Shanghai Boss Caught Up in Graft Sweep

The Communist Party boss of China’s wealthiest city has been charged with corruption and ousted from his job, state media reported Monday.

Chen Liangyu, who served as party secretary of Shanghai and as a member of Beijing’s ruling Politburo, is the highest ranking official in more than a decade to be targeted in a campaign against corruption.

The investigation into Chen centered on the misuse of Shanghai’s social security funds for illicit investments in real estate and other infrastructure projects, according to the New China News Agency. Chen is accused of shielding corrupt colleagues, and abusing his position to benefit family members.

As head of China’s showcase city and a protege of former Chinese President Jiang Zemin, Chen was seen as practically untouchable even when other graft-related scandals swirled around him.

This summer, more than 100 central government investigators from Beijing descended on Shanghai. As a result of the inquiry, two top city officials, including one of Chen’s close aides, had already been dismissed, as had real estate, private investment and utility executives.

Chen’s removal “demonstrates the party’s determination to fight corruption,” the government news agency said. “Whoever it is, no matter how high their position, anyone who violates party rules or national law will be severely investigated and punished.”

Analysts say Chen’s downfall also appears to be part of a carefully orchestrated plan by President Hu Jintao to consolidate his power ahead of next year’s party congress and to clip the ambitions of his predecessor’s allies.

“The Jiang Zemin era is over, the Shanghai Gang is being dismantled,” said Cheng Li, a China expert at the Brookings Institution.

The action against Chen was carefully framed as part of an anti-corruption campaign rather than a factional political fight. That could help Hu boost his popularity as a people’s leader and maintain the grip of the Communist Party, which has long been dogged by corruption. Factional fighting would signal divisions at the top of the government and increase the likelihood of social instability.

Hu temporarily replaced Chen with the current mayor of Shanghai, Han Zheng, rather than bringing in an outsider. That could help calm the political waters and limit the potential damage in the important economic capital, long considered Jiang’s power base.

Hu most likely consulted the 80-year-old Jiang and won his tacit agreement to sacrifice his protege and preserve his own legacy, Li said.

“Remember when he agreed to publish Jiang’s biography last month and launched all those study sessions of Jiang Zemin thought?” Li said. “This is part of that deal.”

In June, Beijing made a high-profile example out of one of its own. Liu Zhihua, a Beijing vice mayor who was overseeing construction for the 2008 Olympics, was fired on corruption charges. A succession of other leaders at the provincial level has also faced dismissal or jail.

The last time a Politburo member was purged on corruption charges was 1995. Chen Xitong, then Beijing party chief, was sentenced to 16 years in prison. Ironically, he fell from grace under then-President Jiang, who saw him as a political rival when he first came to power. The two Chens are not related.

The 59-year-old Chen Liangyu graduated from a military academy with a major in construction in 1968 and built his career as a Shanghai factory manager. He then shot through the ranks of city government in the 1990s, first as district party chief, then vice mayor, mayor and party secretary. During his tenure, Chen presided over some of the biggest growth spurts in the financial hub, including a ballooning real estate market.

“We already know that most local officials are rotten to the core,” said Zhong Dajun, an independent research analyst in Beijing. “This case gives us a chance to see the true colors of a much higher-ranking official. Whether it’s part of factional politics or not, ordinary people just want to know how it benefits society as a whole. That remains to be seen.”

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chingching.ni@latimes.com