The Political Economy of Noncompliance in China: the case of industrial energy policy

Abstract

One of the greatest challenges facing China today is the central government's ability to ensure that policies are implemented effectively at the local level, particularly policies that seek to make China's economic growth model more sustainable. These policies face resistance from local authorities and enterprises that benefit from the status quo. This raises a key research question: why do some provinces more fully implement these central policies? We argue the extent of local implementation is best conceptualized as a rational balance between economic and political incentives: localities with regulatory autonomy, low regulatory capacity and alternative interests will not fully implement policies that are at odds with local economic imperatives. By examining a critical case of central policy implementation—industrial energy intensity reduction in the eleventh five-year plan—this article demonstrates that, regardless of industrial makeup or economic development, provinces that have greater regulatory autonomy for noncompliance coupled with alternative economic interests do not, on average, perform as well. Using a nested analysis approach this study illustrates this argument with both quantitative analysis and original case study evidence from fieldwork interviews.