China needs its frightened officials to save the economy

OVER THE past decade, as Chinese governance has become more politicised and a fear of punishment has taken hold, local officials have changed the way they do things. Many are holding more meetings and issuing more documents—but much of this is just show, according to Hanyu Zhao, a scholar who tracks the bureaucracy. The burden of looking busy is often passed down to lower-level cadres, some of whom, at least, are getting creative. In one example highlighted by Ms Zhao, a group of them were required to hold two (unnecessary) meetings each day as part of an anti-poverty campaign. Instead they met once every three days, taking six photos per meeting with different outfits, lighting and seating.

Local officials once helped to drive China’s economic growth. In the 2000s they fiercely competed to crank up GDP, scrambling to attract investment to provinces, cities and villages. But when Xi Jinping came to power in 2012, he worried that freewheeling officials were feathering their own nests and creating financial risks. More scrutiny of their behaviour and harsher punishments for their mistakes followed. As a result, many local officials now choose to act only in a superficial manner—or not at all—lest they invite scrutiny from the Communist Party’s investigators.

The party, though, urgently needs local officials to regain their enthusiasm and help China out of its economic rut. Growth is flagging amid weak consumption, a property slump and a lack of jobs. The government is trying to stimulate the economy. It approved 4trn yuan ($550bn) of “special bonds” for local officials to use on infrastructure projects in 2024. But they were sluggish both in issuing the bonds and in getting projects started. Some 2.3trn yuan of the funds were still unused as of October, according to the latest data from despairing central authorities.

At the annual session of China’s parliament in March, the government is expected to approve an even higher bond quota for local officials to use on a greater range of projects, including industrial parks, hospitals and care facilities for the elderly. It will also expand a “cash for clunkers” scheme, which subsidises households and firms to trade in consumer goods and factory equipment for newer gear. That scheme is funded by the central government but depends on local officials to carry it out, with more funding to be allocated for those who do a good job.

There is much to do, then, and little time to do it. But officials’ spirits will be hard to revive. For the past decade the party’s anti-corruption arm, the Central Commission for Discipline Inspection (CCDI), has sown fear across the bureaucracy. It has punished more than 6m officials, from high-ranking “tigers” to low-ranking “flies”. Local administrations are now wary of doing anything that might lead to accusations of graft. So lately the CCDI has been handing down punishments for laziness, too. Last year it disciplined 94,000 officials for “irresponsibility”, “inaction” and “pretending to work”, more than twice the number the year before.

The party is also trying a softer approach, which is perhaps overdue. Mr Xi expressed concern about his anti-corruption campaign’s effect on morale way back in 2016. In a speech that year he said inspectors must distinguish between well-meaning but unwise conduct and genuine corruption. In particular, he expressed sympathy for unintentional mistakes, errors made from lack of experience and hiccups when experimenting in new areas without clear rules. The policy became known as the “three distinctions”. In recent years it has gained more prominence in state media. Last July it was mentioned at a big party meeting that set out economic priorities for the next five years.

To implement the three-distinctions policy, the CCDI sometimes waives punishments if there are mitigating circumstances. For example, officials in the central city of Yichang were placed under investigation for rushing through a high-speed rail project without following the correct procedures. But they were let off with a slap on the wrist because the error helped the city “seize development opportunities”, according to a report by the authorities. Other local officials have been forgiven for botching investment projects if they were judged to be for the good of the economy, rather than personal gain.

Let’s chat

The party must “combine strict management with warm care…so cadres will be eager to forge ahead,” Mr Xi has said. Perhaps with that in mind the CCDI has been holding what it calls “heart-to-heart” talks with cadres. Such conversations are “both a science and an art”, according to a guide posted online. It suggests inspectors should build rapport by asking about an official’s children and hobbies. If necessary, it says, interrupt them with a “light cough” rather than a word, to avoid causing offence. “I am grateful to the [CCDI] for reminding me through heart-to-heart talks that slacking off is irresponsible,” one official in the region of Guangxi told state media last year. “I will correct my mistakes without delay.”

Another aspect of the CCDI’s new approach has been to stamp out false accusations of corruption. In 2023 a man in the city of Linzhou was sentenced to 18 months in prison for falsely claiming that a village party boss consorted with criminals and extorted money from farmers. Since the beginning of last year, Zhejiang province, in eastern China, has exonerated 2,802 falsely accused officials.

Inspectors are still struggling to strike the right balance between harshness and mercy, admitted a commentary in a party-run magazine in September. They often err on the side of being strict, it said, because of “cognitive biases”. In other words, old habits die hard. The anti-corruption campaign shows no signs of letting up. Last year the CCDI punished a record 889,000 officials, 46% more than the year before. That trend must reverse before there is any chance of morale improving, says Alfred Wu of the National University of Singapore. “If I were a public official, I still wouldn’t dare to do much.” ■

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