China will ban executives from state-owned banks and financial companies from spending extravagantly on cars and houses, according to the state news agency Xinhua. The 12 regulations, issued jointly by the Ministry of Finance, the Ministry of Supervision and the National Audit Office, come after Communist Party chief Xi Jinping warned that the party risks major unrest and the collapse of its rule if corruption is allowed to run wild in China.
They also come amid growing public anger over widespread graft.
China is sensitive to anything that raises suspicions of corruption, especially after the scandal involving former high-flying politician Bo Xilai and his wife Gu Kailai overshadowed the run-up to last week's once-a-decade leadership transition.
Bo was expelled from the party this year and faces possible charges of corruption and abuse of power, while his wife was jailed for involvement in the murder of a British businessman.
The new rules, which will take effect in December, stipulate that the representatives from state-owned banks or financial institutes belonging to the central government must stay within the guidelines of spending allowed on cars, Xinhua said.
Many Chinese banking executives often use luxury cars for official and private use.
The rules also prohibit these executives from using public funds to pay for the individual's residential purchases, residential renovations, property management fees and so on, according to Xinhua.
The government also said executives from these companies were not allowed to violate guidelines for using public funds to accumulate high expenses for entertainment activities, Xinhua said.
China earlier imposed a frugal working style rule on its civil servants, which went into effect on October 1, barring them from spending public money on lavish banquets or fancy cars, and from accepting expensive gifts.
A string of high-profile incidents, including a high-speed Ferrari crash reportedly involving the son of a senior public official and a local government official photographed flaunting luxury watches beyond the reach of his salary, have enraged many Chinese who have taken to the Internet to vent their anger.
Speaking at the first session of the new Standing committee of the Political Bureau of the Central Committee Xi Jinping linked the fight against corruption with the fate of the party.
He said that the increasingly rampant corruption, if unchecked, would eventually result in the collapse of the party and thereafter the country. Xi added that corruption cases involving government officials in recent years had seriously tarnished the image of the party and stressed that “party committees at all levels must fight against corruption … and the fight must be carried out in a more effective and institutionalized way”.
“There are not enough institutional mechanisms to prevent power from being gripped by leaders at various levels, who can then wield power according to their own will.
Both the central government and party leaders have mentioned on many occasions the need for the optimization of institutions to prevent government and party officials from abusing their power. And the party constitution … states that the supervision of leading officials must be intensified” underlined the new Chinese leader.
Finally he said that “although the socialist system with Chinese characteristics is unique and effective, institution-building and consolidation must be placed at the top of the party’s agenda. Therefore, some new institutional mechanisms can be expected to intensify supervision over leaders at all levels”.