In late 2012 China’s then-new President Xi Jinping began a campaign to crack down on corruption. This campaign, which included the sacking of Chongqing mayor Bo Xilai and investigations into former Politburo member Zhou Yongkang, was influenced by public perceptions of official excess. As such, an 'austerity' campaign was also introduced, with rules and admonitions prohibiting excessive gifts, lavish banquets, and other forms of spending by government officials.

This anticorruption and austerity campaign has reportedly lowered the sales of luxury goods and spending at high-end restaurants, contributed to declining housing market transactions, and reduced construction of overly luxurious local government buildings. Possibly as a result, GDP growth fell from 9.3% in 2011 to 7.7% in 2012 and 2013.

However, it is hard to disentangle the effects of this campaign from the effects of tighter monetary policy. We have tried to quantify more precisely the effects of a reduction in corruption on growth. We used Transparency International's Corruption Perceptions Index, which surveys citizens about the perceived level of public corruption in their country, with a score of 0 meaning high corruption and 10 meaning very clean government. China has moved towards less corruption over the past decade, but still finds itself well behind the average reading for more developed economies.