When Xi Jinping first came to power, the Chinese president had some advice for his colleagues: It was time to "take baths" to purify themselves from greed. Both the “tigers” and the “flies” of the part – upper and lower officials – would be forced to curb their corruption, Xi explained. Just last month, after the arrest of Xu Caihou, a powerful retired People's Liberation Army general, he upped the ante: Announcing that "chili pepper" should be added to the anti-corruption drive to make "every Party official blush and sweat a little."
Is Xi's anti-corruption drive working? In as country as opaque as China, it can be a little hard to tell. But one way to think of it is to look at the many, many reports of a luxury spending slowdown in the country. Here are some examples:
- On Tuesday, the World Wildlife Foundation announced that trade in shark fins from Hong Kong to mainland China dropped by almost 90 percent last year. While this may be due to environmental pressures, WWF-Hong Kong senior program director Tracy Tsang Chui-chi told the South China Morning Post that could not rule out the possibility that the "central government's anti-corruption measures could have played a role in the big drop in re-exports."
- The Chinese catering industry grew at its slowest rate in 21 years during 2013, Xinhua reports, who also reported that the upmarket sector had suffered big losses.
- Last year, 56 five-star hotels made the conscious decision to drop down to four stars, according to Xinhua. Why? As James Kynge of the Financial Times noted earlier this year, it appeared to be part of an effort to attract Chinese officials who were no longer holding their banquets at lavish five-star establishments due to the stigma of corruption.
- Prada, Luis Vuitton and Gucci are among the luxury brands who are seeing slowing sales in the country.
- Diageo, the world's biggest distillery, reported a drop sales of its baijiu brand dropped 66 percent, the FT reported. Other companies that produce luxury alcoholic beverages, such as LVMH Pernod Ricard and Rémy Cointreau, have also reported troubles.
- Swiss watch sales to China slowed in 2013, although there are signs that they are recovering for 2014, Reuters reports.
- According to Xinhua, military license plates are no longer allowed on cars made by Mercedes-Benz, BMW, Lincoln, Cadillac, Volkswagen Phaeton, Bentley, Jaguar, Porsche, Land Rover and Audi Q7s. A number of luxury car companies have reported slowing sales.
- Zhang Hongbao, a funeral home owner in Shanghai, recently told Bloomberg News that his business was very slow due to the corruption clampdown. “Government officials don’t dare to spend too much on funerals,” he explained.
Could all of these really be the result of Xi's anti-corruption clampdown? Perhaps – cutting down on ostentatious luxuries is an easy way to make your own corruption less visible, whether the Chinese government is investigating you or not.
Still, if China's new-found fear of luxuries is part of Xi's plan, it may be having some unexpected effects. Bank of America Merrill Lynch recently estimated that the crackdown on corruption could cost the Chinese economy more than $100 billion this year.