The party's over for Bordeaux first-growths. Chinese President Xi Jinping has told the country's free-spending political elite to cut back on their extravagant lifestyle, leading to a sharp drop in demand for Bordeaux’s classified growths, with the first-growths taking a particularly hard hit under the new government’s austerity platform.

"Ostentatiousness is politically frowned on in China now," said Simon Staples from British wine merchant Berry Bros. & Rudd. There's been a "global slowdown on those very expensive wines."

Wines costing $800 and above have been the most severely impacted, according to Don St. Pierre, Jr., chairman of leading importer ASC Fine Wines. But “most categories have been affected," he said. "This is obvious when you look at the 2012 import figures versus 2011. This is not just affecting the most expensive wines. This is affecting all wines that were used for government and government-owned business entertainment.”

The Bordeaux wine council and broker's union confirmed that for the past 12 months, most of the wine shipped to China sells for under $52 ex-château (before négociants and importers add their margins), with a strong preference for the $4 to $20 range. The demand for top-end Bordeaux has slowed to a trickle.

The first strike at big spending came in April 2012, when a Chinese government statement sharply criticized the use of public money to pay for expensive alcohol for government-related entertainment and gifting—essentially eliminating a vital sales channel with one soundbite.

A year later, and four months after Xi took office, the new president and general secretary of the Communist party has made anti-corruption and modest living part of his platform, fearing that graft, lavish entertainment and the extravagant fortunes of the Chinese elite and their extended families could hurt the party. This has had a ripple effect on hotels and restaurants, luxury goods and flashy wine.

"What has gone away or has been reduced significantly is the use of state funds for entertainment and gifting," said John Watkins, CEO of ASC and a 30-year veteran of doing business in China. "Government to government entertainment, government to state-owned enterprise, and state-owned enterprise to state-owned enterprise, all that has gone away or been reduced significantly."

State funds cover a lot of territory in China. Communist party and local government expenditures, clearly, but also spending by oil companies, car manufacturers and telecommunications firms, which are state-controlled.

"It affects our business—the 5-star hotels—a lot really,” said Steven Yin, sommelier at the Shangri-là hotel in Qingdao. Gone are the lavish banquets and bacchanalian soirées. “If, for example, they are entertaining the governor, they no longer go to a hotel because it's a public place.”

This has created a trend toward entertaining in private clubs, reducing the risk of public exposure. "The last thing a mayor wants to do is to be seen with a real-estate developer at a restaurant, have his picture taken and have it go on the Chinese version of Twitter," said Watkins.

At the same time, several sources say that Beijing’s frugality is not the only factor. Bordeaux faces a maturing market. "Generally speaking, the fine wine Bordeaux market has not been performing for over 18 months," Vincent Yip of Topsy Trading told Wine Spectator. A merchant-importer based in Hong Kong, Topsy is thought to be the largest buyer of Bordeaux classified growth wines in Asia. They stock 1.2 million bottles and have been pioneers in developing the Chinese wine market. According to Yip, Bordeaux prices are now too high to entice speculators, traders have not been making a profit, too many new companies have entered the market and real consumption does not match the supply.

"I also think prices have gotten so high that people are using this issue as an excuse to trade down," said St. Pierre. "They say, instead of the grand vin, let's use the second label, because we don't want to get in trouble—but the real reason in some cases is that they don't want to spend $2,500, they'd rather spend $1,000. So it's given people a very good excuse not to spend as much money."

While Bordeaux's top producers are adjusting to this new reality, most merchants and sommeliers welcome the new trend. “We asked our client, Ruby Red in Shanghai, about the gifting, and they said it’s a thoroughly good thing,” said Mark Walford of U.K. wine merchant Richards Walford. “Now that it’s drying up, customers will be able to come and buy decent stuff from us, choose for themselves, because they love drinking wine.”

Following their palates, Chinese consumers are drifting away from the Médoc. “Before it was Lafite, Mouton,” said Yin. "But now they are looking at St.-Emilion, Pomerol, Lalande de Pomerol and Burgundy. Customers are educated. The brand era is over. Now they are looking for taste and value."

The trend toward value and unknown labels opens up the market to Bordeaux’s vast selection of petits châteaus, where they can compete against China’s lower-priced domestic wine. “This is a good thing. China has discovered the heart of Bordeaux," said Christophe Chateau from the Bordeaux wine council. Industry analysts believe this real consumption—not gifting and entertainment—holds the key to a steady future for imported wine in China.