Assessing the efficacy of China's anti-corruption drive: Insights from consumer expenditure patterns

Abstract

This paper examines the economic impact of China's President Xi Jinping's Eight Regulations of Austerity and the coordinated anti-corruption campaign. Specifically, I analyze the effects of this campaign on household expenditure patterns in China using a triple differences approach. I compare the expenditures of households with government employees to those without, both before and after the anti-corruption reform, across commodities likely to be subject to corruption versus those unlikely to be affected. The findings demonstrate that, in the post-reform period, government-affiliated families allocate relatively more expenditure towards goods they likely obtained illegally through bribes previously. Conversely, expenditure patterns for goods less susceptible to corruption do not show a relative increase in the post-reform period. These expenditure shifts are most pronounced among families of low-level officials, with the majority of the increase observed among non-Chinese Communist Party member government employees and those outside Xi Jinping's power base. This suggests that individuals with the strongest party ties were able to circumvent the effects of the anti-corruption campaign.