Back to blog
Jack Cooper
Jack Cooper
  • 1 Minute Read
  • 24th July 2013

China Bans Construction of Government Offices

In a move that continues sees the continuation of an austerity campaign, China has banned the construction of government offices for the next five years.

The ban, which takes immediate effect, will also apply to the expansion of existing buildings.

Implemented by The State Council, China's cabinet, and the Communist party on Tuesday, it is a move to change attitudes towards economic expenditure.

"We must really use our limited funds and resources for the development of the economy and the improvement of people's lives," they said.

The austerity campaign already in places is dissimilar from western measures, in that rather than being driven by budgetary shortfalls, it is being pushed by the current leadership's determination to address the 'slipping moral standards' of the Communist party.

Party leader Xi Jinping enforced an immediate ban on extravagant banquets, wasteful travel, and other 'trappings of corruption' that have tarnished the public's perception of the country's government.

These measures have lead to a slowed consumption growth in the first two quarters of the year, and have dealt a blow to international luxury goods companies - a clear impact on the global economy.

The impact the latest ban has on the property market depends entirely on how it is interpreted by state-owned companies. Corporate executives have felt pressure to comply with earlier austerity measures.

The new ban does not disallow the renovation of outdated office space, though such renovations will be subject to a strict regulation process, and there will be no tolerance for what is deemed 'luxurious decoration'.

"It's very, very positive. Lots of the investment in buildings has only raised most costs down the road. The money can be saved and used for more productive things," said Shen Jianguang, an economist with Mizuho Securities.