* Communist Party list of violations adds golf, gluttony
* Party tougher on new golf courses, has closed dozens
* Golf retailers bemoan tougher regulations
* Crackdown on graft likely to hinder sport's development (Updates with quotes from U.S-based golf course designer; reaction to new rules; adds PIX to slug)
BEIJING/SHANGHAI, Oct 22 China's ruling Communist Party has listed golf and gluttony as violations for the first time as it tightens its rules to stop officials from engaging in corrupt practices, while also turning an even sterner eye on sexual impropriety.
Chinese President Xi Jinping has been driving a sweeping crackdown on deep-rooted graft since taking over the party's leadership in late 2012. Since then dozens of senior officials have been investigated or jailed.
Tales of corruption and officials' high living, including extravagant banquets and expensive rounds on golf courses, have stirred widespread public anger because bureaucrats are meant to live on modest sums and lead morally exemplary lives.
The new rules update existing regulations and are designed to codify more clearly what constitutes a violation of discipline, the official Xinhua news agency said late on Wednesday. They apply to all 88 million party members for the first time, and also include a new ethical code.
"Party members must separate public and private interests, put the public's interest first, and work selflessly," the Xinhua report said. Party members must also "champion simplicity and guard against extravagance".
"The new discipline regulation explicitly lists extravagant eating and drinking and playing golf as violations, which were not included previously," it said.
Explaining the new rules and underscoring golf's negative image, the party's corruption watchdog said on Thursday that golf was a game enjoyed by a former police chief who engaged in "massive" bribery. A vice mayor in a southeastern Chinese city was sacked this month for belonging to a golf club and playing the game when he should have been working.
IN THE ROUGH
The new rules are a blow to China's nascent market for golf, which is often seen as providing an opportunity for officials to make shady deals and an extravagance for government employees.
"In other countries golf is more about the sport, here it's about the social interaction. If a company boss can't play with a government official, there's little point in him spending his money," said the owner of a golf equipment store in Shanghai who only gave his surname as Huang.
Huang said his store's sales had dropped 30-40 percent last year. "This year, things are even more dismal. With our regular revenues we can no longer make ends meet."
Party officials who play golf have already been targeted by Xi's crackdown. Last year, the government began more rigorously enforcing a decade-old ban on building new courses. In March this year, it shut down 66 golf courses.
There were more than 500 golf courses in China in 2013, according to state media reports, with up to 400,000 regular players. Clubs such as Wolong Lake and Nine Dragons host PGA Tour matches.
Golf in China has also been seen as a possible growth area for foreign firms.
"We have started to look at the Asia Pacific region... China is a future, potential market, although some other markets there have higher priority," said Fredrik Brautigam, head of sales at privately owned Sweden-based golf apparel brand Galvin Green.
"If people in China are forbidden to play golf, if that's the case, then it (entry to the Chinese market) might be even later on our agenda."
The R&A, golf's ruling authority worldwide except for the United States and Mexico, had no comment. No one at the United States Golf Association was immediately available to comment, nor was an official with the PGA of America.
BAD FOR THE SPORT
Golf industry insiders said the strict rules for officials would be a drag on the sport's wider development in China, with fewer courses open and people worried about being tainted by getting involved in the game.
"Golf has been labelled with a very negative image," Jacky Peng, founder of Niceon Sport and a manager of professional Chinese golfers, told Reuters. "Without government support, it is very hard to develop such an elite sport."
Another golf shop owner, Miss Yang, said the regulations were stalling public interest. "With golf clubs closing, people haven't got anywhere to go. This can only reduce people's interest and drag down spending," she said.
Gary Player Design, the legendary South African golfer's course design group, has several courses in China.
The U.S.-based firm's president, Scott Ferrell, said the Chinese government's position is difficult in the short term for the industry, which had been "full-steam ahead over there," but that they hoped business conditions would improve.
"Contrary to a lot of what you hear, I don't think the government is opposed to golf as a game. They are opposed to corruption and they are trying to tackle it any way they can," Ferrell said.
"I think all indications are that the government is going to establish a direction and a policy for golf course development."
While some U.S. golfers and pundits said the move would end up hurting future generations of professional Chinese golfers, others cheekily suggested a similar crackdown on Wall Street.
Beyond golf, the new Communist Party rules also mention "improper sexual relations", broadening the scope of proscriptions that before only referred to "keeping paramours and conducting adultery". The charge of adultery is frequently levelled at high-ranking graft suspects as a way of showing they are morally degenerate and deserve punishment.
Forming "cliques" that seek to split the party is also banned under the new regulations, along with hiding personal issues that should be reported, and abusing positions of power to seek gain for family members and staff. (Reporting by Ben Blanchard, John Ruwitch, Adam Jourdan, SHANGHAI newsroom, Olof Swahnberg in Stockholm, and Eric M. Johnson in Seattle; Editing by Paul Tait, Ian Geoghegan/Mark Heinrich and Diane Craft)