Bloomberg News

China’s Cadres Blocked From Spending Public Cash on Luxury

July 10, 2012

China will bar government agencies from spending public money on luxury goods and lavish receptions as it combats corruption and burnishes its image ahead of a Communist Party leadership handover this year.

The new rules call for more supervision over spending on vehicles, receptions and trips abroad, which the public sees “as a major source of corruption and waste,” the state-run Xinhua News Agency said yesterday.

The restrictions come after a series of scandals and embarrassments for the Communist Party, including the downfall of former Chongqing Party Secretary Bo Xilai and criticism online after party cadres were spotted wearing luxury watches and clothing at this year’s annual legislative session. With the party preparing to change leadership later this year, Premier Wen Jiabao warned in March that corruption could endanger the party’s survival.

“The rules are part of the government’s effort to revive its image after a series of scandals including Bo Xilai,” Willy Wo-Lap Lam, an adjunct professor of history at the Chinese University of Hong Kong, said. “Beijing hopes to build an image of a clean government but the rules themselves won’t be useful if there are no laws or legal arrangements for civilians to report or sue the government officials.”

Chinese officials spent 408.5 billion yuan ($64 billion) on vehicle-related expenditures, 200 billion yuan on meals, and another 300 billion yuan on going abroad in 2004, China Central Television said on its website, citing the Communist Party newspaper Study Times. The 200 billion yuan on meals is enough to build another Three Gorges Dam, CCTV said.

‘Plain Living’

Those sorts of expenses contradict admonitions by Mao Zedong, founder of the People’s Republic of China, for party members to “remain modest and prudent,” and maintain a lifestyle of “hard work and plain living.”

The new restrictions will go into effect Oct. 1, the start of a week-long holiday celebrating the founding of the PRC. The rules have also been handed down as China’s economy shows signs of cooling down.

Economic growth may have slowed to 7.7 percent in the second quarter from a year earlier, according to the median estimate of 36 economists in a Bloomberg News survey. The nation cut benchmark interest rates on July 5 for the second time in a month, adding to the first reduction since 2008.

Meal Limit

The government of Wenzhou, a Chinese city where slowing growth has spurred dozens of suicides, bankruptcies and disappearances by local businessmen, imposed a limit of 60 yuan a person for work-related meals and barred officials from expensing abalone, shark fin, and sea cucumber, the Wenzhou city Commission for Discipline Inspection said on July 5.

“Some local governments cannot even pay salaries so the government wants to show that it’s leading by example,” Minxin Pei, a professor of politics and government at Claremont McKenna College in California, said in a phone interview today. “The primary consideration is that right now the Chinese economic situation looks terrible.”

Wencalled in March for an end to using public funds to purchase cigarettes and “high-end” alcohol, as a widening wealth gap has fueled public outrage over official malfeasance. The state-run CNTV website reported last week that China will ban officials from consuming shark fin at government expense within three years.

Last month, Wenzhou announced it was selling 1,400 government cars to cut costs and increase transparency.

To contact Bloomberg News staff for this story: Yidi Zhao in Beijing at yzhao7@bloomberg.net

To contact the editor responsible for this story: John Liu at jliu42@bloomberg.net


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