What’s behind China’s graft crackdown?

Zhou Yongkang, China's top security official, attends a plenary session on the draft amendment to the Criminal Procedure Law as China's National People's Congress (NPC) takes place in Beijing, China.
Nelson Ching | Bloomberg | Getty Images

It's the China story of the day and it's causing quite a stir: reports that authorities have seized up to $14.5 billion worth of assets from those connected to the former security chief embroiled in a graft scandal.

Whether the development is a sign that Beijing is stepping up its fight against corruption at the highest level or reflects a clamp down on those who might be opposed to the government's reform agenda remains to be seen, analysts say.

Read MoreChina seizes $14.5 billion assets from former leader

According to a Reuters report at the weekend, Zhou Yongkang, the retired domestic head of security, is at the center of China's biggest corruption scandal in six decades. In addition to the asset seizures, more than 300 of Zhou's relatives, political allies and staff have been questioned over the past four months, two sources told Reuters.

"It is difficult to differentiate between a reform agenda attacking corruption and a political agenda attacking people you don't like," said Bank of Singapore Chief Economist Richard Jerram. "From a distance it is difficult to judge which of these are taking place."

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China's President Xi Jinping has made it clear that the government will not tolerate corruption regardless of rank. Last year, Bo Xilai, a former member of the Politburo, a key decision-making body of the Communist party, was found guilty of accepting bribes, embezzling state money and abusing his power and sentenced to life in prison.

"What we've seen so far is that Xi Jinping has gone after people who might be roadblocks to the reform process," said Freya Beamish, an economist at Lombard Street Research in Hong Kong.

Analysts say recent policy documents from the government on corruption put more emphasis on supervision and enforcement.

Property defaults are contained: Shui On Land
Property defaults are contained: Shui On Land

They add that Xi, who became China's new president in November 2012, navigates a tricky path. On the one hand, he is trying to end a culture of graft that could undermine the economy as well as the government's legitimacy. At the same time, pursuing high-level corruption probes that strengthen his authority could also unleash instability within the country's ruling elite.

For some, taking a tough line against corruption is the right move.

"I believe President Xi is trying to really stem corruption. It is not going to be easy, but I think he is moving in the right direction," Vincent Lo, CEO of Shanghai-based developer Shui On Land, told CNBC.

Read MoreWidespread defaults unlikely , says China developer

"And I think that is going to give the Communist Party the legitimacy to govern," he added.

According to press reports, Zhou has been under virtual house arrest since he was put under formal investigation late last year. He is the most senior Chinese politician to be involved in a corruption probe since China's Communist Party came to power in 1949.