China's crackdown on corruption may be easing
Spending is on the rise, but analysts warn the trend could be short-lived
ATSUSHI OTANI, NQN staff writer
HONG KONG -- Chinese President Xi Jinping's anti-corruption and anti-extravagance campaign has forced the country's wealthy to tighten their purse strings, eroding growth in not only China but also other parts of Asia. The region's stock markets, however, seem to believe that the negative effects of the campaign may be subsiding.
Crackdowns decrease 12%
China's Supreme People's Procuratorate, its highest prosecutorial body, announced on March 12 that the number of civil servants detained for accepting bribes in 2016 declined 12% from the previous year to 47,650. Of them, the number of officials at Cabinet-minister and ministry-head levels or above nearly halved to 21.
Although state-run news agency Xinhua reported that the crackdowns have not slackened and that their take-no-prisoners policy remains, these statistics indicate otherwise.
A tally by the Communist Party's Central Commission for Discipline Inspection -- an anti-corruption monitoring body -- has shown that the number of violators of Xi's eight-point rules also declined 25% from a year ago to 4,075. The rules define specific guidelines designed to curb party members' extravagance and corruption.
In a sign that easing of the crackdowns may have assuaged some fears, combined restaurant and retail sales during the Lunar New Year holiday from Jan. 27 to Feb. 2 grew 11.4% from a year ago to 840 billion yuan ($122 billion), according to China's Commerce Ministry. In January, restaurant sales rose 19% to 30% in Anhui, Yunnan and Xinjiang.
A Goldman Sachs analyst said that although crackdowns on overly indulgent wining and dining continued through the holiday, they were less strict than before.
Casino revenues in Macau, China's only region where gambling is legal, are recovering slightly after previously slumping due to gamblers discouraged by the anti-corruption campaign.
Macau government statistics showed revenues from VIP baccarat tables rising 12.7% year-on-year to 33.3 billion pataca ($4.16 billion) in the October-December period. This marks the first year-on-year quarterly increase since the January-March period in 2014, and may signal that these revenues, which fell as much as 40%, may finally have bottomed out.
Another indication of a spending recovery is in sales of baijiu, a fiery grain spirit typically given as a New Year present. Shanghai-listed distillery Kweichow Moutai, known for high-end baijiu brands, has seen sales return, with its shares now at their highest since listing.
Declining sales on a same-store basis at Hong Kong retailer Chow Tai Fook Jewellery Group also abated. The Group's growth in the October-December period sent shares to their highest since last year.
Return of tightening feared
Nonetheless, analysts warn that the current rosy outlook is in no way guaranteed. Xi may again try to play the relentless leader, rooting out corrupt bureaucrats in a bid to boost his popularity and solidify power. In fact, Beijing plans to set up a new commission next March to control corruption, aiming to extend the crackdowns beyond civil servants and Communist Party members -- a move which may again dampen spending.