The sacking of Shanghai's communist party chief Chen Liangyu on corruption charges yesterday is a major event in China's national politics as well as in the life of that vibrant city. Mr Chen fell victim to the new national leadership under President Hu Jintao, having been a protege of the previous leader President Ziang Zemin, whose original political base was in Shanghai.
The corruption charges reflect President Hu's reformist thrust in response to a widespread public feeling that the ruling party's legitimacy depends on it. Many protests against arbitrary actions by regional and local party bosses revolve around this and it will be a central question at the forthcoming 17th party congress.
Shanghai's recent dramatic transformation into China's main financial, trading and architectural hub owes much to the group around Mr Chen and their connections with national power centres. Political leadership endorsed the colossal expenditures needed to develop one of the world's most distinctive urban landscapes in the Pudong district. The city's 18 million people have seen it completely rebuilt, tearing out its traditional centre and displacing millions, often in a completely arbitrary way. Their pride in the city's rapid modernisation is tempered by mounting concern about the means employed. Mr Chen's dismissal centred on his abuse of pension funds and property transfers. It is an exemplary departure intended as a clear warning to other powerful figures suspected of abusing their positions.
A definite shift in China's political geography is also involved. Observers of these events discern behind them a determination by President Hu's ruling group to encourage the development of a new commercial and trading hub near Beijing, at the Tianjin Binhai new area. Huge investments are being made in its port, rail and communications infrastructure. While this would not supersede Shanghai, it would be a counterweight, contributing, it is argued, to a more balanced national economy.
There is a parallel determination to assert more central control over Shanghai's development and ensure its adherence to regulatory guidelines set out in Beijing. This issue bedevils the capital's relations with other regional power centres whose fiscal and political autonomy weaken the national centre. But there is a limit to what can be achieved through periodic campaigns against corruption and arbitrary rule by party bosses with strong economic bases.
Constitutional checks and balances and a much more effective application of the rule of law are required to tackle these problems. They arise from the uneasy combination of capitalist economics and one party rule characteristic of China's current phase of development. The main challenge facing its leadership is how to create a new system of due legal process and political rebalancing which would reflect a more sophisticated society. Whether this can be done without more open political competition is a great and continuing conundrum.