Chinese President Xi Jinping is calling for restraint ahead of the 120th anniversary of Mao Zedong's birth, even as the late leader's hometown spends billions on the highly-anticipated event.

"We need to earnestly implement President Xi Jinping's instructions, which were that the ceremony needs to be solemn, simple, and pragmatic," Xu Shousheng, secretary of the Communist Party committee in Hunan province, told officials after a visit by Xi this week, the state-run Global Times reported Friday.

The Chinese founding father's birthplace of Shaoshan lies within the central Chinese province.

Soon after taking office in March, Xi launched a national austerity campaign with the goal of cutting back on banquets and other over-indulgences at a time when many ordinary Chinese are lashing out at official corruption and lavish spending.

But the Mao anniversary, which China will celebrate on December 26, has been marked not by austerity but instead by a host of high-profile celebrations, exhibitions and even the promotion of special Mao-themed luxury goods.

Xiangtan city, which includes Shaoshan, is spending 15.5 billion yuan ($2.54 billion) on 16 projects linked to the occasion, including the renovation of a tourist centre, the preservation of Mao's former home and the construction of high-speed rail stations and highways, the Changsha Evening News reported last month.

The city also plans an array of events including a "large-scale" cultural performance, a national cycling competition and a photography exhibition, according to previous statements by city authorities, who have said the commemoration's "importance overrides any other at the moment".

Businesses are also seizing on the anniversary as an opportunity to make a profit.

One company that makes maotai, a popular Chinese spirit, is using the celebrations as an opportunity to promote a special Mao Zedong 120th Anniversary version with a limited circulation of 12,000 bottles.

Xi's call for a "pragmatic" Mao celebration comes ahead of a key Communist Party gathering of top Chinese leaders that kicks off Saturday in Beijing.

The Communist Party mouthpiece People's Daily newspaper also made mention of Mao in an editorial Friday, noting that "the history before reform and opening up was closely linked" with the founder of the People's Republic of China.

"Not refuting the period before the reform and opening up means neither ignoring and covering Mao's mistakes in his late years nor overstating his mistakes," the paper wrote. "Both periods are in essence the practice and exploration led by the party, and they cannot refute each other."

Mao's legacy is principally associated in the West with horrors such as China's Great Leap Forward, when tens of millions died through famine. But within China, supporters focus on Mao's earlier revolutionary years, his role in the 1949 founding of the People's Republic and his nationalistic stance.