China’s Luxury Fever and Curbing Official Ostentation

In 2012, China became the world’s largest consumer of luxury goods, overtaking Japan and the US. More striking is the rate of growth in this domain: consumption of luxury goods increased by a factor of sixty between 2000 and 2010. Compared to Europe and the US, Chinese consumers of luxury goods are younger and the majority are aged twenty-five to forty. Chinese consumption of luxury goods also tends to excess and ostentation, competitive consumption is also known as dou fu 斗富 in Chinese, and has attracted criticism from the mainland public.

To make sense of this new Chinese ‘luxury fever’, analysts and commentators have underlined some particular characteristics of luxury spending, some of which are presented below. The first two articles by journalists Sun Xiaoji and Zhu Xuedong appeared in a special issue of Co-China magazine which came out in early March 2013. The third, by the economist Shui Shangnan, was published on Consensus Network 共識網. All three use social sciences – ethnology, sociology and economics – to understand the role of luxury spending in social construction and class distinction. Sun, who speaks of the ‘barbarity’ of Chinese excess consumption reminds us of the German sociologist Norbert Elias’ famous 1930s work on ‘the civilsing process’ in which he noted the structuring and restraining of social behaviour was deemed by many as a mark of ‘civilisation’ as opposed to the barbarity of unconstrained action. In January 2013, Xi Jinping, the ascendant party-state leader, even went so far as to say it was necessary to ‘keep power restricted in a cage of regulations‘ 把权力关进制度的笼子里. This sounded to many like a formula for even greater amounts of red tape and bureaucracy and there was little indication from the new leader about the long-term dilemma of one-party rule: how can the ruling party effectively police itself?

With the advent of the Xi Jinping-Li Keqiang party-state leadership, once more there has been an austerity drive within official China. As a popular saying goes, ‘when a new official comes to power he brings three flames’ 新官上任三把火, meaning that at the start of a new regime policies of moderation and strictness give people hope for more substantive and lasting change. Of course, much is made of Chinese traditions of frugality and moderation, although dynastic and popular accounts are replete with examples of excesses that bely such teatotalism.

In January 2013, Xi spoke of the need to place power ‘within a cage of regulations’ to limit excesses; this built on a December 2012 Eight-point Code 八项规定 that was issued to rein in sumptuary and other behaviour among officials.[1] Speaking as the new Premier at the National People’s Congress in March 2013, Li Keqiang also addressed the need to modulate public spending and the urgency of ending excessive building programs for government offices and villas known by the short-hand lou tang guan suo 楼堂馆所. Much virtual ink has also been splashed on accounts of restraints on official banqueting since Xi’s rise to power. He is said regularly to request meals consisting of a meagre ‘four dishes and one soup course’. The expression ‘four dishes and one soup course’ 四菜一汤 has been in common bureaucratic parlance since the founding ruler of the Ming dynasty, the Hongwu 洪武 emperor (Zhu Yuanzhang 朱元璋, 1328-1398), was repulsed by excessive official wining and dining in the fourteenth century. In the early years of the Communist Party’s reform era much too was made of limiting official meals to ‘four dishes and one soup course’.

Drives for frugality dating back to the Party’s days in Yan’an in the early 1940s have, due to a lack of independent supervision and sustained political will, usually petered out after a suitable interval (see the ‘Corruption and Privilege’ information window in the concluding chapter of China Story Yearbook 2012, ‘Red Eclipse’, here). The new Party General Secretary and President of China, Xi Jinping, has, however, led by example and reports of his public activities have emphasised his direct, frugal and unassuming approach. During the December 2012 meeting of the Central Party Discipline Commission, the body entrusted with the purity of the ruling party, the official Han Henglin said that the Party should try harder to win public trust. He noted:

‘A recent report shows that the public’s trust in the Party and the government has fallen to a critical level.’

Han said he had read The Old Regime and the Revolution, by Alexis de Tocqueville (1805-59), a book recommended by commission secretary Wang Qishan. The book analyzes French society before the revolution of 1789.

‘The book showed that the revolution was caused by a collapse of public trust.’[2]

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Why Do the Chinese Delight in ‘Barbaric’ Consumption?

Sun Xiaoji 孙骁骥, a Chinese journalist trained in the UK, offers a reflection on China’s extreme forms of luxury consumption based on anthropological models.

In line with a certain sociological tradition, Sun Xiaoji identifies the role of luxury as a marker of class distinction. But in the case of China, luxury consumption by the wealthy has gone to near irrational extremes. He compares these extreme forms of luxury spending to the American Indian practice of ‘potlatch’, in Chinese 夸富宴. In a ‘potlatch’ ceremonial banquet, a rich member of the tribe would splurge on an excessive meal and ostentatiously and publicly destroy his possessions so as to gain status. The piece concludes by pointing out the tension between modern middle class ideals of balanced rational spending, and this ‘barbaric’, irrational form of ostentatious consumption or 耗费.

Identifying different social classes through their consumption activities does not itself constitute a problem. The problem is that ‘potlatch’ behaviour is often accompanied by humanity’s most primitive manifestations of irrationality, such as orgies, carnivals, squandering, and large-scale ceremonies. And these phenomena are precisely what Western ‘rational’ thinking has been rejecting since the Enlightenment. For the modern middle class, which advocates a rational form of thinking, ‘potlatch’ will undoubtedly constitute an offence to human rationality. ‘Flaunting wealth’ is something that only tribal leaders can afford to do. Conversely, for most people, including the middle class, money earned through one’s own personal efforts should be spent rationally. Moreover, spending is a private matter: how can you have the nerve to display it publicly? In their eyes, luxury consumption has become shameful; it has none of the ritual ecstasy of a primitive tribe.

Original article: 孙骁骥, 中国人为何喜欢’野蛮’消费?, BWChinese.com, 28 July 2011.

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The Hidden Logic of Luxurious China

This article by Zhu Xuedong 朱学 first appeared in the Beijing-based China Week 中国周刊, which he edits. It analyses the new class relationships revealed by and underpinning changes in China’s consumption of luxury items. His reflection are articulated in three parts:

  1. The quest for luxury is at odds with traditional Chinese thrift. However, recent economic developments have meant that Chinese people have been encouraged to pursue wealth as never before in China’s history. The disappearance of the tradition of thrift among the new generation is not necessarily a bad thing, as the general availability of luxury is a form of social equality, signifying that the nobility no longer has an exceptional status in the consumption of goods.
  2. Luxury consumption is increasingly unpopular due to the particular form it takes in China. Because luxury plays the role of a lubricant in relationships between business people and officials, luxury items keep appearing in corruption investigations, arousing negative emotions in the public.
  3. People don’t hate luxury per se, but the abnormal consumption of luxury items, which is a sign of underlying corruption

He goes on to say:

Luxury has become the target of public criticism. Applying Freud’s theory, we can interpret this as a kind of ‘transfer’. ‘This term refers to the phenomenon of people transferring emotions attached to certain events, objects or relationships to other events, objects or relationships.

What the public hates is neither luxury per se nor normal consumption of luxury. What has caused public anger are stories involving abnormal and excessive behaviour.

Luxury consumption has become abnormal in China. This is because rapid economic development has led not only to wealth accumulation but also to collusion between government and business, legal bypasses and rent-seeking. These have given rise to destructive forms of luxury consumption.

In every case of public corruption involving luxury items, there is a story of rent-seeking and collusion between government and business. In this process, wealth which is supposed to belong to society and the masses has been plundered. The masses have no way of sharing in the fruits of socio-economic development. This is the other side of the triumphalist GDP story and an important reason why growth does not benefit most members of society.

Original article: 朱学东, 奢侈中国的隐秘逻辑China Week, October 2011.

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Irrational Luxury and Unjust Extravagance

In line with its subtitle, this article by economist Shui Shangnan 税尚楠 views ‘China’s luxury and extravagance fever from a behavioural economics perspective’.

Shui Shangnan starts with an analysis of luxury consumption as irrational and ends with the claim that conspicuous luxury consumption is wasteful and generates social tension. He then proposes an explanation for the high levels of luxury consumption in China today, based on the theory of mental accounting. According to this theory, money from different sources is not considered equivalent, and leads to different types of consumer behaviour. People who splurge on luxury do so because they have access to easy money, and this in turn is a sign that wealth is not adequately distributed.

When a minority of people can, without effort and toil, fill their pockets and mindlessly squander their wealth on luxury items, there is undoubtedly a problem of irrationality in the existing wealth allocation and distribution system. What is more, the current allocation and distribution system is unfair. Chinese society ‘suffers not from scarcity but from unfairness’. Unfairness increases dissatisfaction and leads to mass incidents. But this extreme inequality in wealth distribution is also the root cause of sluggish domestic demand, and the reason why structural economic adjustments are so difficult to implement.

Irrational luxury spending and unjust extravagance are ominous in any era. Shui Shangnan ends the article with a warning, citing the Western Jin dynasty as a time when extremes of luxury led to the ruin of the country.

Original article: 税尚楠, 非理性的奢侈,不公平的挥霍, Consensus Network 共识网, 20 March 2012.

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Notes:

[1] The official description of the Eight-point Code reported on 4 December 2012 is as follows:

规定要求,中央政治局全体同志要改进调查研究,到基层调研要深入了解真实情况,总结经验、研究问题、解决困难、指导工作,向群众学习、向实践学习,多同群众座谈,多同干部谈心,多商量讨论,多解剖典型,多到困难和矛盾集中、群众意见多的地方去,切忌走过场、搞形式主义;要轻车简从、减少陪同、简化接待,不张贴悬挂标语横幅,不安排群众迎送,不铺设迎宾地毯,不摆放花草,不安排宴请。要精简会议活动,切实改进会风,严格控制以中央名义召开的各类全国性会议和举行的重大活动,不开泛泛部署工作和提要求的会,未经中央批准一律不出席各类剪彩、奠基活动和庆祝会、纪念会、表彰会、博览会、研讨会及各类论坛;提高会议实效,开短会、讲短话,力戒空话、套话。要精简文件简报,切实改进文风,没有实质内容、可发可不发的文件、简报一律不发。要规范出访活动,从外交工作大局需要出发合理安排出访活动,严格控制出访随行人员,严格按照规定乘坐交通工具,一般不安排中资机构、华侨华人、留学生代表等到机场迎送。要改进警卫工作,坚持有利于联系群众的原则,减少交通管制,一般情况下不得封路、不清场闭馆。要改进新闻报道,中央政治局同志出席会议和活动应根据工作需要、新闻价值、社会效果决定是否报道,进一步压缩报道的数量、字数、时长。要严格文稿发表,除中央统一安排外,个人不公开出版著作、讲话单行本,不发贺信、贺电,不题词、题字。要厉行勤俭节约,严格遵守廉洁从政有关规定,严格执行住房、车辆配备等有关工作和生活待遇的规定。

The official English translation of the Eight Points is:

1. Leaders must keep in close contact with the grassroots. They must understand the real situation facing society through in-depth inspections at grassroots. Greater attention should be focused on places where social problems are more acute, and inspection tours must be carried out more thoroughly. Inspection tours as a mere formality should be strictly prohibited. Leaders should work and listen to the public and officials at the grassroots, and people’s practical problems must be tackled. There should be no welcome banner, no red carpet, no floral arrangement or grand receptions for officials’ visits.

2. Meetings and major events should be strictly regulated, and efficiency improved. Political Bureau members are not allowed to attend ribbon-cutting or cornerstone-laying ceremonies, or celebrations and seminars, unless they get approval from the CPC Central Committee. Official meetings should get shortened and be specific and to the point, with no empty and rigmarole talks.

3. The issuing of official documents should be reduced.

4. Officials’ visits abroad should only be arranged when needed in terms of foreign affairs with fewer accompanying members, and on most of the occasions, there is no need for a reception by overseas Chinese people, institutions and students at the airport.

5. There should be fewer traffic controls when leaders travel by cars to avoid unnecessary inconvenience to the public.There should be fewer traffic controls arranged for the leaders’ security of their trips to avoid unnecessary inconvenience to the public

6. The media must not report on stories about official events unless there is real news value. The regulations also ban worthless news reports on senior officials’ work and activities and said such reports should depend on work needs, news value and social effects.

7. Leaders should not publish any works by themselves or issue any congratulatory letters unless an arrangement with the central leadership has been made. Official documents without substantial contents and realistic importance should be withheld. Publications regarding senior officials’ work and activities are also restricted.

8. Leaders must practise thrift and strictly follow relevant regulations on accommodation and cars.

[2] For these quotes, see ‘Xi Jinping Vows “Power Within Cage of Regulations” ‘, China Daily, 23 January 2013.