THE arrest and kangaroo-court conviction of another successful lawyer might hardly be worth mentioning in a nation where

deregistering, imprisoning or beating lawyers for doing their jobs is becoming commonplace. But the case of Li Zhuang has generated a 10-week Chinese media and internet firestorm, and not just because of the way it was conducted.

It is the first time a lawyer has been convicted of coaching his client to lie on the basis of testimony from an accused mobster, according to another respected lawyer (who has himself been beaten and deregistered for representing the wrong kind of clients).

And the 4000-word character assassination planted in the China Youth Daily straight after Li's arrest was also unusual.

But it is the hazy background to this case that makes it so riveting for onlookers and disruptive for China's political status quo.

The man who must have authorised Li's arrest is Bo Xilai, the only politburo member who can comfortably wear epithets such as "colourful", "mercurial" or "maverick". The Communist Party boss of Chongqing has captivated the nation with a crazy-brave war against the city's organised crime.

Bo got to where he is partly because he is the son of Bo Yibo, one of China's "Eight Immortals" - the tag for an exalted club of revolutionaries who lived long enough to stamp their marks on China's reform-era history.

China Youth Daily hinted at the equally impressive power behind the lawyer whom Bo Xilai arrested: "As Li Zhuang arrived at Chongqing, he began to play the peacock, saying many times, 'Do you know my background? Do you know who my boss is?"

What the censors won't let local media spell out is that Li's law firm is headed by Fu Yang, who is the son of Peng Zhen, who was also one of the Eight Immortals and more powerful than Bo Yibo.

Li's lawyer from the same Kangda law firm, Gao Zicheng, said he could not talk about the background politics: "I can't go there K''

But the fathers Bo Yibo and Peng were once factional allies. Their families lived close together and were closely entwined, often entertaining guests at a Shanxi restaurant they both helped to open, according to a Beijing political aficionado.

"Both Peng Zhen and Bo Yibo were loyalists of [Chairman Mao's one-time chosen successor] Liu Shaoqi, yet the two were rivals," says Huang Jing, a visiting professor at the National University of Singapore. "This hate-love relationship is certainly inherited by their children."

So it turns out that Bo Xilai has just spectacularly arrested, convicted and rejected the appeal of a lawyer who works for Bo's equally powerful childhood playmate, Fu Yang.

The Communist Party has enjoyed enormous success in turning China into a powerful nation and lifting its citizens out of poverty. But the party is also a club that allocates political, financial and social privilege to its members.

It has its own internal system of hierarchy and quasi-royalty, where revolutionary leaders bequeath their status to their children and children's children.

Those descendants are called China's "princelings". Mostly, the princelings get on with the job of expanding the national cake and carving it up. It was Bo Xilai's father, Bo Yibo, who is said to have helped institutionalise the princeling nexus of power and wealth in the 1990s by supporting a proposal that each powerful family have only one princeling in politics, leaving other siblings to cash in their political inheritances for financial ones.

But the case of lawyer Li Zhuang suggests the country may not be big enough for all of them.

Political analysts say Bo Xilai is pursuing an audacious but calculated political strategy. Most say he is appealing directly to the people by implicitly attacking his peers, in the hope of forcing his own promotion into the nine-member politburo standing committee at the next leadership reshuffle in 2012.

"Bo Xilai is indeed challenging the privilege of some princelings to boost his own popularity," says Bo Zhiyue, an expert on China's princelings at the National University of Singapore.

It is not impossible for an outsider to secure the right patrons and make it to the top, as did President Hu Jintao (who was anointed by former party leaders Hu Yaobang and Deng Xiaoping).

Generally, however, modern China belongs to the children of the revolution. All three officers appointed last year to the rank of full general in the People's Liberation Army were children of senior party leaders. Xi Jinping, who many expect to be the next president, is the son of a revolutionary hero. Eight or nine of the 25-member politburo are princelings (defined as having a parent or parent-in-law who held the rank of vice-minister or above), according to Cheng Li, an expert on Chinese elite politics at the Brookings Institution. In the previous politburo there were only three.

The strategic heights of China's economy are also in princeling hands.

The family of former president Jiang Zemin, whose adoptive father was a revolutionary martyr, pulls strings in the telecommunications, railways and postal systems. The family of former premier Li Peng, who was adopted by former premier Zhou Enlai, has outsized influence over electricity production, transmission and hydro-electric dam building. His daughter Li Xiaolin, whose name appeared in the Australian media this week thanks to her run-in with billionaire Clive Palmer over a ''$US60 billion'' ($A67.9 billion) contract, is at the helm of a major power generating company. Her brother headed another large electricity company before being transferred to help run the coal-powered province of Shanxi. Family friend Liu Zhenya controls the electricity grid.

Distinctions between state and personal enterprise are not always clear in China.

Some of the most eminent princeling families discreetly control large companies that are listed on the Hong Kong stock exchange, sometimes in concert with Hong Kong's mega-billionaire families, and often through loyal personal secretaries or close relatives who have changed their names.

Further in the background, Chinese political analysts say the descendants of Marshal Ye Jianying, Deng Xiaoping, Chen Yun, Wang Zhen, Peng Zhen and Bo Yibo are China's real political and financial king makers.

Which brings us back to Bo Yibo and Peng's Zhen's children, Bo Xilai and Fu Yang.

Overwhelmingly, China's intellectuals and the legal professionals castigated Bo Xilai for his Chongqing crackdown, although not by name, for cloaking himself as a modern day Maoist and making a mockery of the rule of law.

The intellectual tide seemed to turn last week when accused lawyer Li Zhuang shocked his own legal advisers with this open-court confession at his appeal: "I fabricated evidence to deceive the police, the procuratorate [prosecution], and the court to exculpate [gang leader Gong Gangmo]."

While that confession was itself clouded in controversy, liberal opinion leaders began to reframe the debate.

Li Zhuang and his law firm, Kangda, are respected for being very good at what they do. But they are also welded into the elite of a Communist Party judicial system that runs on kickbacks and connections.

It is no stretch to say the fathers of Kangda's three founding principals ran China's entire political-security and judicial systems in the 1980s.

The law firm was itself spun out of the legal department of an immensely profitable and unaccountable corporate-charity empire called Kanghua, which was run by Deng Pufang, son of Deng Xiaoping. Controversy about this type of cronyism was one ingredient in the build-up of public unease leading up to the Tiananmen Square demonstrations of 1989.

All that hazy background helps explain why Li Zhuang was once again the big chat topic on leading blogging portals this week, after a Chongqing court rejected his appeal but reduced his jail sentence.

"Bo is the great savior of Chinese ordinary people," said a netizen at the People's Daily website. "Strike hard against gangsters and black lawyers K Drag all their [mafia] uncles out!"

And Bo Xilai hasn't just locked up one well-connected lawyer who may or may not have been doing his job. In China it is impossible for the underworld to thrive without being joined at the hip to the Communist Party, as the open trials of some of Bo's nearly 800 gangland prosecutions have shown.

Wen Qiang, Chongqing's former deputy police chief and then justice bureau chief, was in court trying to explain more than 16 million yuan ($A2.6 million) in suspected kickbacks and sheltering mobsters such as his sister-in-law, "the godmother of Chongqing". It emerged in court this week that the bulk of Wen's wealth was acquired from payments received in return for handing out promotions.

"The trial of the underworld has become a trial of corrupt officials,'' wrote Liang Jing, a pseudonymous political columnist on overseas Chinese language websites.

Yang Hengjun, one of China's most influential political commentators, had previously criticised Bo for his Maoist rhetoric and politicisation of the legal process.

Last week he took a different course, skating close to the limits of permissible speech, after his email inbox had filled to overflowing with unhappy readers.

Yang wrote that the whole debate about defending the ''rule of law" in Chongqing was premised on the assumption that there was actually something already resembling "rule of law" anywhere in China, which there patently is not.

"If you are serious about spreading the 'rule of law' in China I have a suggestion," he wrote. "All legal elites and opinion leaders can join hundreds of thousands of netizens in demanding that Chongqing's fight against gangsters be introduced across the whole nation so that it can terminate unlawful 'rule of law' by corrupt officials."

In the end, writes Yang, debates about rule of law will remain academic in China for as long as it is run by a one-party state:

''Only a greater political system or democracy can provide an answer.''

Privately, political observers in China say that whatever you think of Bo Xilai or his personal motivations, he has thrown a bomb inside Party Central. His public dissection of Chongqing's power and protection rackets invites Chinese people to worry and talk more openly about whether their country is evolving towards some kind of Soprano state. Some liberal thinkers hope Bo is a catalyst for those in the system who are not beholden to "princelings" - perhaps Vice-Premier Li Keqiang? - to rise and challenge the party's privileges.

But the party's princeling bonds will be hard to break. To the extent that they stick together, the princelings will loosen their grip on power only when necessary to preserve it.

"Reporters have every reason to explore the in-fighting among the princelings,'' writes Cheng Li, at the Brookings Institution.

''But I believe that princelings' incentive for co-operation and the need to share wealth and power are far more important than their internal tensions and conflicts.''