FORTUNE -- Starting next week, mum's the word on luxury in Beijing.
After April 15, any company that puts up a public advertisement in China's capital city using the adjective -- or a few other flowery phrases like it -- will be fined around $4,500. The municipal government says on its website that such words induce hedonism and spiritual emptiness. The state media cites the growing gap between the rich and the poor.
Deng Xiaoping once told the Chinese, "To get rich is glorious!" Now apparently it isn't.
I suspect that sooner or later, China will not have to legislate the luxury problem away. It will simply fade away by itself when the country goes through a gut-wrenching re-ajustment phase when nature runs its course.
Nouriel Roubini seems to agree. He just returned from China and had this to say:
"I’m writing on the heels of two trips to China during which I met with senior policy makers, bank executives and academics, just as the government launched its 12th Five-Year Plan, intended to rebalance the long-term growth model. My meetings deepened my own impression and RGE’s long-standing house view of a potentially destabilizing contradiction between short- and medium-term economic performance: The economy is overheating here and now, but I’m convinced that in the medium term China’s overinvestment will prove deflationary both domestically and globally.
No country can be productive enough to take 50% of GDP and reinvest it into new capital stock without eventually facing massive overcapacity and a staggering nonperforming loan problem. Most likely after 2013, China will suffer a hard landing."
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