[Part 1] It is now world news that Bo Xilai, a high-ranking member of the 25-member Politburo of the Chinese Communist Party, has been removed from his key post as Party Secretary of the important Chongqing branch of the CCP.

This move comes as the CCP is preparing to choose a new leadership this fall. Bo had been widely regarded as a clear candidate for the nine-member standing committee of the Politburo. That is now out. This is the first open breach in the Chinese CCP leadership in two decades.

Bo was known for trying to revive the culture of Mao Zedong through many public programs. He emphasized state intervention in the economy and advocated planning for massive low-income housing projects for migrant workers and others, as well as fighting to reduce inequality in general.

Bo has also been known for a fierce anti-corruption campaign in which the masses were encouraged to point out corrupt officials and gangsters. Several thousand people were arrested, among them business people, and many were sent to jail. The highest police official in Chongqing was executed during the anti-corruption campaign.

Bo was removed after an incident in which the subsequent police chief of Chongqing, Wang Lijun, who worked with Bo in a widely celebrated anti-corruption campaign, fled Chongqing on Feb. 6 to the U.S. Consulate in the nearby city of Chengdu and asked for political asylum.

According to Chinese government and party sources, Wang claimed to have documents incriminating Bo. Wang was taken from the consulate, and is now being held in Beijing.

There has been much speculation about Bo and Wang and what happened. Much has been alleged about Bo’s flamboyant personal style, his ambition, a factional struggle within the leadership for position and so on. Perhaps all these factors played some role in his ouster.

But one thing is clear. The imperialists have all taken a position against Bo, and are overjoyed to see his downfall.

To be sure, there is no evidence that Bo was trying to abandon the reliance on capitalism in China’s development that followed the death of Mao. On the contrary, his outlook is fully within the general framework of using capitalism and foreign investment to grow the economy in Chongqing. But within that framework, he emphasized the so-called “third hand,” the need for the state to play a significant role in the economy, to ensure the well-being of the masses and to reduce inequality as a matter of priority.

Effect of global capitalist crisis

It is important to put this struggle in the broader context of the global capitalist crisis and its effect on the Chinese economy and on the political and factional struggle inside China.

The economic crisis in the capitalist world has undermined in a very fundamental way the argument that China should bank its fate and future on capitalist development and the capitalist world market as a foundational strategy.

The collapse in 2007-2009 of the world capitalist financial system and the global market, the ensuing mass unemployment, the wild speculation, the overproduction, the economic dislocation, the flood of bankruptcies, the gyrations of the stock markets and the continuing threats on the horizon must haunt all of China’s leaders and give ammunition to all those who oppose the further unleashing of capitalism in China.

The imperialists and the more pro-capitalist forces in the CCP and the state know this. So they have rushed to fortify their position in the face of the monumental evidence of the failure of capitalism and its dangerous effects in China during 2008 and 2009.

They made their moves just as China’s legislative body was preparing to consider and approve various plans and when the subject of future leadership was under private discussion.

It is significant that the World Bank presented a 448-page document just in time for the 18th National People’s Congress last month, entitled “China 2030.” What makes the public presentation of this document so ominous is that it was co-authored by the Development Research Center of the State Council, the top executive body in China. Liu He, who worked on the document and who meets regularly with U.S. officials, is an adviser to the standing committee of the Politburo who has argued publicly that foreign pressure should be used to push capitalist reforms in China.

To underscore the collaborative nature of the document, the subtitle is “Building a Modern, Harmonious, and Creative High-Income Society.” The term “Harmonious Society” is the slogan of China’s present leaders, President Hu Jintao and Premier Wen Jiabao.

The world was treated to a video circulated online in February that showed Du Jianguo, editor of an environmental magazine in China, disrupting a press conference by World Bank President Robert Zoellick as Zoellick was unveiling his document. In front of the world press, Du stood up and denounced the document as “unconstitutional,” saying it would “subvert the basic economic system of socialism.” Before he was pushed off the platform by security, Du called the bankers’ document “poison” aimed at capturing China’s markets for international capitalists. (Wall Street Journal, Feb. 23)

World Bank’s attempt to promote counterrevolution

This document is part of the background to the factional struggle in China. It represents a firmer and more dangerous nexus between imperialism and the so-called “reform” faction, the more aggressive pro-capitalist faction, in China.

The Executive Summary of the document reads:

“First, implement structural reforms to strengthen the foundations for a market based economy by redefining the role of government, reforming and restructuring state enterprises and banks, developing the private sector, promoting competition, and deepening reforms in the land, labor, and financial markets. As an economy approaches the technology frontier and exhausts the potential for acquiring and applying technology from abroad, the role of government and its relationship to markets and the private sector needs to change fundamentally. While providing relatively fewer ‘tangible’ public goods and services directly, the government will need to provide more intangible public goods and services like systems, rules, and policies, which increase production efficiency, promote competition, facilitate specialization, enhance the efficiency of resource allocation, protect the environment, and reduce risks and uncertainties.

“In the enterprise sector, the focus will need to be further reforms of state enterprises (including measures to recalibrate the role of public resources, introduce modern corporate governance practices including separating ownership from management, and implement gradual ownership diversification where necessary), private sector development and fewer barriers to entry and exit, and increased competition in all sectors, including in strategic and pillar industries. In the financial sector, it would require commercializing the banking system, gradually allowing interest rates to be set by market forces, deepening the capital market, and developing the legal and supervisory infrastructure to ensure financial stability and build the credible foundations for the internationalization of China’s financial sector.”

In other words, the World Bank, with the collaboration of the Development Research Center of the State Council, is recommending that state enterprises be reduced to dispensers of state services and advice, withdraw from the production of infrastructure, steel, energy and other “tangible goods,” and leave that to private capitalists. They further recommend that the banking system be integrated with world imperialist finance capital and that state planning be reduced to a nullity.

In short, they advocate the destruction of the very socialist structures that hold Chinese society together and that have enabled it to withstand the most severe capitalist crisis since World War II.

For a representative of the highest state body to help draft such a counterrevolutionary document, publicly associate his name with it and urge its adoption shows the degeneration of key sections of the highest leadership and, within the broader state apparatus, highlights the pernicious influence of unleashed capitalism in China.

This explains the urgent disruption of Zoellick’s press conference and the push-back that is coming from various quarters in China. This is not to say that the viewpoint represented by the World Bank document will be victorious. There are many forces in China, including the workers and peasants, who would strongly resist any attempt to fully implement this program.

Christine LaGarde, head of the International Monetary Fund, also chose the moment of the National People’s Congress to issue a statement in high praise of China’s economy. This was undoubtedly coordinated with the World Bank presentation of “China 2030.”

The severity of the struggle over the future of China also broke out in the open at the World Economic Forum in Davos, Switzerland, in January.

“A group of Chinese speakers warned in stringent tones on Friday morning [Jan. 27] in Davos that the country’s free-market reform is stalled, and China is sliding backwards towards greater state control of the economy.

“Hu Shuli, editor of Caixin Magazine and widely recognized leader of China’s ‘reform’ faction, launched a breakfast forum by identifying delayed economic reform as one of the two key risks for the Chinese economy going forward, alongside the weakening exports in the wake of the euro-zone crisis.” (Wall Street Journal, Jan. 27) Other Chinese participants agreed.

The world capitalist crisis has brought this struggle on at a crucial time of change in the Chinese leadership. The ouster and public humiliation of Bo, which brought this struggle to light, can best be understood in terms of a struggle over dangerously deepening capitalist reforms. With or without Bo, this serious struggle will continue.

For those who believe that there has been a complete restoration of capitalism in China, this whole matter may seem to be of little importance. But to the workers and peasants of China and to the rest of the world, the question of stopping the further advance of the counterrevolution is of supreme importance.