Public spending fans luxury prices

Now that the country's top liquor brand Moutai is under scrutiny, we should also take a look at some of the other goods that have been trying to follow hard on the heels of the expensive liquor.

Chinese tea producers have let the cat out of the bag by admitting that their highest quality teas are targeted at public funds.

Zhu Baichang, president of Hangzhou Longjing Tea Group in Zhejiang province, East China, was just being honest when he said the best tea is out of reach of ordinary people.

The period from Tomb-sweeping Day on April 5 to Grain Rain on April 21 is generally considered the best time to pick the highest quality Longjing tea from the capital of Zhejiang, and this year it was certainly a golden harvest as the first teas were going under the hammer at auction for 180,000 yuan ($28,500) for half a kilogram - that's more expensive than gold.

It is only government organizations, higher learning institutions, companies and very wealthy individuals that can afford to buy tea at these rarefied prices.

A gift of tea has rarely been considered a bribe, yet that might change now the public is keeping a watchful eye on corruption and high quality teas are more expensive than gold.

China is now the world's fastest-growing luxury market, with gifts to government officials making up close to 50 percent of the country's luxury sales, according to industry experts.

The practice of giving government officials gifts - by other government officials and, more commonly, by private businesspeople - is so widespread that luxury goods producers have come to count on it as an increasingly important revenue source. But this trend has not passed unnoticed and Chinese micro bloggers have been documenting the expensive watches, handbags and cars that have been acquired by officials.

Public-funded government receptions, which are often expensive affairs, with officials spending large amounts of money to entertain their guests with high-end fare, have also been a major driving force behind the soaring prices of many high-end goods - the liquor Moutai being the earliest and biggest beneficiary of the practice - the company netted 8.76 billion yuan last year.

The government has taken note of people's discontent at how public funds are being spent.

In January, Shen Haixiong, a deputy to the Shanghai municipal people's congress, called for a ban on Moutai liquor at official banquets, calling it "an abuse of public funds".

And at the 11th National People's Congress early in March Premier Wen Jiabao said that public money should not be used to buy cigarettes, high-end liquor or gifts. A month earlier a proposal was aired to ban the purchase of any car that is foreign, big or extravagant for official use.

Wen called for a crackdown on corruption in the public sector and said government expenditure on official receptions, vehicle purchases and overseas trips - the so-called sangong expenditures - should be open to public scrutiny.

Several measures have been enacted to combat indiscriminate government spending in recent years, including one passed last year requiring ministries disclose their expenditures on sangong expenses.

But if the government is really serious about controlling the sangong expenditures, it should come up with exercisable solutions.

It should put a cap on consumption using public funds and bosses should be held accountable if their government departments and companies spend above the limit. Also government departments and State-owned companies should be legally bound to open their accounts to public inspection.

Any unnecessary expenditures using public funds should be punished as a crime as it is a misuse of taxpayers' money.

The author is a senior writer with China Daily. E-mail: caihong@chinadaily.com.cn

(China Daily 04/16/2012 page8)