The World Bank has a timely warning for Chinese President Xi Jinping: Don’t let all that money go to your head.

The global lender didn’t refer directly to Shanghai’s stock boom or the Asian Infrastructure Investment Bank (Beijing’s attempt to develop a World Bank of its own). Nor did it have to. By urging Beijing to clamp down on wasteful investment, unsustainable debt, and a shadow banking industry run amok, it was delivering a clear enough warning that President Xi should stop fanning China’s giant asset bubble. The World Bank was also implying China should get its own economic house in order before trying to change the global economy.

“China has reached a critical phase of its economic and social development path,” the lender said in a new report released Wednesday. The economy “will need to be transformed to increase the efficiency of new investments and widen access to finance, enabling China to sustain solid growth and rebalance its economy.”

The World Bank’s admonishment was amplified by a fascinating milestone the Chinese economy reached this week ― one that presents Xi’s government with a complicated image problem. China’s 90 mainland stock traders now outnumber its 87.8 million Communist Party members. This changing of the guard, if you will, is taking place the same week the party celebrated its 94th anniversary ― hardly what Mao Zedong had in mind when he led the Communists to power in 1949.

In truth, China’s fast-growing legions of stock traders are betting on a type of financial Communism. Everyone knows the Chinese economy is slowing and deflation is approaching, but markets have generally stayed aloft amid perceptions Xi will use the full power of the state to protect investments. Along with weekend interest-rate cuts, authorities have just made it easier to take on even more leverage. Brokerages now have leeway to boost lending by about $300 billion.

Yet recent stock market declines suggest those steps aren’t working their usual magic. Part of the problem is traders have realized nobody is shoring up the shaky pillars of the world’s second-biggest economy. As that awareness sinks in, the 24 percent decline in the Shanghai Composite Index from its June 12 peak (which wiped out more than the equivalent of Brazil’s annual output) will only intensify. So will the headwinds bearing down on the broader economy as plunging shares dent business and household confidence.

And that will mean China will have less money available to pursue its global aspirations, including through its new infrastructure bank. In that sense, the World Bank is right to suggest the best way for Beijing to achieve its international goals is to shore up its domestic economy.

That means overhauling a banking system that subsidizes state-owned enterprises at the expense of entrepreneurs and savers. Virtually all of China’s worst economic excesses emanate from its corrupt alliance of top financiers, regulators, executives and their benefactors in the government. Curbing government interference in credit allocation would be the first step to reducing the imbalances the World Bank says could “deflect” China’s “economic trajectory.”

But for all his talk about trusting market forces, Xi has made only modest moves to make more credit available to the private sector and loosen controls on interest rates. Meanwhile, his government has been tossing more fuel at the Shanghai and Shenzhen stock markets by loosening margin financing. Far from being chastened, mainland traders can now buy even more stocks with even greater leverage in an already wildly overleveraged system. The World Bank will no doubt continue telling Chinese officials why that strategy is a mistake. But, to the detriment of the country’s economy, it can’t make them listen.

By William Pesek, Bloomberg

William Pesek is a Bloomberg View columnist based in Tokyo and writes on economics, markets and politics throughout the Asia-Pacific region. ― Ed.