3.3.1 The Nomenklatura Political Personnel Management System

The nomenklatura political personnel management system complements the hierarchical governance structure. The nomenklatura is the main instrument the Chinese Communist Party uses to appoint, promote, transfer, or remove officials. In this system, each level selects the immediately lower level of officials. According to The Regulations of the Selection and Appointment of Party and Government Leading Cadres (党政领导干部选拔任用工作条例), career mobility hinges critically upon the evaluation of five aspects: integrity (de), competence (neng), diligence (qin), achievement (ji), and honesty (lian) (General Office of the CCP 2002), which was echoed in some of my field interviews (Interviews 0714CD02 and 0217ST01). Prior to 2010, of the five criteria, competence and achievement were evaluated based chiefly on economic development. Air pollution control, specifically SO₂ emissions reduction, became binding in cadre evaluation under the 11th FYP (2006–10). However, environmental protection and the deployment of green energy did not gain substantial traction until after 2010, and particularly after the 18th Party Congress in 2012.

Unlike in most consolidated democracies, tenure length in China is not limited by officially stipulated fixed terms or term limits. While official regulations state that prefectural leaders’ tenure length should be five years, these are not strictly adhered to in practice. Even the 2002 Regulations of the Selection and Appointment of Party and Government Leading Cadres requiring all local leaders to stay in their post for at least two years is not always followed. Table 3.1 shows the distribution of time in office, or tenure length, by turnover outcome for prefectural party secretaries who served between 2000 and 2010. For instance, 163 of the 781 prefectural party secretaries in the sample were in office for four years, and 49.1 percent of these party secretaries were promoted at the end of their tenures. The coding procedures are documented in Appendix A. As we can see, tenure length could last anywhere between one and eleven years. The mean and median tenure lengths are both four years. The mode is three years. In light of this, I use “tenure” and “tenure length” instead of “term,” “term limit,” or “term length,” because “term” denotes a fixed length, whereas “tenure” does not.

What determines tenure length? Is it endogenous to performance or political connection? That is, can performance or political connection influence tenure length? Based on the methods and results in Appendix A, I find that tenure length is unrelated with either performance or connection.Footnote ²⁰

Of particular note, in addition to being variable in length, tenures are staggered across Chinese prefectural cities, so the temporal proximity to rotation is plausibly exogenous. Different prefectures generally do not share the same rotation times. Furthermore, the start and end times of prefectural political tenures are usually independent of national-level political rotations, meaning that the impact of prefectural political tenures on pollution patterns can be isolated. To control for unobserved heterogeneity across different years, I will include year fixed effects in the analyses.

3.3.2 The Logic behind a Strategic Implementation

A proposition of this book is that career incentives are tied to cadre evaluation by upper levels in authoritarian contexts or constituency interests in democratic settings. In an authoritarian country like China, cadre evaluation is primarily based on performance vis-à-vis the fulfillment of policy targets set by upper levels. Excellent performance, though a very critical component in promotion decisions, does not translate directly into promotion. Cadre promotion differs from cadre evaluation in that cadre promotion is, in addition to performance, dependent on factors such as political connections and faction politics (Reference NathanNathan 1973; Reference TeiwesTeiwes 1984; Reference ShihShih 2008; Reference Shih, Adolph and LiuShih, Adolph, and Liu 2012), loyalty to superiors (Reference Li and WalderLi and Walder 2001), and even personality (Interview 0715CD05).Footnote ²¹

Nevertheless, a solely career-concerned local leader would implement the policies that maximize their utility (i.e., for career prospects, reputation, positive evaluations); just like in a multitask model underpinned by career concerns, a rational agent – eager to signal their high talent – ends up concentrating on the set of tasks the market expects them to focus on (Reference Dewatripont, Jewitt and TiroleDewatripont, Jewitt, and Tirole 1999, 201). A decisive element to the local Chinese leader’s maximization of their utility is the fulfillment of critical policy targets, especially those related to social stability and the economy. Local leaders “sprint through the ranks in a series of small, rapid steps,” regularly moving to the next position before the end of the officially designated but rarely followed five-year term to preempt exiting the promotion game due to age limitations (Reference Kou and TsaiKou and Tsai 2014). This statement is consistent with what I learned from field interviews: local leaders were said to start planning early and put forward sustained, strong economic performance (Interviews 0715CD03, 0715CD04, 0815NJ03, 1017NJ07).Footnote ²² Career incentives influence the scale and promotion of certain activities, such as production in the construction and industrial sectors and the regulation of pollution emissions, during these political leaders’ tenures.

Achieving economic growth may not be the only goal of a local leader. Some leaders know about their next posts from the start of their current positions. The utility of staying in their current jobs is derived from gaining more exposure to and experience in different socioeconomic settings. Whether or not such leaders behave strategically does not matter for their promotion outcomes. Some leaders might legitimately want to make life better for fellow citizens. Others may be uninterested in promotion and simply want to avoid getting demoted. Given that a number of them do not act strategically, if the results still show a statistically significant pattern of strategic implementation, this will therefore be an underestimate of the extent of strategic implementation among those motivated to signal competence.

3.4.1 Promotion, Irresistible

Reelection is often cast as the dream of every politician in electoral theories. Winning and keeping office may involve achieving fame and being in the spotlight, or fulfilling a noble calling by serving the public or a region one holds dear, or getting well-positioned for a better post afterward, or a combination of these.

In China’s context, the lure of political promotion is even more irresistible because wealth and power are often concentrated in the same hands. Leaders typically want to get promoted because there will be more money, more power, higher social status, more preferential treatment in life, better cars, more beautiful houses, and all the other desirable things in life. Local leaders do not hide their aspirations and obsession with political promotion. Some of them have become prolific authors and novelists, writing about their observations of and insights into the promotion game.

3.4.2 Different Eras, Different Priorities: From the Economy and Stability to the Environment

Economic development, social stability, and environmental protection became top priorities during different periods. Economic growth and social stability were top priorities before 2010; as mentioned above, environmental protection became more important after 2010, especially after the 18th Party Congress in 2012.

The extant literature posits that economic growth and social stability were the sine qua non for career advancement before 2010. The maintenance of stability has been a top priority since the early 1990s as a policy response to the Tiananmen incident and the collapse of Communist systems in Eastern Europe (Reference Wang and MinznerWang and Minzner 2015). The Chinese Communist Party Central Committee’s initiative of “comprehensive management of public security” made the maintenance of social stability a “priority target with veto power” (一票否决) in the early 1990s, meaning that failure to maintain stability (维稳) could offset a cadre’s positive performance in other realms.

Economic development and associated policy goals (Table 3.2), such as fiscal revenue growth, are also perceived by local officials to be of paramount importance.Footnote ²³ Besides its importance as a basis for performance legitimacy (Reference ZhaoZhao 2009; Reference ZhuZhu 2011), economic growth is usually prioritized over all other goals except social stability. It is arguably the least difficult to assess of all goals. The lower-level government, while responsive to the concerns at the immediately higher level, assigns different weights to policy targets in various realms. This is based on its understanding of the degree to which the higher-level leaders can assess its performance using both submitted (official reports and yearbooks) and independent information. As for independent data, WikiLeaks reported that the upper level gauges the economic performance of the lower level by referring not to reported GDP figures but to statistics of electricity consumption, the volume of rail cargos, and the number of loans disbursed (Reference WallaceWallace 2014).

In contrast, air quality is significantly more ambiguous to assess. Although regional monitors send measurements directly to the central government, they remain very limited in number and only take measures at their point locations (Interview 0715BJ03). Due to various ambiguities involved in measuring air quality, there are many ways that localities can fiddle with pollutant concentration readings, as detailed in Chapter 1.

However, this is the first study to illuminate the fact that local political leaders are expected to promote annual growth rates steadily and incrementally during their tenure (Interviews 0715CD03, 0715CD04, 0815NJ03, 1017NJ07).Footnote ²⁴ In other words, an aspiring local leader should generate higher and higher growth rates year after year. If there is a dip in (reported) economic performance without the impact of an exogenous shock (e.g., global financial crisis, global pandemic) in the year before the leader is up for promotion consideration, that weakens their profile (Interview 1017NJ07).

Furthermore, a new insight derived from field interviews is that performance in later years is more critical for two reasons (Interviews 0715CD03, 0815NJ03, 0217ST01, 0317ST02, 0517ST03, 1017NJ07). First, the first year’s performance figures are influenced by the predecessor’s actions near the time of leadership turnover, so performance in later years is more reflective of the incumbent’s ability to grow the economy. Second, leaders who can scale up the local economy are more in control of it, which sends a positive signal about their capability to their political superiors and bodes well for their political careers (Interviews 0217ST01, 0317ST02, 1017NJ07). From these field interviews, I learned that there are two vital statistics related to the performance of the final year that signal competency. (By final year, I mean the final year for which performance will be included for promotion consideration.)Footnote ²⁵ The first vital statistic is the difference in performance between the first and the final years in office. The second vital statistic is the difference in performance between the final two years. The consequence of these facts is that it is strategic to underperform early on and overperform later on because lower growth rates in the early years make it easier to generate more impressive growth rates later on.

Based on official documents and field interviews, I learned that the evaluation system in China values “gradual” (逐渐) and “steady” (稳健) improvement in crucial policy areas (Interviews 0715CD03, 0715CD04, 0815NJ03, 1017NJ07). This characteristic of the “desired” policy implementation pattern has rarely been mentioned in the literature but appears crucial.

The trends of economic targets demonstrate these planned strategies (Figure 3.2). Gleaning annual target information from the government websites of Prefecture L and Province G (L is part of G), which were among the very few localities that released such information and were the most comprehensive in showing information dated before 2008, I plot the time trends for both GDP and industrial growth targets in Figure 3.2.Footnote ²⁶ As we can observe, in 2003, the first year of the prefectural party secretary’s tenure, Prefecture L had the same target as Province G but increasingly higher ones in the years following. A similar trend is observed for secondary industrial growth targets. In 2003 (the first year of the prefectural party secretary’s time in office), the prefectural goal remained at 11 percent even though Province G raised its target to 11.8 percent, 0.8 percent higher than the previous year. However, in later years, the secondary industry growth targets in Prefecture L surpassed and grew faster than those of Province G. Most notably, in the final year of the prefectural party secretary’s tenure, 2007, while the secondary industry growth target dropped to an all-time low of 10.4 percent for Province G, Prefecture L raised the target to an all-time high of 18.5 percent!Footnote ²⁷

Figure 3.2

Annual targets for GDP growth (%) and growth of the secondary industry (%) for Prefecture L and Province G, 2002–10. Dotted lines indicate the last year of tenure for prefectural party secretaries. No data points suggest that data are unavailable (the entire document is unavailable, or that particular statistic is not stated in the document) for those years.

Prefectural and provincial government websites.

In the post-2010 era, ecology and environmental protection emerged as a top priority – but what made the central government finally start paying attention to cleaning up the air? To put it simply, it took a scandal. In 2008, the US Embassy in Beijing installed a rooftop air quality monitor that automatically tweeted hourly air quality, intending to inform US citizens of the severity of pollution (Reference RobertsRoberts 2015). In 2010, the monitor measured Beijing’s air quality as exceeding the highest bound of the US EPA’s AQI. The Chinese government’s own assessment, which measured only larger particles (PM₁₀), suggested “slightly polluted” air. Officials in Beijing responded by arguing that a side-by-side comparison would not be valid because the two measured particles of different sizes. However, the embassy’s rooftop monitor often recorded worse air quality than the official Chinese reports. The discrepancies attracted a growing audience inside China who obtained monitor information via third parties. Beijing residents, who believed the embassy data, put pressure on the central government to acknowledge the gravity of the air pollution problem and start taking action to tackle it.

The 18th Party Congress affirmed the “construction of ecological civilization” (生态文明建设) as a prime goal of the party and incorporated it into the party constitution. In September 2013, the State Council circulated Clean Air Action Plan, which for the first time specified concrete targets for PM concentration reduction by 2017, using the PM levels in 2012 as the baseline (State Council 2013a). According to Article 27 of the document, reduction in PM would, from that time forward, be a binding target in the target responsibility evaluation scheme. The Decision of the Central Committee of the CCP on Some Major Issues Concerning Comprehensively Deepening the Reform (中共中央关于全面深化改革若干重大问题的决定), promulgated at the 3rd plenary session of the 18th Party Congress in November 2013, spells out legal sanctions against polluters, the initiation of the “lifelong responsibility system” for officials who carry poor records of environmental protection, and the auditing of natural resource conservation when senior cadres leave their posts (Central Committee of the CCP 2013). The document also details measures to improve environmental monitoring and data collection. At the NPC in March 2014, Premier Li Keqiang declared a “war on air pollution.” The Ministry of Finance offered RMB 13 billion to control air pollution in heavily polluted regions of Jing-Jin-Ji, the Yangtze River delta, and the Pearl River delta in 2013 and 2014 alone (People’s Daily 2013; Ministry of Finance 2014).

Under the high-profile policy directive, the Clean Air Action Plan, four regional clusters received binding targets to reduce PM_2.5. The clusters were Jing-Jin-Ji and surrounding (i.e., Beijing, Tianjin, Hebei, Shanxi, Inner Mongolia, Shandong), the Yangtze River delta (i.e., Shanghai, Jiangsu, Zhejiang), the Pearl River delta (i.e., some prefectures in Guangdong, including Guangzhou, Shenzhen, Zhuhai, Foshan, Jiangmen, Zhaoqing, Huizhou, Dongguan, and Zhongshan), and Chongqing.

According to an internal policy document gathered during fieldwork, prefectures covered by the action plan in Guangdong Province were expected by the provincial-level leaders to reduce the annual concentration of PM_2.5 more and more aggressively in following years (Figure 3.3). For instance, prefectures 1–4 were supposed to reduce concentration by 20 percent in 2017, compared to 2013 levels. The degree of regulation was expected to become gradually more stringent over time.

Figure 3.3

Official annual reduction targets (%), using 2013 levels as the baseline, for the ten prefectures in Guangdong Province with binding PM_2.5 reduction targets under the Clean Air Action Plan.

Internal policy document.

In August 2015, the General Office of the Chinese Communist Party and the State Council (2015) jointly issued the Regulation on the Accountability and Liabilities of Communist Party Leaders and Government Officials for Ecological and Environmental Damages (Trial) (党政领导干部生态环境损害责任追究办法 [试行]), which spells out the liabilities for severe environmental deterioration during tenure (Article 5) and during lifetime (Articles 4 and 12). Article 9 stipulates that resource consumption, environmental protection, and ecological benefits should become essential criteria in local cadre evaluation. The Proposal on Formulating the Thirteenth Five-Year Plan (2016–2020) on National Economic and Social Development (中共中央关于制定国民经济和社会发展第十三个五年规划的建议), which was adopted at the 5th Plenum of the 18th Party Congress in October 2015, set a target for reducing PM_2.5 by 18 percent in areas that exceeded the threshold of 35 µg/m³ by 2020 (Central Committee of the CCP 2015).

In the energy realm, Chinese leaders have been leading an “energy revolution” that seeks to promote energy conservation and emissions reduction, as reflected in the 13th FYP (State Council 2015b). Promoting green energy has the effect of lessening the tradeoff between economic output and pollution emissions, thereby contributing to dampening the political pollution wave. In the spirit of an “energy revolution,” the Ministry of Finance rolled out plans to spend RMB 21.1 billion on energy conservation and environmental protection in 2014, up 71.1 percent from the previous year (Reuters 2014). In 2016, China signed and pledged to ratify the historic Paris Agreement. President Xi made a famous remark at the opening of the Business 20 (B20) – the official G20 dialogue forum with the global business community – in Hangzhou in September 2016 that, “green mountains and clear water are as good as mountains of gold and silver. To protect the environment is to protect productivity and to improve the environment is to boost productivity …. In promoting green development, we also aim to address climate change and overcapacity.”

Later, China has become widely perceived as a rising global leader in the battle against climate change after President Trump announced plans to repeal the Obama-era Clean Power Plan, eliminate climate change from the national security strategy, and withdraw the USA from the Paris Agreement. This perception is reinforced by Xi’s statement at the 19th Party Congress in October 2017 when he affirmed China’s goal to “take a driving seat in the international cooperation to respond to climate change” (Reference BeelerBeeler 2017).

3.4.3 Strategic Planning

To show that top local leaders can plan the economy and manipulate regulatory stringency strategically, I put forth and validate three propositions here. The first proposition is that local leaders can control the local economy; the second proposition is that local leaders can plan the economy; the third proposition is that local leaders can strategically manipulate the regulatory stringency of pollutants.

Local leaders are in control of the local economy via two pathways. First, they can do so by influencing their growth. Local leaders can set desired annual growth targets that are subsequently translated into microlevel goals via a variety of conduits, such as the yearly production targets at state-owned enterprises (SOEs); can approve or otherwise the inauguration of infrastructure projects; and can set the tax rates for key industries (Interviews 0717BJ04, 0717NJ04, 0717NJ05, 1017NJ07).

Second, top prefectural leaders can augment the scale of the local economy by fostering acquisitions and mergers among both state- and privately-owned enterprises to not only signal their excellent economic competency to superiors but also to expand the scale of the local economy and mitigate employment pressure (Reference Yang and ZhengYang and Zheng 2013; Reference LiXu, Yang, and Li 2017). The increase in overall industrial scale thanks to acquisitions and mergers also entails more production and more pollution emissions. Other principal ways top prefectural leaders can boost growth are by influencing the approval of infrastructure projects and stimulating favorable tax rates for key industries (Interview 1017NJ07).

3.4.4 Regulatory Forbearance and the Reversal of Fortune

Local leaders can order laxer or more stringent regulation of pollution, especially at strategically important times. Top political leaders wield their power over the bureaucracy to implement policies in ways that are strategic for them. The leaders order regulatory forbearance when the state has the institutional capacity – both fiscal and administrative – to enforce laws or regulations, but politicians or leaders rather than their bureaucrats choose not to do so; this nonenforcement is intentional and revocable (Reference HollandHolland 2016). Strategic noncompliance in situations without budgetary, resource, or capacity constraints is frequently underpinned by career incentives, a critical feature that differentiates strategic noncompliance from selective policy implementation (Reference O’Brien and LiO’Brien and Li 1999). An essential element of regulatory forbearance in pollution regulation is that it can be done very quickly, which differs from the growth-adjustment approach.

Unlike existing works, which have deepened our understanding of how the lack of funds, revenue, and capacity contributes to poor environmental policy implementation (Reference SchwartzSchwartz 2003), I argue that even in situations where resources and capacity are not a constraint, strategizing top prefectural leaders may still order laxer regulation of productive yet highly polluting industries or projects at strategic times to achieve three goals. First, they want to meet and preferably exceed economic targets set by upper levels, since the ability to reach such objectives is crucial in evaluation reviews (Reference Zhou, Lian, Ortolano and Ye.Zhou et al. 2013; Interview 0715CD04). Second, strategic leaders want to generate more revenue, of which large polluting industries are often a significant contributor. The more these industries produce, the greater the tax revenue flowing to the local government. The local government, under pressure to meet targets, gradually becomes a silent partner of these industries. Third, out of concern for social stability, local leaders loosen their regulatory grip on highly polluting factories when they feel they may be close to the end of their tenure, to not only keep the economy growing but also maintain workers’ jobs in order to prevent workers’ protests that threaten social stability (Interview 0715CD04). For instance, the local government might call up the local EPB to request that they relax inspection activities at large factories that hire predominantly male workers (Interview 0715CD03). The achievement of these three complementary goals comes at the expense of the environment. Between economic planning and pollution regulation, the latter is more plausible in explaining the variation in air quality over time since planning takes longer to induce changes in production outcomes, but ordering laxer regulation of pollution can be accomplished quickly via a phone call.

When environmental protection takes on more importance, strategizing local leaders are now faced with a very different set of priorities, as a result of which economic growth sometimes yields to air pollution control. Under pressure to create blue skies, the local government turns against the polluting industries that used to contribute significantly to the coffers of their jurisdictions, by ordering stringent regulation and the shutting down of an entire industrial sector to quickly achieve air quality results. In doing so, local leaders also risk social instability, as workers are laid off without reassignment arrangements. In this situation, the achievement of environmental quality comes at the cost of economic growth and even social stability – the former beneficiaries of regulatory forbearance experience a reversal of fortune.