The ban on luxury reduces the profits of Chinese companies

Repressive measures of China's leadership to combat corruption in government and business, have a negative impact on the economy. During the campaign for the elimination of corruption, the employees of foreign organizations that have offices in China were placed in detention, as well as 37 thousand state officials, CNN Money informs.

More recently, Beijing imposed a ban on luxury for state officials. Now officials can not have lavish banquets, have showy cars and accept luxury gifts.

Although it is not easy to calculate the estimated amount of damages from the resolution, experts interviewed by the publication CNN Money, believe that repression has effect on economic performance. "China's anti-corruption campaign affects government spending in some areas of consumer goods and services", - said Kinvey Wang, Associate at Research Center Capital Economics. Wang believes that this would reduce annual GDP by 0.1 - 0.2 %.

The campaign, which started after taking office by the new president of China, Xi Jinping, has affected a number of industries. Thus, the requirement to reduce costs has led to a reduction in income of high-end restaurants, as well as lower sales of alcoholic beverages by premium income luxury hotels and banquet halls. In addition, retail sales of luxury goods fell by 5% in 2013.

State media reported that more than 50 five-star hotels were asked to remove one star, hoping that it will allow them to continue to take official action.

However, analysts argue that, regardless of the purposes of the anti-corruption campaign, in the long run it will lead to strengthening public confidence in the ruling party and improve economic performance.