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China to Ban Public Purchases of ‘High-End’ Alcohol

China to Ban Public Purchases of ‘High-End’ Alcohol, Cigarettes
Moutai, the sorghum-based liquor that Chinese Premier Zhou Enlai used to toast visiting U.S. President Richard Nixon in 1972, sometimes sells for twice the maximum retail price set by the company. Photographer: Nelson Ching/Bloomberg

March 27 (Bloomberg) -- Chinese Premier Wen Jiabao pledged to ban the use of public funds to buy cigarettes and “high-end” alcohol, warning that corruption may endanger the ruling Communist Party’s survival.

Wen, at a State Council meeting yesterday, also said state-owned enterprises and agencies must “strictly control” funds used to renovate “luxury” office buildings or buy artwork, according to a statement on the government’s website.

“Corruption is the biggest danger facing the ruling party,” Wen said, according to the statement. “If not dealt with properly, the problem may change the nature of, or terminate, the political regime.”

Wen, who didn’t give specific cases or identify any officials, earlier this month said China must continue overhauling its political system or risk a return to the chaos of the Cultural Revolution, when mobs of Red Guards persecuted millions, including party cadres.

Consumption by government officials using public funds has helped push up the prices of products such as China Kweichow Moutai Distillery Co.’s 106-proof liquor. Moutai, the sorghum-based liquor that Chinese Premier Zhou Enlai used to toast visiting U.S. President Richard Nixon in 1972, sometimes sells for twice the maximum retail price set by the company.

A half-liter bottle of Flying Moutai, the company’s best-selling brand, costs 1,980 yuan ($314), according to the Sam’s Club online shopping website.

Shares Fall

Moutai fell 6.4 percent in Shanghai trading, the biggest drop in two months. Rival Wuliangye Yibin Co. declined 6.5 percent in Shenzhen, also the biggest drop since January. China’s benchmark Shanghai Composite Index fell 0.2 percent.

The number of protests in China, including strikes and demonstrations, rose to at least 180,000 in 2010, double the number four years earlier, according to Sun Liping, a sociology professor at Tsinghua University.

Wen, due to step down next March after his second five-year term, said yesterday that government agencies must publish detailed information about spending related to car purchases and use, and overseas travel.

State-owned enterprises and financial institutions shouldn’t sponsor events unrelated to their businesses, he said. The government will also step up supervision of officials whose spouses or children have emigrated abroad, Wen said.

To contact Bloomberg News staff for this story: Victoria Ruan in Beijing at vruan1@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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