Foreign Policy magazine recently published an article on Chongqing, Sichuan’s largest metropolis and China’s fastest growing city, as Chicago on the Yangtze. For many Americans, the rise of China, and of huge metropolises which many have never heard of, let alone pronounce, comes as a surprise.
The sad fact is that it shouldn’t have come as a surprise. The rise of China did not happen overnight. To a large extent it was planned, and in some instances, it also took advantage of circumstances. For me, this raises the bigger question of why it should come as a surprise for Americans? Doesn’t the US have a free press, and shouldn’t they know about these things? Or did they just refuse to see, being pre-occupied with other events which seemed more important at the time?
Back to Chongqing. I visited the city in 2007 for several days, and it seemed to me like a mess, growing in all directions but with seemingly not much planning. In 2008, I wrote an article which was somewhat critical of Chongqing’s chances for success. Like many fast-changing industries, it’s easy to overestimate the effects of change in the short-term, and underestimate the effects of change in the long-term when it comes to China.
In the case of Chongqing, the appointment of Bo Xilai as mayor has been politically significant. Previously, Bo Xilian had served as mayor of Dalian, where he had successfully started the modernization of that city, and was then appointed to the Ministry of Commerce, where he also had a successful tenure.
Bo’s appointment to Chongqing is politically significant because it is one of the few cities in China which does not report to its own provincial government of Sichuan; it reports directly to Beijing. Before Bo’s appointment as mayor, Chongqing had a reputation for being rowdy and corrupt, with the police in collusion with local gangs. After Bo became mayor, he brought in many of his own people, some of whom had worked with him at Dalian and at MOFTEC, and proceeded to clean up. Corrupt officials were tried, and in a few instances, executed, including the former chief of police. There could be no mistake; this was no cosmetic cleanup, this was the real thing. In Chinese politics, one of the ways a politician establishes a tough reputation is to have someone who was part of the old order tried and executed. This shows that the politician is a “tough guy” and will not compromise. Even more, it means that the corrupt old guard won’t come back, and if they try, it will literally be a fight to the death. When this happens, support for the ancien regime usually collapses.
There have also been reports that Chongqing plans to introduce a property tax, which would be a first in China. While there has been widespread discussion about the introduction of property taxes in China, it is politically difficult to do so, especially in the major cities of Beijing, Shanghai, Guangzhou and Shenzhen, which like Chongqing, are direct municipalities which report directly to the central government. Unlike Chongqing, they do not have a mayor who was given a free hand to clean up, and tried, jailed or executed the former clique which ran the city.
Bo Xilai is widely known to be politically ambitious, and there has been discussion that he may want a seat on the Politburo’s Standing Committee of the Chinese Communist Party. Looking at it now, there are two ways it could go: he may be quickly appointed to the Politburo Standing Committee and go back to Beijing, but another scenario which may be more likely is that he is being asked to introduce the property tax in Chongqing and make it a success before being asked to take a major leadership role in Beijing, which may be higher than the Politburo Standing Committee role. If Bo Xilai can make a success out of the introduction of a property tax in Chongqing, and then goes to Beijing in a major role in the central government, he would be in an ideal position to introduce the property tax nationwide.
In all of China’s cities, the major developers have a tight relationship with municipal governments, and their resistance to a property tax makes implementation virtually impossible. But Bo’s actions in Chongqing show that he means business, and that he has the team to make things happen.
In another article, I talked about how the Chinese government liked to try new policies on a trial basis. For Chongqing and Bo Xilai, it is an ideal place to try and experiment to do new things in new ways.
For businesses, it is often wise to ally politically with a rising star. Chinese pay attention to timing; it not only matters that you ally with a rising star; what is even more important is when you ally with them. Chinese government officials give special preference to companies which came to China when it was dirt poor, and when western countries had sanctions against China. These companies are generally considered to be “old friends of China” and tend to be given special preferential treatment on an unofficial basis. The later you come in, the less special you are.
If you company comes to China now, they will look at it purely in terms of how much investment money and technology you bring in, and then they will negotiate the degree of market access you get. This is of course, a generalization, but you get the idea.
The same goes for individual politicians who are rising.
The Chinese definitely prioritize their friends, and if you’re smart, you’ll know where you stand in that priority.