In addition, in Section 3 it was noted that vested local business or political interests can hinder the implementation of environmental initiatives at the local level. Recent research shows how local leaders in some localities have used various creative strategies to make the implementation of environmental policies more attractive, or less unattractive, in order to bring different local interest groups on board. In other words, officials “bundled” costly environmental policies with other equally pressing policy priorities (Kostka and Hobbs, 2012). As a result, less popular environmental policy initiatives benefited from their association with policies that carried wider political support. For example, in China’s 11th FYP period, local authorities in Shanxi shut down scores of small mining operations in the name of promoting worker safety; in doing so, they achieved energy savings that were often an unstated objective.

Local leaders also practiced _“interest-bundling”_ which refers to deliberate efforts to bring together parties with distinct interests around a particular policy (Kostka and Hobbs, 2012). Examples include linking the implementation of a policy to specific economic or other benefits – such as preferential access to government resources, expedited project approvals or negotiated agreements of mutual support – in exchange for the implementation of one or more policies. For instance, an enterprise may agree to comply with tough energy efficiency standards in exchange for strict enforcement by government that company leaders expect will push competing enterprises out of business (Kostka and Hobbs, 2012).<sup>21</sup> _Box 13_ illustrates how Xiaoyi County in Northern Shanxi skillfully persuaded private coal enterprises to share the burdens of environmental policy implementation. The case of Xiaoyi also shows that in places with better environmental living conditions, capable government officials are more likely to stay permanently, enlarging the pool of capable local leaders and ensuring continuity in leadership.

# **Box 13: Persuading local businesses to aid greening growth in Xiaoyi**

Xiaoyi County in Northern Shanxi effectively managed to persuade local businesses into sharing the burdens of green growth and economic restructuring. Xiaoyi is a resource-based economy with an undiversified, coaldependent industrial structure in the midst of transformation. Leaders in Xiaoyi’s leadership group have effectively used their _guanxi_ ties to induce local businesses to share the burden of reducing Xiaoyi’s coal dependence. Strikingly, local coal enterprises, many of which are privately-owned, have actually been given **soft targets in local plans for investment in economic transformation projects** : “Coal production enterprises should each launch non-coal projects of between one and two billion RMB; each coking enterprise should launch projects of one billion RMB or more in non-coal or downstream processing projects.” (Xiaoyi Government Work Report 2011: 20). In addition, Xiaoyi leaders have effectively bundled coal restructuring with the goal of developing non-coal industries by providing **incentives for former coal bosses** whose enterprises were eliminated as part of a 2006 industry clean-up to start greener businesses. For instance, with government backing, a former mine owner whose enterprise was shuttered brought a Walmart outlet to Xiaoyi and also has a new business marketing agricultural products.

Xiaoyi’s greening growth strategy has built up gradually with guidance from a **strong and locally-rooted leadership group** . Recent Party secretaries in Xiaoyi have served for an average of 8.3 years and mayors an average 6.2 years, much longer than the average tenure of local leaders of three to four years. A unique characteristic of Xiaoyi is that leaders from elsewhere put down roots in Xiaoyi: “Most of the Party secretaries, mayors and CCP Organization Department heads are from outside. But they all settle down here” (INT_20111121). The **attractiveness of Xiaoyi as a place to live** (e.g., good primary and secondary schools, high environmental quality, and developed entertainment industry) does seem to have contributed to its success. Living environment is often cited as an important factor in luring investors, but the example of Xiaoyi shows that **it may also be important in attracting and retaining able government leaders** .

This continuity helped Xiaoyi’s leadership group make very effective use of the relationships it has built over time with local industry. Leadership continuity likely contributed to the leaders’ success in securing investment because investors can be confident that plans will not shift radically with personnel changes in the leadership group.

_Source: Eaton and Kostka (2013; 2014)_

> 21 On _interest-bundling_ and _policy-bundling_ , see Kostka and Hobbs (2012) and Harrison and Kostka (2014).

39