BEIJING — With China’s new leadership pledging to toughen up on corruption, luxury brands that have been thriving in this country — often thanks to the massive gray market in currying official favor with expensive gifts — may be in for a bit of a slowdown.
Since Xi Jinping was anointed head of the Chinese Communist Party in November, paving his path to the presidency in March, Xi and others have sent a series of signals that they intend to clamp down on corruption, the systemic and unavoidable facet of China’s economic model. In the past week, two key points were revealed. First, Xi himself spoke openly of the need to punish corrupt officials, everyone from “flies” to “tigers,” a metaphorical reference to going after top government leaders who are corrupt as well as the lowly ones often used to make a point.
“We must uphold the fighting of tigers and flies at the same time, resolutely investigating law-breaking cases of leading officials and also earnestly resolving the unhealthy tendencies and corruption problems which happen all around people,” Xi said, in comments reported Tuesday by the official Xinhua news agency.
Chinese media have reported for several months that there has been a slowdown in luxury sales on the heels of hints that the new leadership might strengthen its anticorruption efforts. Caixin, an investigative business journal, reported last year that several high-end brands had already reported slowed growth in China, owing to signals that corruption might be curbed. In October, Bain & Co. predicted a further slowdown in luxury sales in China in 2013 with some brands already showing signs of strain.
Starting last summer, the country’s ruling State Council issued orders curbing local governments’ spending on trips abroad, vehicles and other high-ticket items. Observers have said the government crackdown on “bling” has resulted in less gift-giving to government officials, with watches one of the favorite gifts to give. The edict was aimed at reining in what has become a very public sore spot for China’s government. The latest indications from Xi are that the push against official corruption won’t stop at local governments.
Xi’s comments this week came just a few days after China’s surprising revelation of the country’s income gap, releasing its own measure of the Gini coefficient — a global gauge of income inequality that China has not published since 2005. While there remains widespread skepticism about the figure and the fact that China’s National Bureau of Statistics said the wealth gap has narrowed of late, that the statistics bureau chose to release its data after so many years of silence on a volatile issue was seen as significant by economists and other China experts.
The official numbers released by the statistics bureau put China’s Gini coefficient at 0.474, slightly down from last year, which would place China roughly on par with the U.S. By comparison, some earlier estimates placed it as high as 0.6, which is a much steeper scale of inequality and could undermine China’s careful efforts to maintain social stability amid rapid economic and personal wealth growth.
Patrick Chovanec, an associate professor at Tsinghua University’s management and economics school in Beijing, said he believes the more troubling issue for China is not the income gap, but rather an “inequality of privilege.” Many Chinese people at the bottom of the income gap are less concerned with the chasm than they are with the concept that the very wealthiest people in society have amassed fortunes based on family relations, personal relationships and government positions.
“There’s a sense that there are people who live according to a different set of rules, that power begets wealth and wealth begets power — that is what bothers people,” Chovanec said.
Dai Jianzhong, a labor relations expert at the Beijing Academy of Social Sciences, said the bottom rungs of the income data in China are populated with the country’s internal migrant workers, the people who work low-end jobs that build up the economy, but rarely share in the massive profits.
Dai said income and household registration status have created what he considers a new social class system in China, similar to ethnicity. Discontent among ethnic minorities is a lesser threat than that among the economically disenfranchised.
“It is because people have a different cultural identification [through their economic status],” said Dai. “I think these conflicts will cause tension within society.”
My character, Dinah Madani, is just the coolest, [most] badass woman imaginable," says @amberroserevah. The actress stars in @marvel's newest series on @netflix, @thepunisher. To prepare for her role, Revah sat down with Homeland agents to get a real sense of with Dinah's day-to-day life is really like. Read our full interview on WWD.com. #wwdeye (📷: @jilliansollazzo)
A scene from the 91st annual @macys Thanksgiving Day Parade. The parade, which boasts 50 million TV viewers and 3.5 million on-site spectators, is considered one of the largest and most watched parades in the world. (📷: Jason Szenes/EPA-REX)
The circus came to @bloomingdales 59th Street on Tuesday night and lit up Lexington Avenue with acrobatic dancers, death-defying knife throwing, sword swallowing and aerial acts with no net. The 45 minutes of theatrics built up to unveiling the holiday windows depicting @swarovski crystal-encrusted circus pieces and scenes from “The Greatest Showman” – songs from the soundtrack included. See the rest of the photos on WWD.com #wwdfashion (📷: Joshua Scott)
The psychedelic fashion that pervaded the ’60s is back with an exhibit at the @museumofcityny. “Mode New York: Fashion Takes a Trip” chronicles the changing styles from 1960 through 1973 and features designers such as @ysl, @oscardelarenta and more. The exhibition, which is on display through April 1, is organized into four periods: First Lady Fasion, Youthquake, New Bohemia and New Nonchalance. Pictured here is model Pat Bardonella during the Garvey Day Parade in 1968. (📷: @kwamebphoto) #wwdeye #wwdfashion
“People should be a lot more honest in expressing both the dark and light of themselves. We need to give each other the space to do that because it’s the only way we can grow and evolve,” says @noelwells of her new film “Mr. Roosevelt,” which is largely based on her own struggles. Unexpectedly leaving @nbcsnl in 2014 after just one season, Wells felt set back in her self-esteem and career trajectory. She quickly refocused her energy to more personal projects, which led to the completion of “Mr. Roosevelt.” Read the rest of WWD’s interview with the “Master of None” actress on WWD.com #wwdeye (📷: @jilliansollazzo)
@barbrastreisand is giving fans a chance to see her perform up close in a new concert series, which makes its debut on @Netflix today. From behind-the-scenes takes to her concert performance in Miami last December, the two-hour streaming special captures Streisand in her element. Pictured here is the singer/actress photographed for WWD in 1963. (📷: Palmieri Tony) #wwdeye #wwdarchive
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)