President Xi Jinping has broadened his government’s anti-graft campaign to include former senior Communist Party officials and high-ranking military officers. In an unprecedented move, the authorities recently rounded up hundreds of associates and relatives of Zhou Yongkang, a former domestic security czar who retired from the Politburo Standing Committee in 2012. Perhaps even more surprising are reports of corruption charges against Lt.-Gen. Gu Junshan, former deputy logistics chief of the army.

Zhou, who has not been formally charged with any crime, is known to have opposed the ouster of Bo Xilai, the former Chongqing party chief (and opponent of broader market-based reforms) who was handed a life sentence in September 2013 for corruption and abuse of power. Prominent members of the establishment called in for questioning include former top officials at PetroChina and the China National Petroleum Corporation.

Rooting out official corruption has been one of the central themes in Xi’s efforts to restore public trust in state institutions and the party leadership, and the unfolding purge will have the added benefit of creating openings into which the president can promote political allies and pro-reform officials who can be relied upon to implement government policy. That bodes well for policy continuity, but suggests that the situation bears close attention for signs of a backlash from disaffected factions within the party hierarchy.

The Xi administration’s assignment of top priority to reform, even if the result is slower economic growth, is sure to create tensions within the power structure, as the decelerating pace of real GDP growth reinforces economic-based discontent and fuels episodes of social unrest.

Government officials have ruled out another large stimulus package. In fact, the Finance Ministry has put local administrators on notice to speed up implementation of ongoing public-sector projects or risk losing the allocated funds.

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