Legislative decentralization and regulatory dilution: Evidence from air pollution control in China

This paper examines how the delegation of legislative authority from the central to local governments in China affects environmental regulations. While this legislative decentralization has achieved some of its intended benefits, such as introducing balances within local governance and legitimizing administrative and fiscal decentralization policies, there is also the problem of legislative dilution. Two major institutional flaws in China's legislative system exacerbate this issue: the absence of competitive elections for local People's Congress representatives and insufficient resources for constitutional review by the National People's Congress. Consequently, local political and economic elites capture legislative power to primarily advance their own interests. We substantiate this analysis with a systematic evaluation of local adaptations of the Atmospheric Pollution Prevention and Control Law and find evidence indicating that provincial legislatures have weakened national regulations, resulting in deteriorating air quality. Enforcement data from local government agencies and the spatial mobility of polluting firms further support this hypothesis. Moreover, the extent of legislative dilution varies with local contextual factors, such as direct central supervision and informal patronage networks with the center. This research contributes to the broader discourse on decentralization by focusing on the benefits and challenges of legislative authority delegation, a dimension of decentralization that has not been thoroughly examined in existing literature. Our findings on how local institutional quality affects decentralization outcomes align with similar results observed in other areas of decentralization.