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1 Talking Point 6 The Week in 60 Seconds 7 China and the World 8 China Consumer Week in China 9 Aviation 10 Economy 11 Energy and Resources 13 Banking and Finance 14 Internet and Tech 17 February 2012 15 Property Issue 138 16 Society and Culture 20 And Finally www.weekinchina.com 21 The Back Page Chongqing’s arresting news m o c . n i e t s p e a t i n e b . w w w y b g u in He brought down gangsters and earned the nickname ‘Robocop’. But last week he fled o k y n o a t B s to the US consulate. What the fall of Wang Lijun means for China’s leaders... t l t h a e g b k u o r o l a r G M B C d B n S a H Week in China Talking Point 17 February 2012 Fair cop? The mysterious fall of Chongqing deputy mayor signals a power struggle “ e haven’t entered the deep Wwaters yet,” Wang Lijun told the New York Times last year. A few months later, Chongqing’s deputy mayor and former police chief finds himself in very deep water indeed. Up to his neck in it, in fact. In WiC129 we warned that Wang – nicknamed ‘Robocop’ and lauded in the national press for his role in a corruption crackdown in Chongqing that saw 1,500 arrested – would have to navigate the politi - cal depths with care. The loquacious cop said he knew so too, allegedly telling friends that he was like a piece of gum, and that once his po - litical masters got bored chewing him, they’d spit him out and he’d end up flattened under a shoe. That proved prescient. Last week Wang was apparently under deten - Former police kingpin and deputy mayor of Chongqing, Wang Lijun tion in Beijing. The scandal is po - tentially huge, offering a rare the Chongqing authorities. After the international press. glimpse into the backroom power - hours of standoff, Wang left the con - From Robocop to runaway rene - plays that are characterising the sulate. But by now China’s weibo – gade in not much more than a week, lead up to the selection of China’s the country’s Twitter-equivalent – Wang’s sudden downfall has led to top political body this year. was awash with rumour. Had Wang all sorts of speculation, especially been seeking asylum in the US? about its impact on the fortunes of A quick review of the events of the The first official announcement his erstwhile boss, Bo Xilai, the pow - last two weeks… on the situation came the follow - erful Party boss of Chongqing. It’s been a tumultuous few days for ing day, with confirmation that As we pointed out in our Talking Wang. First the news on February 2 Wang was on “vacation-style” leave Point in issue 131, a favoured way for that he had been re-assigned from for treatment for stress. But that political rivals to hobble one other his more active duties to a lesser po - night Bloomberg reported that in China is by purging their under - sition. Netizens sensed immediately Wang had flown to Beijing in the lings. Theories about why Wang was that something serious was hap - company of a senior official for at the US consulate have also mush - pening in China’s largest munici - state security. Century Weekly has roomed – one has him in negotia - pality, although no one predicted since suggested that Wang is in the tions with US officials about the events of four days later, as custody of the Central Commission Tibetan affairs, another sees him re - Wang made a dash for the US con - for Discipline Inspection – the vealing damaging information P h o t o sulate in Chengdu. Party organ that takes on cases of about senior political figures. S o u r Once there, he was surrounded senior-level corruption. The article c e : R e by a large group of police, many sent was soon spiked by the censors but What did he say to the Americans? u t e r s from across the provincial border by not before the news had reached They’re not saying. At a State De - 1 Week in China Talking Point 17 February 2012 partment briefing, spokesperson self-preservation. By staying there imagery was lost on no one. De - Victoria Nuland elected to stick to for over 24 hours (but leaving vol - spite the furore, it was business as the facts she had at hand. untarily) he turned himself into an usual, as Bo welcomed the visiting “There’s been unusual reporting international issue. Those taking dignitary. about all of this,” she told journal - this view tend to view Wang as the ists. “So just to reaffirm for you, that wronged party and theorise that, in So it’s all about Bo? he walked out, it was his choice.” the circumstances, it was a smart How Bo emerges from this debacle move. After all, since the authorities is really the crux of the matter. He’s What are the scenarios being dis - didn’t know what he might have left hardly made a secret of the fact that cussed? with the Americans, they’d have to he aspires to top political office, For anyone with an interest in con - be more cautious in handling him. and has a realistic chance of mak - spiracy theories, this is fertile While the rumours grew, Bo ing it onto the Politburo’s Standing ground. WiC takes the view that the showed little public sign of being Committee later this year – the truth may never emerge about fazed. He even hosted Canada’s powerful nine-person body that Wang’s case, and at this juncture al - Prime Minister Stephen Harper runs the country. most all of the rumour is conjec - during his trip to Chongqing. The The consensus of political ana - ture. But nevertheless some plausi - ble scenarios have been widely discussed on weibo . One interpretation is that this was an inevitable falling out be - tween two deeply ambitious men. Both Bo and Wang are more than comfortable in the public eye, with a keen awareness of their personal images. Wang – Bo’s political junior – has also been actively courting media attention through potential book and film deals (including a ‘Godfather’ style movie about his life). These ambitions may have brought him into direct conflict with his boss. Only a couple of days before Wang’s fall, the Chongqing Daily reported a warning from Bo that “certain people” were too inter - ested in their own “individual per - formance”. They would do better to focus “on work on behalf of the In the future, issuers masses,” Bo suggested. Another theory is that Bo was will need to be explorers. no longer happy with the anti-cor - In challenging markets you have to look beyond old, familiar ruption investigations Wang was ways. HSBC’s Debt Capital Markets teams have a track record of creating innovative structures and delivering landmark deals. conducting. Cross border and cross discipline, we connect investment Yet another view: his investiga - banking advice with financing solutions – to help our clients tion by the Party’s discipline body is navigate the future. There’s a new world emerging. linked to a corruption case sur - There’s more on debt issuance at www.hsbcnet.com/dcm rounding the police chief who took over from Wang in Tieling in Liaon - ing province. Other users of weibo have HSBC operates in various jurisdictions through its affiliates, including, but not limited to, HSBC Bank plc, authorised and regulated by the Financial Services Authority, The Hongkong and Shanghai Banking Corporation Limited, HSBC Securities (USA) Inc., member of NYSE, FINRA posited that Wang’s visit to the con - and SIPC, and HSBC Bank USA, NA. 11-094 sulate was really a calculated act of 2 Week in China Talking Point 17 February 2012 is actually selected more via a top- Former president Jiang Zemin down process, says Li. Newcomers was a princeling. Upcoming presi - are ‘pulled up’ after discussion dent Xi Jinping (who ran vibrant Fu - among current Standing Commit - jian, Zhejiang and Shanghai tee members, who push for their formerly) and current vice-premier preferred candidates. Wang Qishan are the two most In the past this has looked like prominent princelings on the cur - an orderly process, notes Bruce rent political roster. Gilley, a professor of political sci - Crucially, Bo Xilai is also a ence at Portland State University. princeling. The top role of President is picked The other main grouping is the out well in advance to minimise “populists” and includes the current controversy when the time comes president Hu Jintao, current vice for change. Then the additional premier Wen Jiabao, and his likely roles are allocated among the elite, successor Li Keqiang. through an extended period of As a general rule, the populists signalling and negotiation. are more likely to have less-privi - Bo Xilai: Chongqing model Rivalries in the race for power are leged family backgrounds, spend - rarely visible. But this time around, ing much of their careers in the lysts like Cheng Li, a senior fellow at they are becoming a little more ap - inland provinces and often coming the Brookings Institution, is that parent. to prominence via the Communist this year’s handover is going to be Youth League (hence they are more fractious than usual. And Bo is a focal point in this? known colloquially as the tuanpai Li points to a variety of reasons It looks like it, with Wang Lijun’s or ‘league faction’).

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