China is going after another official over corruption.
Chinese authorities have announced a corruption investigation into Jiang Jiemin, the head of the commission that oversees state-owned companies.
The supervision ministry said Mr Jiang was suspected of a “serious violation of discipline”. He has not publicly commented on the allegations.
Nomura economist Zhiwei Zhang has sent out a note explaining the implications:
We believe the macro implications are slightly negative for the next 6-12 months, but positive beyond. Anti-corruption cases will probably lead to a reshuffling of senior officials, which may delay some government activity. However, we believe it is a long-term positive because it shows the new leadership is on track to establishing its authority, which is a necessary condition for implementing tough structural reforms.
The Chinese government went through a similar experience in the 1990s when Jiang Zemin and Zhu Rongji fought corruption fiercely and pushed major structural reforms in their administration, which laid the foundation for rapid growth in the past decade. It is too early to judge the reform outlook at this stage, but this announcement suggests the new leadership is moving in the right direction.
In addition to another well-known trial (the Bo Xilai trial), current Chinese leadership has been cracking down on state-sector opulence, which has famously been hurting the bottom lines of fast restaurants and caterers in the country.