Updated regulations in China have banned the country's 40 million civil servants from lavish banquets and restricted overseas travel for personal leisure, part of a government austerity drive aimed at curbing corruption. However, analysts warn the measures could undermine economic growth.
In Beijing, a restaurant near a municipal government building has seen a sharp drop in customers at lunchtime, with a waitress attributing the decline to the crackdown on civil servants dining out. The rules, released in May, target Communist party members and civil servants, prohibiting extravagant spending and other visible signs of excess.
Economist Guo Shan of Hutong Research predicts the policy could slow China's retail sales growth by around one percentage point in the second half of the year, counteracting other efforts to boost domestic spending. The renewed regulations follow earlier anti-corruption guidelines introduced in 2013, but experts suggest the latest push indicates previous drives were not fully effective.
Local governments began implementing the new guidance in June, with some provinces ordering civil servants not to dine out in groups larger than three, and others instructing cadres to avoid social gatherings. Penalties have already been reported, including two bank employees in Anhui who had bonuses docked for attending a client-paid lunch of noodles costing about six yuan.
The crackdown has also hit the liquor industry, particularly Kweichow Moutai, whose share price dropped nearly 9% by the end of July, wiping out over 170 billion yuan in market value. Baijiu, a popular spirit among officials, has come under scrutiny after three local officials died of alcohol poisoning.
Restrictions are extending beyond senior bureaucrats, with teachers in some provinces now required to apply for permission for overseas travel, even for personal holidays. Public sector workers in other regions must hand in their passports, sparking complaints on social media. Despite the economic concerns, the government appears willing to bear the costs to enforce discipline.
