The fall of Bo Xilai, former party secretary of Chongqing, has raised concerns among China observers. Early last month, his right hand man and Chongqing police chief, Wang Lijun, went to the American consulate in Chengdu and stayed there overnight. It remains a mystery why Mr Wang did that, but what is clear is that the incident has led to Mr Bo’s sacking.

Yet the police chief’s odd behaviour was only a catalyst for Mr Bo’s fall. Over the past few years, the party secretary has waged a campaign in Chongqing to crack down on organised crime. He also started a movement to sing “red songs”, the songs that were popular in the first thirty years of the communist rule. Most China observers believed that he was angling for a position in the next standing committee of the political bureau.

But his campaigns were perhaps the very reason for his sacking. Mr Bo’s moves have garnered him loud applause from the people, but raised concerns among the top leadership. This was made clear in premier Wen Jiabao’s answer to a question regarding Mr Wang in a press conference a day before the central committee sacked Mr Bo. Pointedly, Mr Wen remarked on the disasters China experienced during the Cultural Revolution when populist movements led to great destruction of the society.

The sacking of Mr Bo signals that the party will continue on its pragmatic and centralist policy set long-ago by Deng Xiaoping. It has now been widely recognised that the reform process stalled in the last decade. However, it was a key theme in Mr Wen’s address to the recently-concluded annual People’s Congress. It seems that this was not just lip service, but would be backed by real actions.

An example is the government’s new hukou, or household, registration policy. In small cities and towns, people can register as local residents as long as they have a job and a home (even if it is rented). In medium-sized cities, people can do the same if they have worked and lived there for three consecutive years. This new policy, if it is carried out as outlined, will end the discrimination against migrant workers. Its impacts on China’s political and social landscapes will be felt only after it is fully implemented.

The recent ‘China: 2030′ report by the World Bank supports the thesis that the government is back on the path of reform. Among other recommendations, it calls on China to seriously reform its state-owned enterprises. The report is a joint effort between the World Bank and the Development Research Center of the State Council, China’s executive branch headed up by premier Wen. So the reform proposal is at least endorsed by some key sections of the government.

To see real changes, though, one may have to wait until the Communist party concludes its 18th congress and a new leadership takes shape in October. But the recent political developments and policy changes have raised hopes that reform is back on the agenda.

The writer is director of the China Center for Economic Research at Peking University