.
Another similarity is reform of the hukou. Recently the Party has announced that it is lifting the vast majority of the restrictions it had once imposed for applying for household registration in large cities. This has been a major step forward in allowing many poorer Chinese the ability to make their home in the urban areas where they work.
The CCP is known for picking and choosing what it felt worked in certain areas. It considers this one of the benefits of its way of governance. It would be distasteful to mention from whom some of these national polices originated, but their hallmark is undeniable.