The Chinese Communist party has just been through its most interesting year since 1976, when the Deng Xiaoping faction purged Mao's widow and her three key supporters in the weeks after Mao's death. In case anyone had missed the point, photographs of Mao's memorial ceremony – which in their originals featured the Gang of Four prominently – were republished following their arrest with fuzzy gaps in the places where they had stood.
Bo Xilai, the disgraced party secretary of the megalopolis of Chongqing, is also being airbrushed out of the city that he dominated for five turbulent years, until his spectacular fall last March. His victims now speak openly of torture, and the Mao-style rallies he promoted are out of favour. Bo himself has yet to be put on trial on the corruption charges now drawn up against him. While the trial of the Gang of Four in the early 80s was a protracted affair that drew a public line under the extremes of the Maoist era, Bo's trial is likely to be briefer. Its purpose is to drive a stake through the corpse of his political career, rather than to rehearse the details of crimes that the public might judge unremarkable in any Communist party leader.
Bo was corrupt? The public shrugs. His family was inexplicably rich? Some of the richest people in China are the children and grandchildren of party leaders. But the party prefers its would-be leaders to remember that none is allowed to be bigger than the organisation. It is one of several characteristics the Chinese Communist party shares with the mafia. The message that the once charismatic – and highly visible – leader's trial will convey to the Chinese public is quite simple: he lost.
But his fall comes at an inflection point in China's development, almost as significant as that of 1976. This year will test China's ability to execute a number of key transitions: towards a less wasteful and more innovative economy, towards or away from the rule of law, towards a fairer society or back to authoritarianism and the immense privileges of the elite.
The new leaders inherit a number of actual and impending crises, of which the most dramatic is in Tibet, where the number of self-immolations since 2009 has reached 92. A new approach there would be a convincing sign of leadership. On corruption, Xi Jinping, the incoming president, will have to work hard to convince anyone that his promises mean more than the empty talk of his predecessors. (Wen Jiabao, the outgoing prime minister, warned that the families of those in power should not enrich themselves. In October2012, the New York Times was blocked for revealing that Wen's family had accumulated assets worth $2.7bn during his years as premier. Bloomberg was also blocked for revealing details of Xi Jinping's family fortune, estimated at several hundred million dollars.)
In 2011, then president Wen Jiabao told a London audience: "Without freedom, there is no real democracy. Without guarantee of economic and political rights, there is no real freedom", sentiments his audience might claim to appreciate rather more than the speaker. But in his 10 years in office, rule of law made little progress, and economic and political rights continue to be honoured more on paper than in practice. The outgoing president Hu Jintao's "harmonious society", proclaimed as a rebalancing of an increasingly unequal social order, is invoked by citizens to satirise everything from internet censorship to the suppression of political debate. Instead of rebalancing China's unequal wealth, the government stopped publishing the Gini coefficient, the index of inequality, 11 years ago, claiming its data on the rich was incomplete.
Will Xi fare any better? The first signs are not encouraging for those who hope for a more liberal China – like the 71 intellectuals who signed a petition last month calling for separation of powers and an end to state interference in the law. Internet controls have been severely tightened and the official media have led a chorus calling for patriotic obedience to the rules in everything from internet use to culture.
Xi's speeches so far have stressed the nationalist dream of an ever stronger China, and maintaining the one-party system and its spoils will be a priority. When he speaks of reform, does he mean any more than measures necessary to keep the system intact?
Perhaps the party hopes it will grow stronger as the first model of a "post democratic order", as Eric Li, a Shanghai-based venture capitalist, writes in the current issue of Foreign Affairs. The party, Li argues in a notably sycophantic essay, will overcome any short-term difficulties to demonstrate the superiority of China's wise, meritocratic, and public-spirited one-party system and expose the failings of western democracy.
The Chinese system does not look outstandingly public spirited from below, but in a "post-democratic" system, perhaps this does not matter. The people, though, are increasingly showing their feelings, despite 20 years of rising living standards: in the 180,000 acknowledged major public order incidents each year; in posts on social media and on the internet; in savage satire of the party's claims to virtue.
As China's first phase of development and modernisation comes to a close, the new leadership might wonder how its restive citizens would react to an economic setback – one that collapsed the bargain of the last 20 years in which political stasis was accepted in return for economic advance.
They might soon find out. China's overheated property market is one of the few investments available to the rising middle classes and the estimated 10% of China's GDP represented by illicit "grey" money, and selling real estate is a major source of income for local authorities. Warnings that the bubble will burst have grown steadily louder over the last year: in the once prosperous city of Wenzhou, property prices have dropped 70% since 2010, Shanghai developers have cut prices to offload swollen inventories, and last month the Chinese business magazine Caixin warned of the dangers to the economy of the empty speculative property that the magazine estimates at 20% to 40% of housing stock.
The knock-on effects on shaky financial institutions across China and the consequences for savers and investors could be extremely serious. How the leadership will handle such economic challenges will test whether the claim to wise meritocracy has any more substance than the repeatedly proclaimed anti-corruption drives.