Queen Elizabeth II wrote Deng Xiaoping a letter after visiting Beijing in 1986. In it the British monarch thanked him for not smoking during a five-hour meeting and dinner. But meeting Philippine president Corazon Aquino in 1988, Deng was less restrained. “Mind if I smoke?” the 83 year-old asked before their talks. “I cannot say no to you because I am not the leader of this country,” Aquino told Deng as he lit up. “But in the Philippines for Cabinet meetings, there’s no smoking.”
Deng is said to have laughed, and told her of a legislative session in which one of the delegates – the Cantonese opera diva Hung Sin-nui – had passed him a note asking him to put out his cigarette.
Deng did it for Hung but not for Aquino, it seems.
Yet it was the intervention of another woman – Deng’s daughter – that made him quit the habit in 1989. During his high-level talks with Soviet leader Mikhail Gorbachev in May that year, Deng didn’t light up even once.
The theme of when and where to smoke in public arose again last week. In what the Xinhua news agency described as “the most stringent smoking ban in history”, the Party and the State Council have issued a joint directive requesting that China’s political bosses “take the lead” in tobacco control. The outcome? Both Party and government officials are now banned from smoking in public. Using public funds to buy cigarettes or even offering cigarettes while on official duties are also prohibited.
Following the directive, many local governments have come up with further bans of their own. Gansu’s provincial capital Lanzhou, for example, has just banned smoking in indoor workplaces and public areas.
China ratified the World Health Organisation’s framework convention on tobacco in 2005 – a move in which Beijing acknowledged the harmful effects of smoking and signalled its intent to discourage the practice. But until now, the government itself has made a mockery of the treaty. With more than 300 million smokers, China is easily the world’s biggest tobacco consumer. It also produces more cigarettes annually (at least 170 billion sticks) than the next seven largest cigarette-producing countries combined. The regulator of this lucrative market, tellingly, is the State Tobacco Monopoly Administration, which also happens to control China National Tobacco Corp (CNTC) the world’s biggest tobacco firm.
According to Southern Weekend, CNTC accounts for 32% of global tobacco volumes. You’d have to merge BAT and Altria (formerly Philip Morris) to get another tobacco firm with an equivalent market share. Meanwhile foreign firms have struggled to compete in the Chinese market, garnering only 2% of domestic share.
The South China Morning Post reported that CNTC made more than Rmb300 million ($50 million) a day in net profit in 2010. That gets to the crux of the tobacco dilemma. The state-dominated industry also paid an estimated Rmb753 billion in taxes in 2011 and has accounted for at least 10% of the central government’s fiscal income for 20 consecutive years.
Many local governments also rely on tobacco for tax and employment. The Chinese Academy of Social Sciences estimated in 2009 that China had 60 million people making their living in tobacco, which included 182,000 farmers and five million households.
But with 1.2 million tobacco-related deaths every year, the authorities may have realised the social cost of smoking outweighs the more immediate financial benefits.
The latest ban flags a key policy shift and it is already hitting the higher-end of the market. Prior to the move, expensive cigarettes were popular gifts through which businessmen could win favour with chain-smoking officials. These brands are expensive by any measure. A carton of Huang He Lou 1916, a premium pack whose sticks are hand-rolled, used to sell for Rmb2,000 (it peaked in price two years ago). Special editions of Panda cigarettes, made from the tips of tobacco leaves and the erstwhile favourite of Deng Xiaoping, are also considered a status symbol since you need to be well-connected to get them.
The Qilu Evening News reported that many retailers are now in a panic. The Spring Festival (i.e. Chinese New Year) usually generates big group purchases from government entities but the newspaper claims that this year the orders have dried up. According to the Beijing Youth Daily, some city traders don’t think the slump will last and have grabbed the opportunity for a bit of arbitrage, offering to buy back cartons of Huang He Lou 1916 from customers at Rmb600 each (i.e. 30% of the price they fetched a couple of years ago). But the newspaper wondered whether prices wouldn’t fall further, following the example of premium liquors like Moutai, which plummeted after the start of a crackdown on extravagant dining early last year (see WiC210).
The Legal Daily noted that Xi’s administration has now issued more than 10 directives on curbing undisciplined expenditure over the past year, imposing bans on a wide range of activities (one call a halt to the construction of new government buildings, another to hosting year-end parties or giving out mooncakes).
Apparently, none of China’s seven top political bosses on the Politburo have a nicotine habit. But the latest directive might be the toughest yet for millions of the country’s nicotine-addicted cadres. Of course, how it is going to be policed is a key question. But surreptitious smokers will be mindful that a number of their colleagues have been caught in career-ending photos displaying their penchant for Swiss watches or outed by bloggers for hosting lavish banquets replete with Bordeaux wines.
They can smoke secretly if they must. But bureaucrats will know that if they puff away too recklessly in public their jobs could be at risk from eagle-eyed netizens.
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