There appears to be a genuine attempt to tackle high-level corruption in China – and offloaded mansions are flooding the market, says Paul French

Is there, at last, a real and serious crackdown on corruption in China? It has to be said (even by dyed-in-the-wool sceptics like your columnist, who’s heard the rhetoric before repeatedly) that this year’s renewed crackdown by Communist party officials does look a little more serious than previous efforts. Certainly it seems some cadres think so, and are divesting themselves of their ill-gotten or rather murkily acquired gains.  

The newly installed premier, Xi Jinping, is obviously keen not to see a repeat of the Bo Xilai scandal that rocked the credibility of even the highest cadres within the party. However, the problem is that revealing the extent of the corruption within the party brings with it the danger of further shocking and alienating a population who’d pretty much thought they’d seen it all.

For instance, a corruption whistleblowing hotline looked like a good idea – getting tough, involving the public in fighting corruption – but what it has revealed is astonishing to most people. The first 10 corrupt officials outed and convicted after calls to the hotline came from across the country. Each owned more than a dozen properties (several had many more – the winner, Gong Aiai, the head of a bank in Shaanxi Province, had 41). The outed included police chiefs, state bank managers and party officials.

Property is a touchstone in Chinese society. The desire to own property has become a national obsession. Ordinary people are willing to switch the heating off and eat nothing but instant noodles for years to scrape together high mortgage deposits. Young men spend their parents’ life savings on apartments in the knowledge that only when propertied can they seriously contemplate marriage.

Property prices have risen tenfold in the past decade, making property a hot investment in many cities. It is also true that, previously, corrupt officials thought property less traceable than holding large sums of cash. However, now property is being investigated – revealing a cascade of corruption involving forged paperwork, permissions and permits down the chain. It is not illegal to own numerous properties, and tracing back the money paid for the properties is difficult, so investigators say.

Sell up quick!

Clearly some corrupt officials are nervous. Since the start of the crackdown last September real estate dealers report far larger than normal levels of high-end property being put up for sale, often at less than current market rates.

Many officials and senior executives at state firms are clearly offloading their questionable assets. One Beijing newspaper reported that in the fortnight after the start of the crackdown, 714 party officials fled overseas, never to return. (Presumably they have offshore bank accounts.)

So therein lies the problem – let the snake out of the box and it might just end up biting you. Certainly high-level corruption seems to be being reported more widely now – both in the official media (which must be sanctioned from on-high) and on the internet where, despite the assiduous efforts of the ever-alert Net Nannies, news does filter out. The conundrum for the government is to be seen to be dealing with the scourge of corruption without letting it become an issue of party legitimacy. A few rotten apples must be expunged for the good of the barrel.

This crackdown is also being backed by a government-orchestrated campaign to stem extravagance and waste. The State Administration of Radio, Film and Television, the censors of all things broadcastable, has now banned adverts for expensive gifts including watches, rare stamps and gold coins. Such ads “publicised incorrect values and helped create a bad social ethos”, according to SARFT.

Restaurants specialising in lavish government-sponsored banquets report business slowing to a trickle; purveyors of baijiu, the traditional spirit drunk at such events, report sales dead in the water. If it counts, it seems the stock markets think the crackdown is real – shares in companies specialising in high-end gifts, such as the listed luxury watch distributors Hengdeli and Emperor, have tanked in Hong Kong.

But those old questions remain. Will this simply be a short-term cosmetic exercise and then, once the new government beds in after March, will it be back to business as usual, or will the whistleblowing, the asset confiscations and prosecutions continue?

The cynics say just wait till the spring and all will be back to normal; the pessimists look to Xi himself and his now common practice at press conferences of dispensing with elaborate floral displays and simply taking the stage with a notebook, pen and bottle of water. One thing is for sure – this is the most public and wide-reaching crackdown on corruption in over two decades.

Paul French has been based in China for more than 20 years and is a partner in the research publisher Access Asia-Mintel.

China column  corruption  Paul French  supply chains 

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