Effect of Dongguan crackdown pondered

The crackdown on underground prostitution in Dongguan continues to ferment as economists warned that such a campaign will have nationwide economic ramifications.

The campaign, which will continue for at least three months in the southern manufacturing hub, is designed to root out the underground industry and punish local interest groups that serve as the protection umbrella for the illegal trade.

As the CCTV coverage has shown, the sex trade has become blatant in the city, which indicates that there must have been local forces that protect the industry. They could, for example, be criminal gang groups, corrupt local officials or police officers. Analysts said given the high profile coverage of the State-run CCTV, the incident sends a message that the top authorities are determined to eliminate the industry and uncover and punish the interest groups behind it.

Such an action has been widely praised, although some people also said that law enforcement should be improved and more systematic measures should be taken to combat the crime more effectively.

While it will help eliminate crime and corruption, the move may bring unexpected economic implications nationwide, economists said.

Guan Qingyou, economist from China Minsheng Securities, said the move may spread to other parts of the country and could affect consumption, fiscal revenues and employment. It would worsen the economic situation, he said.

The Chinese economy, the second-largest of the world, registered a 7.7 percent year-on-year growth in 2013, a rare low level in recent years. The weakening momentum could continue early this year, analysts said, although the unexpectedly strong trade figures for January provide some cause for optimism.