Do political incentive affects China's land transfer in energy-intensive industries?

Abstract

In the paper, we mainly investigate why China's local governments tend to undermine the rule of central government in restriction of land transfer for energy-intensive industries (EIIs). Built on the standard political economic literature, we hypothesise that political promotion incentive for the local secretary (measured by age and tenure), the de facto “first-in-command” official, regarding rapid economic development, which is encouraged by the existing cadre evaluation system, lead to poor performance of local government in terms of energy and the environment. The empirical results state that being closer to the age of 57 and having spent more than 4 years in office significantly enhance the secretary's promotion incentive, which in turn spurs the local government to provide more land for EII projects, even at the expense of environmental degradation, and the results hold across several robustness tests. Thus, we suggest that more weight be given to environment-related indicators in the cadre evaluation system, and the newly introduced lifelong accounting system for the ecological environment should be implemented effectively.