In parallel to new nation-wide laws and regulations, various mandatory binding environmental targets were included in the two most recent national Five Year Plans (FYPs), the 11th (20062010) and 12th (2011-2015). This target-based implementation approach relies heavily on linking environmental targets with the annual cadre evaluation system. Meeting binding environmental targets is an important requirement for career promotion and local leaders face strict punishments through denial of promotion and formal censure if they fail to meet them. This personalized incentive setting system ensures that local officials do not misuse the flexibility granted to them under China’s decentralized structure. However, while national policy makers have skillfully embedded incentives in cadres’ evaluation system, the formal system does not always succeed in making faithful followers out of local leaders. In spite of national policy makers’ careful efforts to align cadres’ interests with those of Beijing, local leaders often engage in “selective policy implementation” (O’Brien and Li, 1999) and significant gaps exist between the central government’s national ambitions and policy outcomes at the local level.

# _2.2 Local Realities_

Despite national ambitions and numerous new initiatives and incentives, a substantial environmental policy implementation gap exists. In the 11th FYP period, several environmental targets went unfulfilled. Officially, the only hard target not met was reducing energy intensity per unit of GDP by 20% against 2005 levels (the actual recorded reduction for the period was 19.1%). Among the softer targets related to economic restructuring in the 11th FYP, fully three were unmet: (1) increasing service sector as a percentage of GDP, (2) service sector as a percentage of employment, and (3) R&D as a percentage of GDP (Eaton and Kostka, 2013, 2014). Disappointing results on these targets reflect the fact that many local cadres have actually put off the difficult business of switching to more energy-efficient and low-emission production and restructuring their localities.

At the local level, despite the addition of green targets to the national plan, leading officials have often continued to focus on satisfying economic growth targets, and this is one reason why environmental pollution continues to get worse in many Chinese cities. For instance, although the national 12th FYP targets an annual average GDP growth of 7%, 26 of the 31 provinces have initially set growth rate targets above 10% in provincial FYPs, indicating that local governments continue to place high priority on growth-focused development (Kostka and Mol, 2013). The annual GDP growth targets in the local 12<sup>th</sup> FYPs for the second- and thirdtier cities I visited in Hunan, Shandong, and Jiangsu further underline this reality; all the cities had incorporated annual growth rates of 12% to 17%, double the national growth rate target.

Environmental pressures have drastically increased in China’s urban cities.<sup>2</sup> A recent report by the Chinese Academy of Social Sciences described most Chinese first-tier cities, including Beijing, Shanghai and Guangzhou, as “barely suitable for living”, with poor air quality and traffic congestion lowering cities’ attractiveness for top talent (China Daily, 2013c). Air and water quality standards are especially grim. Recent rises in PM 2.5 levels have posed serious health risks to urban citizens (Greenpeace, 2012). In addition, the quantity and quality of water has deteriorated in many Chinese cities. According to a report by the Ministry of Environmental Protection (MEP), 57% of the groundwater in 198 cities in 2012 was rated as "bad" or "extremely bad", while more than 30% of the country's major rivers were found to be "polluted" or "seriously polluted" (China Daily, 2013d; Guardian, 2013). Moreover, the rapid 2 For a more detailed summary of environmental challenges in urban China, see e.g., OECD (2009, Section 6.2).

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