Bo Xilai's charm offensive is paying off politically in China

Image by Getty Images via Daylife

By Ariana Eunjung Cha
Washington Post Foreign Service
Monday, March 8, 2010; A07

BEIJING -- Of the nearly 3,000 members of China's ruling elite in the country's capital this weekend to kick off the biggest political gathering of the year, only one has the state media and online commentators abuzz: Bo Xilai.

Named "Man of the Year" by a People's Daily online poll, the subject of an adoring home video being circulated on the Internet and revered in countless blogs, Bo is in contention to be named to one of the top jobs in China in 2012, when many of the country's current leaders are expected to retire.

In the three years he has served as the top Communist Party official in Chongqing, the country's largest municipality, Bo has shaken up Chinese politics by becoming a wildly popular politician in a country where politicians in the Western sense are frowned upon.

"Bo Xilai is a selfless person and a fearless one. In these times, we need government officials like Bo . . . He chases justice for ordinary people," said Li Lei, a 48-year-old entrepreneur. Li created the video tribute after reading about Bo's crackdown on Chongqing's mafia, a crusade that not only targeted corrupt businessmen but -- in a departure from previous efforts -- the senior-level government officials who colluded with them.

The official purpose of the meeting of the National People's Congress from March 5 to 14 in Beijing is to review and pass new legislation. But given that there's no separation of powers in China and that some of those who will vote on the laws were also involved in drafting them, the gathering is largely symbolic.

The more interesting discussions are happening behind the scenes, because this year's people's congress is the unofficial start of mid-term jockeying for the 2012 Communist Party Congress where the next generation of leaders will take the reins from Hu Jintao and Wen Jiabao.

All eyes are focused on which of the "fifth generation leaders" like Bo are up and which are down -- what that says about the direction of the country.

In two years, more than half the members of the ruling Politburo are expected to retire or step aside because of age. This would set the stage for newcomers to emerge as the principal figures responsible for the country's political and ideological affairs, economic and financial administration, foreign policy and military operations, according to Cheng Li, a China researcher at the Brookings Institution.

Among them, Li Keqiang, 55, a former farmer who got his doctorate in economics at one of China's top universities and is now vice premier, is widely seen as being groomed to be the next premier. Xi Jinping, 57, the son of a powerful Communist Party elder and who currently serves as the vice president, is considered to be the most likely heir to the position of president.

However, Li, the China researcher, wrote in a recent policy paper that "a dark horse can emerge in Chinese politics, just as in American politics." He wrote it would be wise to "pay greater attention to a broader group of potential contenders for power, especially the rising stars in provincial leadership." Of those regional leaders, Bo -- a former minister of commerce, provincial governor and mayor -- is the standout.

While other senior-level officials tend to be shy and awkward in dealing with the public and the media, Bo has managed to charm nearly everyone. He has led crowds of thousands in singalongs of "red culture" songs, sat down for TV chats with protesting workers and communicated with students via mass text messages.

At 60, Bo is too old and controversial to be regarded as a candidate to become premier. But Chinese scholars say he's likely to be named to the Communist Party's nine-member standing committee -- China's most powerful decision-making group.

Charismatic, handsome and majestically tall by Chinese standards at 6-foot-1, Bo has become the poster child for a group of emerging Chinese leaders known as the "princelings."

His candidacy reflects how far China's Communist Party has evolved from its origins. Today the party's constituency is increasingly middle class and more concerned with things like business and finance than Marxist ideology.

Like other "princelings" -- descendants of high-ranking party officials -- Bo grew up mostly in China's wealthier coastal regions, came of age during the Cultural Revolution, is fluent in English, has a graduate degree, and began his career in the government after it began market-based economic reforms in the late 1970s.

In contrast, many of China's current leaders were raised mostly in the inland by ordinary working-class families and they worked their way up the ranks of the government bureaucracy through postings in far-flung provinces. Known as "tuanpai" -- a reference to the China Communist Youth League that they were members of and that was once considered the place to groom future leaders -- these men are considered technocrats who have helped China carry out the goals set forth by previous generations but stopped short of reinventing them.

In policy decisions, the princelings tend to believe the future lies with advancing the interests of the middle class; the tuanpai tend to pay more attention than the princelings to vulnerable groups such as farmers, migrant workers and the urban poor.

Bo "is perceived by the public as a modern, honest and upright official," said Zhang Hongliang, an economics professor at the Minzu University in Beijing. On the other hand, Zhang said, "The high praise of Bo equals criticism of other officials," which has created enemies.

The second eldest son of the seven children of Bo Yibo, one of a group of Communist Party officials known as the "Eight Immortals" who were purged during the Cultural Revolution for supporting open trade with the West and other capitalist-style reforms, Bo and the rest of his family were jailed and his mother was beaten to death in custody. But when Deng Xiaoping rose to power in 1978, he returned Bo Yibo to his position of vice premier. Bo Xilai thrived during his father's tenure in Beijing, graduating from Peking University with a degree in history and then working at the Chinese Academy of Social Sciences, a prestigious government-affiliated think tank, for his master's degree.

Today Bo is in charge of running Chongqing, a region of more than more than 31,000 square miles and 32 million people along the Yangtze River that is the largest of China's four provincial-level municipalities. In the fall of 2008, Bo gained national praise for the way he managed strikes by teachers, police and taxi drivers in the city as China's economy began to contract. While other regional leaders around the country faced with similar problems treated striking workers as criminals, arresting leaders and sending in police, Bo made what was considered a radical move in China: He invited taxi driver representatives to meet with him in a forum broadcast on state television and negotiated terms for ending the strike.

And in 2009, Bo took another political gamble. He launched what he called a "Red Culture Campaign" to get people to get together and read, study and even sing about Mao Zedong's work again. While a few scholars ridiculed the efforts, it was a hit with the masses, with hundreds of thousands showing up at the events.

Researcher Wang Juan contributed to this report.

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Powerful Japanese politician Ozawa flexes his muscles as party leader falters

Image via Wikipedia

By Blaine Harden
Washington Post Foreign Service
Sunday, January 10, 2010; A16

TOKYO -- Shrewd, stern and baggy-eyed, Ichiro Ozawa has prowled the back rooms of power in Tokyo for more than four decades. Last year, he masterminded an election victory that crushed the political party that ruled Japan for nearly half a century.

Yet after the historic vote, as his Democratic Party of Japan (DPJ) took power, Ozawa chose not to join the government. Instead, he served officially as his party's secretary general and unofficially as its all-powerful political wizard. The local press dubbed him the "shadow shogun."

Now, with the new government stumbling, its poll numbers sinking and another national election looming, Ozawa, 67, has stepped out of the shadows and is beginning to wave his wand.

He played a major role in undermining Finance Minister Hirohisa Fujii, who resigned last week. Ozawa has also handed down directives on social spending and highways toll rates to Prime Minister Yukio Hatoyama, whose leadership ability he has reportedly criticized in private.

In a remarkable display of foreign-policy chutzpah, Ozawa last month led a 645-member, five-airplane pilgrimage of lawmakers and other leaders on a visit to Beijing, where he met with Chinese Premier Hu Jintao.

The DJP has questioned the long-held traditional alliance between Japan and the United States, with Hatoyama so far refusing to follow through on relocation of a U.S. Marine base on Okinawa sought by Washington.

In Washington, Ozawa is viewed with a mixture of alarm and understanding. Some in the Obama administration portray him as a Rasputin-like character plotting to push Japan away from the United States. Others understand him as an old-time pol, more interested in winning elections than in international affairs. Ozawa, they recall, was a mastermind behind the defeat of the once powerful Liberal Democratic Party (LDP) in 1993. That victory proved short-lived, though, when Ozawa botched the handling of a coalition government.

Asked to explain Ozawa's new role in governing Japan, the head of the DPJ's international department, Yukihisa Fujita, said in a statement: "Government policies are overseen by the cabinet led by prime minister Hatoyama, and party affairs by the secretary general Ozawa. There is a division of labor with close cooperation and leadership between the two."

But Japan's two most influential newspapers -- which are not friendly with the new government -- have detected a new form of two-headed rule. The Yomiuri newspaper calls it "dual-governance." The Asahi suggests "there is another prime minister outside the cabinet."

Japan's election schedule virtually guarantees that Ozawa's relative influence will expand into mid-summer, when there is a vote for the upper house of parliament. The DPJ needs to gain just seven seats in that 242-member chamber to win a majority, which would give it commanding control over parliament for several years. The party already dominates the lower house, and analysts here agree that Ozawa is likely to lead his party to another sizable win.

There is, however, a legal roadblock confronting the ever-more-visible DPJ shogun. The Tokyo prosecutor's office wants to question Ozawa about $4.31 million from his political fund that was used to buy real estate in Tokyo six years ago. Ozawa agreed this week to meet with prosecutors, although the seriousness of his legal difficulties over the unreported land purchase is not yet clear.

The investigation is an echo of a separate fundraising investigation that last year forced Ozawa to resign as head of the DPJ and forfeit his chance of becoming prime minister. In that case, as in the current one, Ozawa said his aides acted without his knowledge.

There are questions, though, about the political motivations of the Tokyo prosecutor's office, which has old allegiances to the Liberal Democratic Party, the former ruling party.

This winter, the rise of Ozawa's public profile has roughly coincided with the falling poll numbers and perceived leadership failures of Hatoyama, who took over the DPJ last summer after Ozawa stepped down as party leader.

Hatoyama's approval numbers have plummeted in the past three months from above 80 percent to below 50 percent. Part of the reason, according to newspaper polls, is indecision on key policy matters. Still, his party remains far more popular than the LDP, which has collapsed since losing the election in August and is now supported by less than 20 percent of voters.

Ozawa is a champion of the DPJ's most popular new policies, pushing to strip policymaking authority from bureaucrats and give it to elected officials. He has also forced increased transparency in how the government spends public money, opening up a process that for decades was kept behind closed doors, with decisions often made by senior bureaucrats who later took jobs in companies that received public money.

"The people see Ozawa's toughness and admire his emotional strength," said Harumi Arima, a political analyst in Tokyo. "It is because of him that people feel the DPJ will actually change things and make thing better. They feel Hatoyama is a weakling."

Other analysts say that while Ozawa is unquestionably a powerful voice in the government, he is not the only one -- and that he shares control with Hatoyama and the new finance minister and former deputy prime minister, Naoto Kan. "To say that Ozawa has single control doesn't reflect reality," said Koichi Nakano, an assistant professor of political science at Sophia University in Tokyo.

Still, there is a perception that Ozawa, if Hatoyama continues to stumble, may take over the government after the summer election. "Deep down, Ozawa wants to win that election and become prime minister," said Arima. "He wants the honor, as well a mark in history that he has changed Japan."

Special correspondent Akiko Yamamoto and staff writer John Pomfret in Washington contributed to this report.

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Al Qaeda Vies for More Power in Pakistani Taliban Group

By ZAHID HUSSAIN IN ISLAMABAD and MATTHEW ROSENBERG IN NEW DELHI

Officials struggled Monday to figure out what is going on inside the Pakistan Taliban following the apparent death of its leader last week and said al Qaeda was trying to gain greater power in the group.

Gen. Stanley McChrystal, the top American commander in Afghanistan, says the U.S. military needs to make strategic changes to its presence in the region, including shifting more troops to cities. WSJ's Peter Spiegel reports.

Pakistan's top law-enforcement official said al Qaeda was taking advantage of a bloody succession battle to choose a leader favorable to its interests, while someone identifying himself as a contender who had been reported killed in that infighting called reporters to say he's alive and well.

The contender, Hakimullah Mehsud, also claimed that Baitullah Mehsud, the Taliban leader U.S. and Pakistani officials say they are almost certain was killed last week in an American missile strike, is still alive. The two men aren't directly related.

Officials say Baitullah Mehsud, as the nominal leader of the Pakistan Taliban, helped orchestrate a series of bombings in Pakistan's major cities and Taliban offensives in its northwestern mountains. Also believed killed along with the militant leader were his second wife and a number of top aides.

While officials lack physical evidence of Mr. Mehsud's death, they point to communications intercepts and information from informers in the remote South Waziristan tribal agency where the Taliban leader held sway. There are also other signs, such as the militants completely closing to outsiders the area around the parts of South Waziristan where Mr. Mehsud's faction is in control. Pakistani officials say that by claiming that Mr. Mehsud isn't dead, the Taliban may be trying to maintain unity in the movement in Pakistan, which appears to be seriously strained.

Pakistani officials and militants say members of Mr. Mehsud's faction -- there are more than a dozen different groups in the Pakistan Taliban -- have been meeting in recent days to choose a new leader and, presumably, a new overall leader for the loose confederation of groups, which is known as the Tehrik-e-Taliban.

Agence France-Presse/Getty Images

Hakimullah Mehsud, left, posing for media on Nov. 26, has reached out to news organizations in the past to issue Taliban threats to carry out attacks in Pakistani cities in retaliation for U.S. drone attacks.

Members of al Qaeda and the Afghan Taliban, which oversees but doesn't directly control the Pakistani side of the movement, have also been taking part in the deliberations, the officials and militants say.

But much remains murky. Over the weekend, Pakistani intelligence officials, speaking privately, said they were almost certain that Hakimullah Mehsud, who is one of the Taliban commanders believed to be among the top contenders, had been slain in a shootout between his supporters and the backers of another contender.

On Monday, Hakimullah Mehsud called to say the reports are untrue, the Associated Press reported. The AP said its reporter was familiar with the militant commander's voice.

Hours before the phone call, Pakistan's Interior Ministry chief, Rehman Malik, said al Qaeda is believed to have intervened to end the succession battle.

If Mr. Mehsud's death inadvertently allows al Qaeda to gain more influence, it could help the insurgents maintain their potency and reach. Pakistan was taking measures to stop that from happening, Mr. Malik said.

Write to Zahid Hussain in Islamabad at zahid.hussain@dowjones.com and Matthew Rosenberg in New Delhi at matthew.rosenberg@wsj.com

Temasek's Portfolio Hit: $27.75 Billion

By P.R. VENKAT and SE YOUNG LEE

SINGAPORE -- The value of state-owned investment company Temasek Holdings Pte. Ltd.'s portfolio fell more than 40 billion Singapore dollars (US$27.75 billion) at the end of March from a year earlier, Chief Executive Ho Ching said.

Ho Ching

"We are certainly not happy with the negative wealth added in March last year as well as March this year," Ms. Ho said.

The figure suggests Temasek has recouped some of the losses made at the height of the financial crisis, as global markets begin to rally on hopes that the worst of the downturn has passed. Ms. Ho didn't disclose the percentage decline or the overall value of its assets.

The Singapore government previously said that the value of Temasek's portfolio had fallen S$58 billion to S$127 billion from the end of March 2008 to November, suggesting a 31% decline. Based on those figures, it suggests the portfolio lost about 22% over 12 months,

Earlier

• Goodyear Won't Be Temasek CEO
  07/22/2009
• Opinion: Temasek and Transparency -- II
  07/22/2009
• Randomly Noted: Singapore's Temasek Troubles
  07/22/2009
• Temasek Loses Big on Stake in Barclays
  06/04/2009
• Deal Journal: A Lesson in Bad Timing
  06/04/2009
• Temasek Portfolio Lost $39.91 Billion
  05/29/2009
• Opinion: Temasek and Transparency
  02/12/2009
• Taking Hits, Temasek's Assets Slide 31%
  02/11/2009
• Deal Journal: The Now Slightly Less Singaporean Singapore SWF
  02/09/2009
• Temasek Shakes Up Its Top Ranks
  02/07/09

Ms. Ho, speaking at the Institute of Policy Studies in Singapore, also said Temasek was exploring the possibility of creating "one more group of stakeholders." Ms. Ho said Temasek could allow outsiders to co-invest with the investment fund, a plan that may be firmed up in the next six to 12 months.

Temasek wants to invite "sophisticated" investors to put money into deals alongside Temasek and could eventually allow retail investors to co-invest in eight to 10 years if the test succeeds, she said.

She also said the bulk of incentives to Temasek's senior management has been deferred by three to 12 years.

Separately, Ms. Ho said Temasek's succession planning continues given the impending departure of Chief Executive-Designate Charles "Chip" Goodyear.

Last week, Temasek said it and Mr. Goodyear mutually agreed to part ways -- just a little more than two months before the former BHP Billiton Ltd. chief was to succeed Ms. Ho.

Temasek said last week that the decision was due to "differences regarding certain strategic issues." Mr. Goodyear will leave the company Aug. 15. Ms. Ho said in her speech that his departure was "unfortunate."

Chip Goodyear

"This does not mean, however, that we should stop this discipline of succession review," she said. "I just want to reaffirm that the decision was both mutual and amicable. We continue to hold Chip in very high regard for his professionalism and his integrity."

Temasek surprised many in February when it named U.S.-born Mr. Goodyear as successor to Ms. Ho, who is married to Singapore Prime Minister Lee Hsien Loong and is daughter-in-law of the founder of modern Singapore, Lee Kuan Yew.

A person familiar with the situation said last week that Mr. Goodyear's proposals for the company's new strategic direction were considered too risky by some, without elaborating. He also said Mr. Goodyear planned changes in senior management that weren't well received by Temasek's board.

Ms. Ho said Temasek will keep its portfolio exposure to Asia at 70% or more, its current exposure to members of the Organization for Economic Cooperation and Development at around 20%, and its exposure to new regions like Latin America, Africa and others at up to 10%.

"We continue to anticipate opportunities, not just within Asia, but also in Latin America and elsewhere, too," she said.

Write to P.R. Venkat at venkat.pr@dowjones.com and Se Young Lee at vincent.lee@dowjones.com