Lecture Transcript

Air quality in most parts of China has seen significant improvements over the past few years, with PM2.5 concentrations falling by 32% between 2014 and 2018. One possible explanation for this achievement lies in the campaign-style enforcement initiated by China, whereby central ecological environmental protection inspectors, approved by the Party Central Committee and the State Council and composed of officials from the Ministry of Environment, the Central Commission for Discipline Inspection, and the Central Organization Department, are stationed in localities to launch inspections of ecological environmental protection. In order to meet the environmental protection requirements of the inspection teams, local enterprises are usually fined, or ordered to stop production or even shut down completely for failing to meet emission standards.

Inspections are powerful in addressing pollution problems because provincial and municipal leaders are directly responsible for environmental protection. As of December 2017, the inspection team had conducted individual talks with 768 leading cadres at the provincial level and above, and 677 leading cadres at the municipal level, and had also interviewed 689 provincial departments and units. As career prospects are the most important element for local officials, political ties among leaders are seen as a key factor in explaining officials' behavior.

This study explores whether homogeneous relationships affect officials' behavior during environmental inspections by analyzing homogeneous relationships between municipal and provincial leaders and comparing economic data with air quality data before and after the inspection period. For economic data, the study uses monthly VIIRS-DNB nighttime lighting data to simulate GDP data due to the absence of monthly GDP data. For air pollution measurements, the article uses real-time national air quality monitoring data provided by the Ministry of Ecology and Environment and monthly satellite aerosol optical depth (AOD) data provided by the National Aeronautics and Space Administration (NASA), and the monthly percentage of rain and snow and the mean maximum wind speed are used as control variables. For the official data, alumni, colleagues, or hometown relations between municipal leaders and provincial leaders were assigned as homogeneity indices, and the higher the homogeneity index between the two, the more likely it was that a friendship would be established.

To address the endogeneity of the timing and location of inspection teams' visits, the authors used provincial data from 2011-2014 to measure and found that the implementation of inspection teams operates as a top-down decision, independent of the local economy and pollution. Meanwhile, the authors use a subsample to do a double difference test and do separate test analyses for provincial capitals and first-tier cities (e.g., Shanghai and Beijing).

The empirical results show that the PM2.5 concentration in the inspected cities decreases by about 18% on average during the inspections by the central ecological environmental protection inspectors, which is mainly achieved by controlling the production of heavy polluting industries. In terms of sheltered relationships, the relationship between mayors' behavior and nighttime lighting data is more significant, while municipal party secretaries' behavior is more relevant to PM2.5 concentrations. If the homogeneity index between mayors and provincial party secretaries is higher, the intensity of nighttime lights during the inspection period decreases more significantly; if the homogeneity index between mayors and governors is higher, the intensity of nighttime lights is higher, i.e., the economic performance is more prominent; the homogeneity relationship between municipal party secretaries and provincial party secretaries has a more significant impact on air quality. The cost-benefit analysis shows that the economic losses incurred during the inspection period are higher than the cities' willingness to pay.