As riots shake China’s Guangdong province, and the kudzu-like growth that has catapulted the country into modernity starts to sputter, the case of Bo Xilai, and his wife, Gu Kailai, combines virtually all of the elements that are pushing the country into a crisis: official corruption, the growing income disparity between the party elite and the rest of the country, a faction-ridden Communist party leadership — and, not least of all, Mao’s ghost.

Just to recap the details of the case: Bo, formerly Communist party boss of Chongqing and a rising star in China’s political firmament, is now being held in secret, along with his wife — the latter accused of murdering a British businessman, Neil Heywood, who apparently functioned as a “fixer” for the family’s many overseas investments. Asahi Shimbun recently reported her “confession.”

Bo was summarily ousted from all his posts, and disappeared from public life — and now, fourteen weeks later, there is a dead silence coming from Beijing. For weeks, this scandal rocked China, where rumors of a coup were quickly quashed by internet censors, and a stream of denunciations of Bo issued forth from the party’s propaganda apparatus — and then, suddenly, nearly complete silence. What’s going on in the Inscrutable East?

Bo’s fate is likely the subject of a fierce debate within the top party leadership. Apparently he has some support among senior leaders, who no doubt have a soft spot in their hearts for a modern Chinese leader who would invoke the heroic tradition of Maoism, exemplified by Bo’s push for the singing of “patriotic” “red songs” from the old days of the Revolution. China may have gone capitalist, but there are still some old-timers in the top echelons of the party who take the ideological slogans of their youth seriously. The “reform”-minded officials, centered in Beijing, have the central party organization well in hand, but they are riven by factionalism, and it is not inconceivable that a politician like Bo could arise to challenge what is one of the most corrupt oligarchies in world history in terms of sheer scale.

Stories are now circulating about Bo’s financial empire, lorded over by his willful wife — another Chinese “dragon lady,” a ridiculous Western stereotype the anti-Bo forces in China (and the West) are not above exploiting. Yet the details are unimpressive: a couple of London apartment buildings worth somewhere around $3 million. There are vaguer accusations of Madame Bo managing to somehow take $6 billion out of the country — and when Heywood threatened to expose her, she had him poisoned. That, at any rate, is the official story. That this scenario sounds like the plot of one of those movies that never make it into the theaters and instead go straight to DVD is not a reason to rule it out, but count me as skeptical, to put it mildly.

On the other hand, if we look at the actual corruption that is an everyday fact of life in China — China’s own central bank recently reported that corrupt officials have spirited $123 billion out of the country — the alleged sins of Bo and his family pall in comparison. The real corruption scandal in China is that one cannot do business without paying off officials, and this is true in the internal market as well as for foreigners. China’s “princelings,” the sons of Mao-era party leaders, are China’s One Percent, and their money is driving up prices for high-end real estate from Manhattan to Malibu. Whereas factionalism in the Communist party used to revolve around ideological matters, with “rightists” and “leftists” contending for public opinion, today the factions are centered around competing financial combines, as the party bureaucracy sells off “public” property to the highest bidder and emerges as the new “capitalist” class.

This, of course, was the whole point of Mao’s “cultural revolution,” which was initiated on the premise that a new capitalist class was incubating in China — in the ranks of the ruling Communist party. Prominent party leaders were hauled up before the masses, made to wear dunce caps, and denounced as “capitalist-roaders” — among them Deng Xiaoping, who made a political comeback after Mao’s death and did indeed put China on the capitalist road. His successors, however, are taking a detour down Crony Capitalist Lane, and this is creating the conditions for a potential day of reckoning for China’s elite.

The regime is facing huge economic problems on the home front, one of the most volatile being the millions of migrant workers, some 16 percent of the population, who provide cheap labor for China’s export-driven economy. Social and regional tensions are exacerbated by this vast mobile workforce, who exist at the very bottom of the socio-economic ladder: a recent riot in Guangdong province is but a rerun of numerous previous incidents. The number of large scale riots and other examples of public “disorder” has increased exponentially since the early nineties, when 8,300 such incidents were recorded. In 2012, the number exceeded 90,000. Land seizures by party officials are often the cause.

Bo appealed to some of these sources of rising discontent — to those who witnessed the degeneration of the Communist party into a kind of Mafia, and remembered — or, thought they remembered — a better day. His crackdown on China’s rampant gangster underworld — often linked to party officials — inspired widespread support. He stoked all those fires the central party leadership most fears — Maoism, nationalism, and growing economic inequality.

That is why he had to go: this nonsense about a murder plot is just for the tabloids. What’s telling is that the case shows no signs of going forward: for the first time since the Bad Old Days of Mao’s reign, there is a real ideological struggle going on behind the scenes. The fate of Bo and his wife is going to give us a good idea of who is winning the struggle, and the timing, in this case, is crucial.

The 18th national congress of the Chinese Communist Party is scheduled to begin in the autumn, and there the power will pass from one generation of party leaders — Hu Jintao — to the next: Xi Jinping. If the Bo Xilai matter is still up in the air by the time the congress convenes — which seems likely, given the official silence so far — China may be facing some interesting times once again.

Failure to resolve the issue in a timely manner means there is a real fight going on inside the CCP — at a time when China is beginning to feel the effects of the worldwide economic recession, and is facing new threats from abroad. The Americans are reorienting their entire “defense” strategy to focus on the Pacific region, and the brouhaha over the South China sea is reaching the boiling point.

In the field of foreign affairs, the Chinese have pursued a classic mercantilist policy, abjuring Great Power theatrics for the most part and playing a cautious role at international forums such as the UN. Yet if the Americans are determined to come after them, and intervene in territorial disputes between China and its neighbors, then the Beijing leadership will have no choice but to respond in like manner. Failure to do so means losing credibility at home with an already disgruntled and highly nationalistic populace.

China, America’s number one creditor, and supposedly the rising superpower of the future, is a paper tiger. Efforts by the neocons to make them into a replacement for the vanished Soviet threat seem doomed to failure when the Chinese spend a fraction of what we spend on “defense.” To put it all in perspective: the Chinese government spends more on its internal police than on their military, which should give us a good indication of what they’re really afraid of. And they have reason to fear.

China’s dictatorship is more brittle, and less resilient than the Syrian Ba’athist regime: one good tremor will shake up the whole system and threaten its very fragile foundations. Ever since the Cultural Revolution, the Chinese leadership has been successful at keeping a lid on powerful populist currents churning just below the surface of society, but their luck may be running out. Mao’s ghost haunts a country whose heedless and greedy rulers live in luxury and head up a “Communist” party no one believes in anymore: if they aren’t careful, the “princelings” may find themselves dethroned much more easily than anyone ever imagined. The Bo Xilai affair revealed the first cracks in the edifice: more are likely to appear as the pressures on the regime increase.