Tracing the Sources of Bo Xilai’s Family Fortune

With allegations that former Chongqing party secretary Bo Xilai’s wife may have planned the murder of British associate and friend Neil Heywood when he threatened to reveal the extent of her overseas assets, journalists are trying to parse together exactly how much Bo and his family are worth. Bloomberg has an extensive report looking into the finances and lucrative positions of Bo’s extended family, including his son from his first marriage:

Li Wangzhi, who had joined Citigroup after earning a master’s degree at Columbia University, was the first son of Bo Xilai, according to two schoolmates of Li and repeated on an online publication affiliated with the Ministry of Culture. Extended family members of Bo, then commerce minister and now ousted Chongqing Communist Party boss, have also had positions in such firms as alternative-energy company China Everbright International Ltd. (257), according to data compiled by Bloomberg.

While the accumulation of influence is commonplace among relatives of politicians worldwide, the Bo family fortune of at least $136 million may fuel perceptions of corruption in the Communist Party and deepen social tensions over China’s widening wealth gap. The party has sought to cordon off from politics the investigations of Bo and his second wife, arrested on suspicion of murder, with an official commentary stating that the inquiry is solely a matter of law.

“The danger for them, the Chinese, is that the whole of the Politburo and their Central Committee colleagues will be exposed as a new property-owning class,” said Roderick MacFarquhar, a Harvard University professor who focuses on Chinese politics. “It’s already got out of hand. The problem for the regime is that it is now out in the public sphere.”

Bloomberg earlier reported on the extensive business empire run by the sisters of Gu Kailai, Bo’s wife. Government investigators have been dispatched to Hong Kong to look into the family’s wealth, AFP reports. As the Hindu reports, the Communist Party is focusing on the corruption angle of the case to divert attention from reports of Party infighting:

Reflecting concerns that the purge of popular and influential Politburo member Bo Xilai could trigger divisions within the party, the CPC has launched in recent days a massive propaganda campaign, using both official media and microblogs, to mobilise public opinion against the charismatic Chongqing party secretary who was suspended for “serious discipline violations”.

The commentaries have been seen as an attempt to present the Bo Xilai case as a clear-cut corruption issue and not, as widely believed, a reflection of factional political infighting. The message is that the party is serious on cracking down on corruption.

“The government is saying that this is a corruption fight, and not a political struggle,” Qiao Mu, Director of the Centre for International Communication Studies at Beijing Foreign Studies University told The Hindu in an interview. “The problem is,” he added, “few people believe that”.

Back in Chongqing, abundant government spending during Bo’s administration has left the city heavily in debt, the Wall Street Journal reports:

“I don’t think it would be a stretch to say that Chongqing local government, state-owned enterprises and state-owned developers collectively owed 1 trillion yuan at the end of 2011,” says Victor Shih, an expert on China’s local-government debt at Northwestern University. That estimate, based on Mr. Shih’s own look through the records of Chongqing’s financing vehicles, would put local-government debt in Chongqing at 100% of gross regional product, far higher than the 22% level for China as a whole, according to numbers from China’s national audit office.

Chongqing, a smoggy city straddling the Yangtze and Jialing rivers, isn’t the only Chinese city to take on heavy debt to build roads and other infrastructure in a bid to energize growth.

But the city’s situation illustrates the tough choices facing the world’s second-largest economy after the U.S.’s, as many analysts and even some Chinese leaders warn that the nation’s traditional reliance on big government spending could leave its economy dangerously unbalanced and open to corruption. China is looking for way to increase domestic consumption to lessen its dependence on investment and exports.

Read more about Bo Xilai via CDT.

April 22, 2012 11:02 PM
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