Some of Xi Jinping’s most revealing comments about economic policy have come when he is ostensibly not talking about the economy at all. Official media have recently published a speech he gave on March 1, 2022 at the Central Party School, in which he mainly talks about ethics, ideals, responsibilities–the heavy burden that young Communist Party cadres must bear in their careers.

But it also contains some fairly frank remarks about the conduct of local government officials. Xi has made it his mission to reorient China’s political system away from the decentralized pursuit of growth-at-all-costs, and he is frustrated that not everyone is on board:

Most cadres can actively adapt to the new development requirements, but some cadres cannot keep up. Some think that development is about launching projects, doing investments, and expanding scale, and even still regard highly polluting and energy-consuming projects as an important means of promoting economic growth. Some over-borrow to build and blindly expand businesses. Some methods are simple and crude: the “one size fits all” campaign-style reduction in carbon emissions led to large-scale power shortages and seriously affected enterprise production and people’s livelihood. And so on.

The criticism of local-government debts and wasteful investments, long tolerated and even encouraged by the central government, is notable. Later on in the speech he draws on his own experiences in local government to make a broader point:

When I was working in Ningde [in 1988-89], the central government carried out rectification in response to intensifying inflation and the serious problem of duplicate construction. Ningde’s economy was affected as a result, and some cadres didn’t understand and complained. I said that this part of eastern Fujian must comply with the overall design for the whole province and the whole country; if the current macroeconomic adjustment work requires sacrificing some local interests, this should be willingly accepted.

Today, some cadres still have a parochial mentality. When something happens, they think first of departmental interests, local interests, and small-group interests. They play games with the Party Center’s decisions, selectively implementing them, or using fraud to hide their lack of compliance. ….Leading cadres must think about problems and do things from the perspective of the overall situation and strategy. All work must be based on the implementation of the Party Center’s decisions, and cannot damage the interests of the whole for the sake of local interests, or damage fundamental and long-term interests for the sake of temporary interests.

These comments reinforced my feeling that Xi’s economic strategy is ultimately political. He is not mainly opposed to the decentralized local pursuit of growth because he thinks it is a sub-optimal way to run the economy, or because it contributes to imbalances and inefficiency–the kind of critiques that economists make. Rather, he doesn’t like it because it has undermined Communist Party discipline and increased corruption. Growth-at-all-costs turns out to have had a high political cost, in the context of China’s top-down Leninist system.

As Joseph Fewsmith’s excellent book Rethinking Chinese Politics argues, this problem was evident from the very beginning of the reform era, and indeed was inevitable given the nature of reform:

There are tensions built into Leninism that reform unleashes. In particular, the role of cadres changes. No longer the object of mass political campaigns to control their behavior or able to use political campaigns to control the behavior of others, local cadres pursue economic development and often self-enrichment. Doing so often requires developing close relations with other cadres and developing ties with economic actors in society. Local networks and corruption are an inevitable consequence of reform. In short, a degree of party dysfunctionality is a part and parcel of reform. Local cadres become less responsive to higher-level commands and conflict with society is a by-product of politically directed economic reform. That reform erodes control and discipline in Leninist systems is wholly predictable. The impact of reform on Leninism was visible from the start.

Xi’s centralizing agenda is perhaps best understood, Fewsmith argues, as an attempt to “reinvigorate” Leninism, pushing back against the loss of Party discipline rather than accepting its inevitable decline into a welter of competing interest groups.