In Xinhua’s account of the fifth plenary session of the 20th Central Committee of the Chinese Communist Party (CCP), which runs to more than 5,000 Chinese characters, one sentence stood out.
Speaking at the plenum’s second meeting on 29 October, CCP General Secretary Xi Jinping addressed a question some people had raised: Has comprehensive and rigorous Party self-governance hindered economic and social development, or has it safeguarded and promoted it?
Xi said that since the CCP’s 18th National Congress, “the cause of the Party and the country has scored historic achievements and gone through historic changes”, with comprehensive and rigorous Party self-governance providing a fundamental guarantee. He further stressed, “If full and rigorous self-governance has had an impact on economic and social development, it has been positive, not negative.”
In his view, comprehensive and rigorous Party self-governance means upholding integrity and rooting out wrongdoing, clearing obstacles, correcting deviations and addressing disorder. By tackling misconduct and corruption, it protects fair market competition, encourages initiative and enterprise, and prevents harmful economic activities that involve illicit interests and undermine the people’s fundamental interests.
The CCP leader has set out a clear position on the relationship between strict Party governance and economic development.
From an economic perspective, the central question is whether the gains in resource allocation efficiency brought about by fighting corruption can offset, or even outweigh, any short-term losses in administrative efficiency.
In theory, the economic benefits of fighting corruption are clear. By cracking down on the channelling of benefits and exchanges of power for money, it reduces private businesses’ informal transaction costs. It directs resources and factors of production towards companies with mature technology and quality products, rather than inefficient projects that rely on connections and back-door dealings.
But in China’s local government-led development model, a tough anti-corruption drive also affects administrative efficiency. Over the past few decades, much of the rapid growth in China’s local economies has stemmed from its officials’ boldness in attracting investment and pursuing institutional innovation.
Under intense scrutiny and pressure to be accountable, some officials fear that taking on more work means making more mistakes and that their actions could readily be deemed breaches of rules or Party discipline. They retreat into a form of administrative inertia in which they neither take bribes nor take action, keeping businesses at arm’s length, shelving contentious investments and delaying complex approvals.
Such behaviour translates into administrative delays in getting projects off the ground and uncertainty over policy implementation, weakening business confidence in investment. Companies face not only the risk of corruption, but also questions over whether the government can honour its commitments, whether projects can proceed on schedule and whether policies will be implemented consistently.
In other words, integrity does not automatically translate into efficiency. When clean governance comes with decision-making paralysis, it also drains economic vitality. This is not unique to China. Vietnam, which is also undergoing a transition, faces similar growing pains as its ruling party presses ahead with a forceful anti-corruption campaign.
The Communist Party of Vietnam launched its “blazing furnace” anti-corruption campaign under Nguyen Phu Trong, and the drive has continued since To Lam took over as president. At the same time, the Vietnamese government has pursued large-scale administrative streamlining, departmental mergers and improvements in administrative efficiency, seeking to reduce bureaucratic overlap and obstacles to implementation.
In its 2025 OECD Economic Surveys: Viet Nam, the Organisation for Economic Co-operation and Development (OECD) said anti-corruption efforts and officials’ avoidance of responsibility had become factors affecting local administrative procedures and the implementation of public investment. The report showed that Vietnam’s public investment disbursement in 2022 reached only 68% of the planned target, while some land-use permit applications took two years to approve. The OECD therefore called on Vietnam to strike a balance between fighting corruption and efficient decision-making, stressing that more should be done to eliminate the institutional conditions that breed corruption, rather than merely punish it after the fact.
The CCP leadership has clearly recognised the problem of officials being afraid to act or failing to act. It must address institutional shortcomings to create a virtuous circle between fighting corruption and economic development.
At a press conference on 30 October, CCP Central Committee Organisation Department Deputy Head Huang Jianfa explicitly outlined measures including maintaining the right approach to appointments, improving appraisal systems, caring for officials and strengthening incentives and protections. These include promoting officials who take responsibility, deliver outstanding results and uphold integrity; improving performance appraisals for high-quality development; and addressing the problem of officials being treated the same regardless of how much work they do or how well they do it. They also include clearing the names of those falsely accused and investigating malicious accusations, so that those who take responsibility receive support and those who get things done have backing.
This shows that the CCP’s policy approach does not focus solely on disciplinary constraints. It also seeks to bolster officials’ motivation through incentives.
But another crucial question is this: when decisions made in the normal course of duty, without any improper transfer of benefits, lead to mistakes and losses, should the officials involved bear the same responsibility as those implicated in corruption or inaction? How can the Party organisation convince officials that “if they take responsibility for the cause, the organisation will stand behind them”?
Addressing this may require clearer boundaries between powers and responsibilities, and a distinction between honest errors in decision-making and breaches of rules or discipline, to reduce the political cost of legitimate trial and error.
Performance appraisals must also be improved to avoid a situation in which doing more means making more mistakes, while doing nothing means making none. Officials who get things done need institutional protection. The business environment also needs to be placed more firmly on a legal footing, reducing reliance on behind-the-scenes arrangements made at the discretion of top officials. Transparent, predictable rules would reduce businesses’ dependence on connections and unwritten rules.
Outside attention to the CCP’s tough anti-corruption drive has often focused on how many “tigers” — senior officials — have been caught and how high-ranking they were, as well as their links to other senior officials, fuelling political speculation about where those connections might lead.
In assessing the economic effects of the anti-corruption drive in future, greater attention should be paid to whether economic considerations are gradually regaining their place in local government investment and approvals for economic projects; whether private-sector investment, employment and business expectations are improving; and whether uncertainty over administrative enforcement and policy, along with the burden on businesses, is easing.
Political integrity and economic prosperity are not incompatible. In a system where competitive elections are not the central mechanism of political accountability, can the CCP strengthen Party commitment, disciplinary constraints, official appraisals and incentives to ensure officials’ political loyalty and the clean exercise of power, while preserving administrative effectiveness and economic vitality? This is one important measure by which to assess the practical results of comprehensive and rigorous Party self-governance over the long term.
