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Angus Nicholson

Chavez and Bo Xilai Gone: Death of a Political Model?

Credit: Flickr/atphalix

This article also appears in ChinaFile, a Tea Leaf Nation partner site.

Venezuelan president Hugo Chavez’s death on March 5, 2013 came in the same week as the “Two Sessions” began in China, when China’s national legislature meets in Beijing. It was also almost exactly a year since the spectacular political demise of Bo Xilai, the former party boss of the Chongqing municipality in China.

Both Chavez and Bo are prototypical examples of the strongman leftist leader, who pandered to the masses at the expense of economic sustainability, and cultivated polarizing cults of personality around themselves. The policies adopted under Bo Xilai’s Chongqing Model and Chavez’s Bolivarian Revolution bear remarkable similarities in many respects and provoke some powerful questions as to whether these models are sustainable, repeatable, exportable or desirable.

The True Believer

Credit: Flickr/DonkeyHotey

Chavez stormed to power on a wave of popular sentiment. He was a representative of the negro e indio (Black and Indian) masses, a challenge to the privileged classes that called themselves “Spanish.” He promised to confront the powerful interest groups of the Western oil companies and the wealthy elites. He quickly nationalized large tracts of private sector assets, including energy, farms and banks. His attacks on the private sector collapsed Venezuela’s middle class from 21% down to 3%. And when the big Western oil companies ExxonMobile and ConocoPhillips refused to agree to his tax increases he took the majority stakes in their crude projects in the Orinoco. He also took firm control of the state petroleum company PDVSA. While these antics scared off foreign investment, he gained full control of Venezuela’s petroleum sector, which supplied 50% of government revenues and accounted for 90% of foreign currency inflows.

Chavez used this money to fund ambitious social welfare programs focused on the poor, bringing education, healthcare and new housing to the slums. He also undertook a large number of construction projects funded through state investment corporations like Fonden, which accounted for one-third of all investment in Venezuela and had absorbed US$100 billion of oil revenues since 2005. This boom in public spending climaxed during the run up to his presidential victory in October 2012 when he announced a plan to build three million homes by 2018. According to Bank of America-Merrill Lynch, government expenditure rose 30% in real terms as a result over the 12 months leading up to the election.

The Opportunist 

Bo Xilai, in contrast, was probably less of a “true believer” than Chavez. Bo came from Chinese Communist Party aristocracy. His father, Bo Yibo, was one of the Eight Immortals who ruled China under Deng Xiaoping. During Bo Xilai’s rise to political prominence as party boss of Liaoning and as the commerce minister he never showed any particular penchant for the extreme leftism for which he was later known.

Bo’s leftward turn in Chongqing was likely born of political desperation. Given his need to aggressively campaign for a seat on the Politburo Standing Committee in 2012 or even to unseat Xi Jinping and Li Keqiang from their positions as heirs-in-waiting, Bo realized the political expediency in associating himself with the increasingly influential “New Left” theorists such as Wang Hui, Cui Zhiyuan and Wang Shaoguang.

Bo, like Chavez, recreated an old class enemy, but rather than targeting the extractive oil companies his focus was on the private sector entrepreneurs – the new “bourgeoisie.” A number of commentators believe his “dahei” Campaign targeting local mafia was a way to clear out the local power base that might stand in his way to promotion. It also allowed for an incredible scale of corruption. According to the estimates of Li Zhuang, a lawyer persecuted under Bo Xilai, likely over RMB 100 billion in assets was confiscated from private sector entrepreneur’s accused of being gang bosses during the crackdown, yet only RMB 930 million is registered in the state treasury.

Under Bo, rural peasants were reimbursed for their land at well below market rates and moved into large public housing estates of questionable quality. These huge tracts of land were loaded up into Chongqing’s local government financing vehicles (LGFVs). The government then exploited their control of the property market to ensure continued price increases. Large amounts of loans from state banks were taken out using the highly questionable projected increases in land values as collateral. The LGFVs then funded the rapid construction of infrastructure, public housing and a number of prestige projects, such as Bo Xilai’s expensive gingko tree planting campaign and the Mao-era rallies of his “sing red” campaign.

Death of the Leftist Strongman Model?

Chavez’s regime achieved some stunning growth numbers on the back of record oil prices and confiscation of private sector assets – such tactics boost growth numbers in the short term, but over the long term the foreign capital and private sector were scared off and did not produce new assets that could be confiscated.

Corruption was also rampant during Chavez’s reign. The primary state development fund, Fonden, spent hundreds of millions of dollars on half built or unfinished projects including a paper mill, aluminum factory and a fleet of unused buses, as well as an undisclosed annual US$10 million payment to the president’s office. Venezuela’s battle with an over-valued currency led Chavez to engage in a series of dramatic devaluations. This, coupled with huge amount of oil money being poured into the economy, had led to Venezuela’s inflation rate to be consistently above 20% and destroying the possibility of low-level entrepreneurship. The combination of inflation and high government spending with Venezuela’s strict currency and capital controls has also led to an expanding deficit of 9% in 2012. In an interesting parallel to Bo’s Chongqing, the deficit led the Venezuelan government to increasingly rely on loans from the China Development Bank (CDB), with the CDB lending them US$42.5 billion over five years. Venezuela’s debt is now ten times higher than it was a decade ago, at 50% of GDP. This still compares favorably to the EU’s average debt in 2012 at 82.5%, but it means imminent problems if this rate of debt growth were to continue.

Similarly, Chongqing’s stellar GDP growth over Bo Xilai’s term was heavily financed by fixed-asset investment, of which the majority can be attributed to the big eight LGFVs and their accumulated debt doubled to RMB 345 billion in four years. The Chongqing government was also running a budget deficit of 10% in 2011.

The dire straits of Chongqing’s finances were thrown into sharp focus when only a week after Bo Xilai’s dismissal the local NDRC and finance bureau jointly issued an “urgent notice” for the city to “clean up” government investment projects. Then only three days after a new party boss was appointed in November 2012, he announced a new investigation into local government and LGFV debt.

The highly expensive construction and development projects under Bo and Chavez depended on short-term financing options, such as peak oil prices and a property bubble. Also, despite these convenient funding avenues their regimes still accumulated incredibly unsustainable growth of debt rates.

The populist policies of both Chavez and Bo garnered great public support, and for a short period of time showed success in a number of key development metrics. But the resurrection of the private sector as a class enemy under their regimes did serious damage to the institutions that create the structures for a sustainable path out of poverty beyond subsistence.

 

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Angus Nicholson

Angus reads Chinese and Economics at the School of Oriental and African Studies, and is writing a dissertation entitled 'The Chongqing Model: Lies, Debt, Graft and a False Start to a New Left Utopia.' He is a fan of baijiu cocktails, and managed to read quite a lot of Hao Ran's "The Golden Road" before losing his mind. You can follow him on twitter at @freescania.
  • mikeygow

    “Bo realized the political expediency in associating himself with the increasingly influential “New Left” theorists such as Wang Hui, Cui Zhiyuan and Wang Shaoguang.”

    I think you’ve got to go back and re-read all of these theorists and well-respected New Left thinkers. Their views are works of academic rigour, a world away from the political grandstanding and frankly vacuous promises of Bo Xilai, who it would appear was a quite vile narcissist and megalomaniac.

    Putting Bo in the same sentence as Wang Hui is kind of like comparing Oswald Moseley to Milton Friedman. I would certainly be very careful about drawing parallels in your dissertation between Bo Xilai and the New Left scholars. They are practically mutually exclusive.

    • http://twitter.com/freescania Angus Nicholson

      I didn’t say they are one and the same, I said he saw the benefits of associating himself and his model with their work. All three of them expressed support for the Model.

      You’re welcome to read Wang Hui’s piece in the London Review of Books, where he states his conspiracy theory around Bo Xilai’s purge, “The question here is
      whether there is a single intelligence at work, or a network of forces
      collaborating to bring about a particular result.” http://www.lrb.co.uk/v34/n09/-wanghui/the-rumour-machine

      You can read any number of Wang Shaoguang’s numerous papers praising the Chongqing Model. Here is just one http://www.usc.cuhk.edu.hk/PaperCollection/Details.aspx?id=7985

      And Cui Zhiyuan is the least defensible. He was selected especially for his journalistic background in order to publicise and market the model as part of Bo Xilai’s campaign for promotion. He was on the payroll of the Chongqing government explicitly advising them, and you can read any of his numerous articles on the model on his website http://www.cui-zy.cn/

      • mikeygow

        Hi Angus,

        I’m extremely familiar with the work of all three scholars. More than you’d probably think.

        My post wasn’t meant to provoke an argument, merely to question the claim that Bo Xilai was aligning himself with these scholars and their work. I simply do not believe that this was or has ever been the case. Bo Xilai was interested primarily in mobilizing support at a popular level, which he hoped would insulate him and strengthen his position. It had, it transpires, quite the opposite effect. Several prominent China scholars, including Jeff Wasserstrom at UC Irivine, have openly questioned the wisdom of such a strategy in a political system that values conformity. Bo had very little theoretical/marxist philosophical underpinnings for the Chongqing model, and while Wang Hui does himself no real favours arguing the conspiracy theory, he is an academic and New Left scholar: that he wrote those articles is entirely in keeping with his scholarly persona going back to the 90′s.

        Wang, Wang and Cui have all published various pieces on the Chongqing model, but this does not constitute evidence of a New Left academic school finding a political voice in Bo Xilai.

        Wang Hui’s work on the Chongqing experiment is largely reflective and raises important questions that, regardless of whether you agree with them, have remained unanswered (maybe after the NPC). I’d also argue that, while Wang Hui’s analysis might seem far fetched, he is amongst the most qualified to comment on this and rather than dismiss him on the basis of one’s own political opinion, it would be wiser to listen to his concerns and acknowledge them as valid questions.

        Cui’s work on CQ is also largely analytical. The greatest criticism that can be launched against Cui is his rather poor understanding of the complexities and nuances of Gramscian theory of hegemony. He argues that Bo was engaged in a process of developing large scale support, but confuses populism with deeper more structurally-inscribed dispositions that constitue hegemony in the Gramscian sense. Your statement that Cui was being paid by the Chongqing government may well be true, but it is extremely common practice for prominent university Professors to sit on municipal, provincial, ministerial and state council advisory committees to guide party policy at the local and national level. It by no way proves he was an advocate of Bo’s policies, though we can be assured that Cui is a left-leaning scholar. But the two issues should not be conflated: just because a New Left academic engages in academic discourse on an emerging socio-political-economic innovation, does not mean he is advocating the policies or actions of that politician. Your comment on why he was selected and that his comments are “the least defensible” is also a tacit indication that you oppose the New Left scholars on more than the level of academic debate.

        As an academic, I think we need to be very clear on what the role these scholars play. We are supposed to discuss ideas and contribute to knowledge, as far as is possible resisting the temptation to take a normative opinion, that is, to view the world how it might change, rather than how it should be. That includes getting involved in policy discussions with governments, but does not mean we would always back the resulting policy.

        My main reason for commenting was that, while I think your topic for your dissertation sounds extremely interesting and I liked your article on Chavez vs Bo, you need to be extremely careful in your choice of phrase especially when making claims about academics. If you make claims like this and it lands on the desk of a 2nd marker with loyal affectations for Wang Hui or Cui Zhiyuan or Wang Shaoguang (and there are a lot at SOAS), they may take issue with the same apparent conflation that I have. Just friendly advice, thats all.

        One thing I would like to ask is, you mention that CDB loaned Venezuela US$42.5bn. Can I ask where these figures come from? I thought CDB was for national infrastructure projects only, with CIC providing overseas investment. Would be happy to be proved wrong.

        I’ll look forward to your next post.

        • http://twitter.com/freescania Angus Nicholson

          Well I cited the BBC piece where i first read that information about the CDB http://www.bbc.co.uk/news/business-20795781 but there is also a more in depth Bloomberg piece I can point you to http://www.bloomberg.com/news/2012-09-25/china-development-bank-lends-venezuela-42-5-billion-since-2007.html.

          I don’t want you to think that I’m saying these New Left scholars should not be analysed on their own merit quite separate to the Chongqing model, of course they should. I think they do provide some compelling and thoughtful analyses on China’s development, and their works are mandatory reading if you are at all interested in the contemporary Chinese public discourse. However, I am making an argument similar to that made by Shanghai Normal University’s Xiao Gongqin (http://www.21ccom.net/articles/zgyj/ggzhc/article_2012101469071.html) that many in the Chinese left did themselves a disfavour by too strongly associating themselves with Bo and his model. Such that they were left leaderless when he was purged. Thus, you have noted left intellectuals like Wang Hui, Chun Lin and Zhao Yuezhi arguing that it was an “alliance of a Communist
          leadership, rightwing anti-Communist factions inside and outside China
          (including Falun Gong), and western governments and press – a phenomenal
          example of 21st-century postmodern politics.” (http://www.guardian.co.uk/commentisfree/2012/apr/22/china-leaders-cracking-down-chongqing-xilai)

          I think the “New Left” provide a very important voice in China, but I don’t think there has been much contrition on their part for supporting Bo and the many gross excesses of his policies. In particular Cui, who was intimately associated with the model and its explication. If you read his paper, “Partial Intimations of the Coming Whole: The Chongqing Experiment in Light of the Theories of Henry George, James Meade, and Antonio Gramsci,” his role as publicist becomes quite clear. It simply takes policies already in existence in Chongqing and argues they have a deep history in Western political discourse, despite Bo and Huang Qifan being in complete ignorance of those theorists he invokes. And I would certainly agree his defence of the “sing red” campaign by invoking Gramsci is incredibly weak. If you read Philip C. C. Huang’s article in the same edition of Modern China 37, no. 6, he also clearly states that Cui is living in Chongqing and advising the local SASAC, also documented in Jamil Anderlini and John Garnaut’s investigative pieces.

          I appreciate your comments, but I fully stand by my statement that Bo, after losing out in the 17th Party Congress, purposefully tapped into the rich intellectual theories of the New Left in his design and publicisation of the Chongqing Model. His model may well not have been a true reflection of their ideals, but they nonetheless lent their support to it. And in light of its many failings, they have been lacking in much contrition. If this continues they risk being hijacked by the far more extreme leftist views of Han Deqiang or Zhang Hongliang who would like to deify Bo as a leftist matyr http://www.reuters.com/article/2012/08/21/us-china-politics-chongqing-idUSBRE87K03S20120821

          • mikeygow

            Hi Angus, Thanks for the reply. I wasn’t aware that CDB lent money overseas. Apparently they set a new overseas investment division in Dec 2011, but looks like they have been doing so for some time on an ad-hoc basis (Australia being a main recipient).

            I have to reject your claim in the last statement that Bo purposefully tapped into New Left thinking – he invoked Maoist populism in a cynical attempt to direct attention away from his other activities including extra-judicial punishment of opponents, forced acquisition of business interests and the dubious use of state apparatus. None of these aspects are features of New Left thinking. Neither is Maoism, which Wang Hui himself argues was a failure and an anti-modern philosophy of modernization. He also argued it was largely a failure.

            While Huang (academic) and Anderlini & Garnaut (mere journalists – I like Garnaut, but he himself has been questioned for some opaque practices and contentious articles about the Wenchuan quake – albeit by the anti-anti-China contingent) have used the fact that Cui worked for SASAC to infer a conflict of interests.

            Firstly, Cui himself, in the very article you cite (Partial Intimations…..), includes two declarations that no conflict of interest existed or remuneration/funding was received for the article (a standard inclusion). Secondly, and more importantly, Cui includes a footnote in that very article stating that he is currently on leave (possibly sabbatical) from Tsinghua, and is Asst Director of SASAC in Chongqing. So the source for Garnaut, Huang et al’s “revelation” is Cui himself and they make highly dubious inferences that this implies a conflict of interest without reporting the crucial fact that they got this info from Cui’s own article. They seed a cynical thought in the minds of their readers and then do nothing to stop speculation based on partial information.

            Two other important points should also be clarified: (1) as a Professor, Cui Zhiyuan can take sabbatical leave to work on research projects; (2) this will likely have been either a sabbatical, where he is continually paid by Tsinghua, or extended leave, where SASAC pay him in his capacity as Asst. Director (3) SASAC is a central government commission under the direct jurisidiction of the State Council, not part of the municipal government of Chongqing.

            If the “evidence” of Cui being on the payroll of Chongqing (and consequently Bo Xilai) is his own admission that he took extended leave from his professorial post at Tsinghua to take up a temporary posting to SASAC, then I would directly challenge this as being an erroneous conclusion. Cui Zhiyuan is an expert in tax policy. Is there any evidence that he was selected for this post because of his journalism background? No. There is only his own admission that he was seconded to an Asst Director post at SASAC.

            Finally, I would contend that the New Left scholars did not lend their support to Bo Xilai, but sought to critically analyse the potential merit of social and economic policies in the area and to further understand how the Chongqing Experiment may have informed future development trajectories. Remember, when Bo fell, it was due to the Wang Lijun scandal, and no-one saw it coming. Prior to his purging, Bo was largely expected to take a seat on the PSC. Retrospectively, it is easy to find fault with advocates of the Chongqing Project, but the New Left scholars writing before his downfall appear to me to be doing nothing more than exploring and analyzing the potential merits of a different developmental strategy. That many of these populist social and economic policies spoke more to their left-leaning tendencies makes it all the less surprising they were drawn to it in the first place, but that does not constitute evidence that either they advocated Bo’s policies; that they were instrumental in promoting or developing policy, or that Bo wish to align himself with their thinking. Bo was absolutely not interested in this, only in what was convenient and expeditious to his ambitions.

          • http://twitter.com/freescania Angus Nicholson

            I think if you write glowing pieces about a man and his economic model that is later found out to be guilty of gross corruption and human rights abuses and with 13 people executed on tampered evidence (http://www.scmp.com/news/china/article/1118484/doubts-cast-story-cash-stash-wen-qiangs-fish-pond) and torture-induced confessions then you should show some contrition.

          • mikeygow

            We’re going in circles here Angus. None of the scholars mentioned wrote glowing pieces about Bo Xilai, but did analyse the social justice of certain features of the Chongqing model.

            There is only one academic piece that I’ve read which accurately predicted the turmoil in Chongqing, and even then did so indirectly.

            http://media.hoover.org/sites/default/files/documents/CLM32JF.pdf

            However, it speculated that Bo was doing a great job in uncovering organized crime and that this would be embarassing to Bo’s predecessors, Wang Yang and He Guoqiang. The article is a brilliant example of the opacity of the whole debacle. If you believe Fewsmith’s argument that Bo embarassed his predecessors, it adds weight to Wnag Hui’s claim of a factional conspiracy. If you dont, it simply paints Bo as a dishonest and corrupt politician. Does this mean Joseph Fewsmith advocates torture? Not really. I doubt he does.

            Either way, Fewsmith clearly argues here, as almost everyone did before March 2012, that Bo was a mover and shaker, doing great things. Peter Foster (DT Beijing correspondent at the time) cited Xi Jinping as vocally supporting Bo Xilai. I remember flaming Foster for this, arguing that Xi did not want a return to CR politics (as Foster claimed in a blogpost), simply by virtue of the fact his own father spent 8 year in solitary confinement while Xi was sent-down to Shaanxi.

            Plenty of people have spoken up for despots throughout history and been shown to be idiots. Thacther and Idi Amin. I mean, the US govt had Saddam Hussein placed in power FFS, just as the Brits ensured Mugabe and Mubarak and various other were.

            Personally, I never really liked Bo. I thought he was a slimy, nasty piece of work. If you talk to any educated Chinese people of a certain age, they’ll tell you he is largely despised for having his own father tortured and maltreated during the CR. He was part of the United Group (I think that’s how it would be translated) at Beida. Many people were sad to see him go in Chongqing, but a lot of other people were happy to see him get nailed.

  • http://www.facebook.com/metalheadpaladin Matt Cooper

    This caricature seems a propos here:

    https://samkriss.wordpress.com/2013/03/06/every-hugo-chavez-obiturary-in-the-western-press/

    And for those interested in the legacy of Chavez, one would do well to check out Mark Weisbrot’s post-Keynesian analysis here:

    http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/chavezs-legacy

    I believe it is an analytical error to attribute the success of the ‘pink tide’ to just one man, or to attribute Venezuela’s failures (of which there were decidedly many) merely to Chavez’s policies aimed at building populist support. For example, many of those same policies have been pursued in Ecuador by Rafael Correa (another article by Weisbrot here: http://www.guardian.co.uk/commentisfree/2013/feb/15/rafael-correa-ecuador-elections), who managed to run a fiscally much-tighter ship than Chavez could have dreamed of doing.