China turns against official extravagance

Banquet at a Chinese official function (file image) Such was the extent of officials' spending on luxuries that the clampdown is said to have depressed share prices in high-end liquors

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Shanghai's Hotel Industry Association is, you would think, naturally a conservative kind of organisation.

It represents more than 50 five-star hotels, which cater for the city's rich and powerful elite.

The association's president, Huang Tiemin, is himself a top hotelier and a card-carrying member of the Communist Party.

He seems a very unlikely person to throw discretion to the wind and turn on some of his highest profile and highest spending clients - but listen to this.

"It is astonishing. Unbelievable," he says of the dining habits of China's government officials.

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Huang Tiemin

Shark fin, abalone, bird's nest and other very expensive foods can very often be found in banquets funded with public money”

End Quote Huang Tiemin President, Shanghai Hotel Industry Association

"It is very normal to have a banquet with over 10 courses. Some have 15 to 20. I've seen one where there were so many dishes they had to be stacked three-high."

And he disapproves not just of the large quantity of food consumed but its superior quality too.

"Shark fin, abalone, bird's nest and other very expensive foods can very often be found in banquets funded with public money."

Warming to the theme, he adds; "Sometimes the cost of the alcohol is even higher than the food."

It is a picture of publicly-funded gluttony and extravagance that a few months ago would have been very hard to glean from one so well connected.

But something has changed and in China it is suddenly the political fashion to denounce the high-spending habits of the country's public servants.

No whim

It was Xi Jinping, the new Communist Party chief, who started it. When the new leadership took over in November last year, one of the first acts was to issue a list of prohibitions.

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There is a clear danger for the new leadership in all this”

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No more spending public money on banquets. No more official gift-giving. No more using official cars on public holidays.

It has not been done on a whim. Such is the level of anger in China about corruption, privilege and abuse of power that the Communist Party openly admits that it threatens its hold on power.

It has been heard before, of course. Previous leader Hu Jintao - and Jiang Zemin before him - warned of the existential threat posed by corruption.

But this time the thunder has been matched by the following rainstorm, to borrow a now oft-quoted Chinese saying.

The prohibitions are clearly being enforced if you take economic activity as a measure.

"It's had a big effect on high-end hotels like mine," Huang Tiemin tells me. "Since the date the new regulations were published, banquet bookings have fallen by at least 30%."

Share price fall

And there are other indications that the rhetoric is being taken seriously this time round.

The order prohibiting the military from holding boozy receptions led to a drop in the share price of some luxury liquor brands.

And flower sales across the country are reported to be plummeting, with one stall owner telling me business was down at least 50% because of the ban on floral displays at official functions.

Xi Jinping emerges as head of the Politburo Standing Committee of the Communist Party - and the new leader of the country - at the Great Hall of the People in Beijing on 15 November 2012 Will Xi Jinping's resolve to tackle corruption falter?

There is a clear danger for the new leadership in all this. The more it cracks down on and exposes the corruption, the more the people will be reminded of just how deep it goes.

Mr Huang tells me that so voluminous was the flow of public cash into the luxury hotel industry that it was distorting the market with new five-star establishments planned and built on the back of it.

Perhaps if such accounts become too widespread, or if the accompanying internet exposes of official corruption get too close for comfort, the leadership will stifle them again.

After all, this is primarily about party survival, not an exercise in reform for its own sake.

If anyone has any doubt about that, they only have to read the reported comments from a leaked speech that Xi Jinping gave two months ago, shortly after coming to power.

In it he apparently laments the collapse of Soviet communism and warns that China will never move towards the "universal values of the West".

But whatever the reasons behind the new-found government frugality, many are hoping that it will be long-lasting.

Corruption is a political and social challenge for China, but it has also been a drag on the economy.

Mr Huang, now given licence to say what he really thinks about some of his long-standing customers, believes more thrifty and less extravagant bureaucrats will be good for business.

"In the short term it will hurt profits," he says, "but in the long term hotels will be forced to adjust our business model so we don't focus on public money."

"We will have to cater more to the local private market and attract more international guests, and I'm confident that we will."

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