WHEN TAOISEACH Enda Kenny flies in to Shanghai next weekend at the head of a large trade delegation, he will find China in a cautious and reflective mood as senior political and business figures come to terms with the most tumultuous National People’s Congress in 20 years. Traditionally, once the annual talking-shop parliament finishes its 10-day session, the delegates get into their black Audis and head back to their home towns to “intensely study” the findings of the session.

This year, they will not have much time to go to the books.

As we saw last week, there was the 7.5 per cent growth target for this year, the lowest for eight years. Then there was news of a big decline in exports, which pushed China’s trade balance into the red to the tune of €24 billion in February, the largest deficit in a decade.

But the political leadership is also in turmoil after Bo Xilai (right), a high-flying member of the communist elite long tipped for greatness, was purged on the Ides of March during what looks like a bloody fight between left-wing hardliners and reformers inside the upper echelons of the party.

China remains a land of opportunity for western businesses, but the Bo Xilai affair is a reminder that, BMWs and gleaming new skyscrapers aside, the decision-making process in the country still goes on behind closed doors among a small group of unelected officials. Bo is the third senior cadre in a major city to be purged since 1995, after Beijing mayor Chen Xitong and Shanghai boss Chen Liangyu.

The Communist Party boss of the sprawling municipality of Chonqing looked a dead cert to make it to the all-powerful, nine-man standing committee of the Politburo. However, Bo’s career was effectively over once his protege and police chief Wang Lijun pitched up at the US consulate in Chengdu saying that his life was in danger and trying to defect.

And the political and the economic are inextricably linked in a centrally planned economy. For a one-party state to function, it needs stability. Managing the fallout from Bo’s fall is essential if the government is to maintain its efforts to reform the economy.

Bo is a smooth figure, popular with foreign businesspeople and diplomats. But his message was avowedly traditionalist and Bo seems to be a convinced communist in the traditional mould. In some ways, getting rid of Bo is a positive move for western investors.

In Chongqing, where Bo was Communist Party chief, he had pushed what was known as the “Chongqing Model”, an economic strategy that advocated more state control of the economy, a bigger role for State-owned Enterprises (SOEs) and social measures, including cheap housing for the poor.

In his last public appearance, at an ill-fated press conference at the NPC, he said that for the Communist Party to become capitalist was a failure. “If a new capitalist class is created, then we’ll really have turned onto a wrong road,” he said.

The other side of the party, represented by premier Wen Jiabao and, presumably, president Hu Jintao, seems more in favour of continuing to liberalise the economy.

Wen attacked Bo and basically accused him of trying to bring back the Cultural Revolution. Now we have to wait and see what becomes of the “Chongqing Model”.

Bo’s replacement as head of the party in Chongqing is vice-premier Zhang Dejiang, who has the dubious distinction of being an economist trained at Kim Il-sung University in North Korea, not an institution known as a hotbed of reform.

The Irish contingent would perhaps be advised to start learning about the man widely tipped to be the main beneficiary of the fall of Bo, Guangdong party secretary Wang Yang. With Bo seemingly out of the running for a standing committee job, the way could be open for Wang to step up to the top leadership body.

In China, there is a saying that all change comes from the south, and Guangdong is the economic engine that has driven the growth of China.

Wang has earned a reformist reputation, especially for the way he has dealt with labour unrest in the province, and also handled a potentially tricky political situation in recent months in Wukan village.