The First Incineration Plant: Weak SOE

The first incineration plant in Wuxi was planned in 1999, began construction in 2001, and started operation in 2004. It was built and operated by a local SOE. The launching of this first incineration plant was part of Wuxi city’s effort to win the title of National Model City in Civilization (quanguo wenming dianfan chengshi) for the second time, and the city’s plan to build an “ecologically civilized district” (shengtai wenming quyu) as an example to other cities in the province. The leaders of Wuxi’s Public Utilities Department and Urban Management Department at the time proposed a waste incineration plant as part of these efforts. This would be the first ever in Jiangsu province and would “put Wuxi way ahead of other cities in the province, especially its long-time competitors of Suzhou and Changzhou cities.”Footnote ¹ With a total investment of 280 million yuan, this plant ranked as the fourth most expensive and the third largest incineration plant (out of eighteen) built in China in 2001, boasting a 1,000-ton daily incineration capacity. The Wuxi government lauded the plant as an important project for improving the people’s well-being and as representing a high level of incineration technology.

The decision to have a local SOE build the plant was a simple one. There had not been protests against incineration plants at this time in Wuxi or its neighboring cities, and a local SOE was already running Wuxi’s landfills. It would make sense to have the same local SOE build the incineration plant as well. Moreover, there were not many options in incineration companies back in 1999, as the sector was still taking off in China.

In 2006, when the city’s later disgraced party secretary, Weize Yang,Footnote ² launched an industrial park, the Taike Park, right by the incineration plant, problems started to emerge. The industrial park was built to attract high-tech companies to Wuxi to promote clean and knowledge-intensive industrialization, and it was supposed to be, and later became, a signature project of the new party secretary. However, once the high-tech companies settled in the industrial park, they quickly realized there was an incineration plant only 900 feet away, as they saw black smoke and smelled a strong odor every day. The companies started to lose employees who were worried about pollution, and they requested the government relocate the plant. In 2008, the city government promised it would shut down the incineration plant by 2011.Footnote ³ But as there were never protests against it, the city government did not proceed with plant shutdown.

In 2014, after years of futile requests to the Wuxi government to either regulate or shut down the incineration plant, companies started to leave the industrial park. This concerned the government. In 2014, a local People’s Congress delegate officially proposed the shutdown of the polluting plant.Footnote ⁴ The proposal listed several problems: emission of exhaust, strong odor, leaking leachate, and lack of legally required coverage of the solid waste storage tank. The incineration plant manager admitted that “the plant has not been operating up to environmental standards since before 2011 … the construction quality was low, and the facilities are not functioning correctly … we also have a flawed garbage sorting system, and we can’t sort out garbage that shouldn’t be burned, causing constant malfunction of the furnace.”Footnote ⁵ In 2016, after a mere twelve years of operation, this incineration plant – originally built with a fifty-year lifespan – was closed. The plant was demolished in 2023.

The Second Incineration Plant: Introducing Private Firms

In 2004, right after the first incineration plant started operations, the Wuxi city government started construction of a second. The total investment was 377 million yuan and it had a treatment capacity of 1,200 tons per day, adding to the city’s already large waste treatment capacity of 3,400 tons per day. With the second incineration plant in operation, the city would have an excess treatment capacity of 3,039 tons per day beyond the amount of solid waste it actually produced. This second plant was launched as part of the effort to win a National Civilized City title (guojia wenming chengshi) in 2005, hoping to continue Wuxi’s success in national title competitions. It was also part of a three-year plan by the party secretary, Weize Yang, to turn Wuxi city into a “Famous City for Mountains and Water (shan shui ming cheng),” of which incineration plants were an important element in “making garbage invisible.”Footnote ⁶

The Wuxi city government’s fiscal expenditure-to-income ratio increased from 0.97 to a slightly less ideal 1.04 in 2004, but the city’s finances remained relatively healthy. The Wuxi government decided to continue using the same local SOE to launch the second incineration plant, but this time it also allowed private firms to enter the industry. Eventually, this plant had a mixed ownership, with the local SOE as the dominant shareholder that controlled its construction and operation.

Given that the second incineration plant was located near a large residential area and the first incineration plant had caused dissatisfaction among nearby companies, the Wuxi government did not publicize the launch of the new one until after it was already built. But after it began operations in 2006, protests quickly followed in 2007. Residents reported the new incineration plant’s strong odor and complained that the garbage trucks leaked trash and leachate onto roads while transporting the garbage. At the end of 2007, residents discovered that there was a surge in cancer diagnoses in the neighborhood, and they associated it with dioxin emissions from the incineration plant nearby.Footnote ⁷ Angry residents organized a blockade of the entrance to the incineration plant and demanded the city government either move the incineration plant or compensate the residents for moving away.Footnote ⁸ After estimating the amount of compensation at an exorbitant amount of 2.1 billion yuan,Footnote ⁹ almost 1 percent of the city’s fiscal income that year, the city government decided not to compensate the residents, and instead announced in 2008 that they would upgrade the new incineration plant to make sure it would not produce more smoke and pollution.Footnote ¹⁰ However, none of these promises was fulfilled, and complaints and petitions about the second incineration plant continued.

The Third Incineration Plant: Powerful Central SOEs

At the end of 2008, two years after the second incineration plant started operation and amid increasing complaints against the first two plants, the city government decided to launch a third. This was listed as a key government project, and part of the city’s application portfolio to the “Most Livable City in the Province (zui yiju chengshi)” title. The city government set the goal for the third incineration plant to be the largest in China, the fastest built, and a “garden-like” project.Footnote ¹¹ It had a high investment of 1.5 billion yuan and a treatment capacity of 4,000 tons per day, greatly increasing the city’s solid waste treatment capacity to 7,200 tons per day, far exceeding the city’s daily solid waste production of 2,480 tons per day in 2008.Footnote ¹²

Yet, when deciding on what firm to use this time, the Wuxi city government made different calculations than before. In 2008, Wuxi had gone through three years of massive infrastructure construction, including highways, roads, industrial parks, wastewater plants and other projects under the party secretary Weize Yang. These projects brought huge debts to Wuxi city. While the exact amount was never publicized, a few reports on the debt problem indicated its severity. One city official said that from 2006 to 2011, Wuxi’s fiscal income was “completely depleted” by Yang.Footnote ¹³ A Reuters report showed that the Wuxi government was in such deep debt that in 2012, the city tried to cut civil servants’ wages.Footnote ¹⁴

In 2008, when the third incineration plant was launched, the city was in the middle of accumulating these debts. Regarding the decision on the third incineration plant, a government official said: “By then [2008] it was a different situation, it was not quite as easy to invest as before. If we can’t give money [to the plant], we don’t give money.”Footnote ¹⁵ This was also a time when the national government stressed the importance of public–private partnerships to alleviate local governments’ fiscal burden on public projects; so the Wuxi government decided to use public bidding and build–operate–transfer (BOT) as the delivery method for this third plant.Footnote ¹⁶

At the same time, the city government became aware of potential protests against yet another incineration plant in the city. In 2008, there had been numerous complaints against the first incineration plant, several protests against the second one, and two high-profile protests in the immediately neighboring cities of Changzhou and Huzhou against their waste incineration plants. Now fully aware of the unpopularity of incineration plants among the public, Wuxi local officials took the potential of high-profile protests into consideration when selecting a firm. A local official explained the final decision to use a central SOE: “It is very complicated. We have to consider the social problems [protests] we have. Private firms are also okay … central SOEs are still better when there are protests.”Footnote ¹⁷ The city government eventually selected Enfi, a newly established subsidiary company of a central SOE, to launch the third incineration plant.

The Wuxi government and Enfi decided to hide the project from the public and committed a series of illegal acts to gain environmental approval from the Ministry of Ecology and Environment. Because there was a lack of justification for another incineration plant, the Wuxi government had a difficult time getting public consent for a third, a required procedure in getting an environmental impact assessment (EIA). In 2007, the government told the residents they were going to build a temple in the area, not too concerned that a temple would obviously look different from an incineration plant. The government then obtained signatures from residents who believed they were signing to support the building of a temple. This document was later attached to the city government proposal for the incineration plant.Footnote ¹⁸ In 2008, before construction began, Enfi was also required to submit proof of public consent to construction to the Ministry of Ecology and Environment. Enfi simply forged 200 signatures and submitted them.Footnote ¹⁹ Construction then started in October 2008, with residents still believing that a temple was to be built.

In 2010, the first part of the incineration plant was completed and started trial operations, which created considerable smoke and a strong odor. Residents finally realized this could not be the smell of sandalwood incense from a temple but was the odor from a solid waste incineration plant. Angry residents petitioned the government to stop construction, and the government appeased them by promising they would urge the incineration plant to pause operation until the company could guarantee no exhaust fumes and odor. However, the residents soon discovered this was an empty promise and the incineration plant was still in operation.Footnote ²⁰ Moreover, they also discovered that the incineration plant had dug a trench to directly drain leachate into a local river, which was clearly illegal and caused water pollution. Residents then organized a series of acts of civil disobedience. They printed flyers about the harm of incineration and distributed them nearby, made frequent petition trips to the city government,Footnote ²¹ and guarded the river from which the incineration plant retrieved water.Footnote ²²

The government and Enfi at first responded with a strategy of continued appeasement. In March 2011, the government decided to arrange “educational trips” for resisting residents to see other incineration plants. Such trips are common among incineration plants facing protests. Usually, the firm pays for the trip so the protesting residents can visit an incineration plant, often a beautiful one, to relieve the concern about health hazards from solid waste incineration. The trip also includes one or two days of “free activities,” basically a paid vacation for the protesters. In the case of Wuxi, the government, instead of the firm, arranged for the protesters to visit one incineration plant in Shanghai and another in Jiangyin city. However, instead of taking a vacation, the Wuxi residents used the “free activity” time to secretly visit local residents living near these incineration plants, and heard entirely different and negative accounts about the incineration plants. Therefore, these two paid trips produced the opposite effect of what was intended, and instead increased Wuxi residents’ resolve to resist the incineration plant.Footnote ²³

The residents escalated their resistance after returning from the “educational trips.” Starting in mid-March 2011, they set up tents in front of the entrance to the incineration plant to prevent garbage trucks from delivering solid waste. Retired residents stayed in the tents during the day and working residents stayed in them at night, with local entrepreneurs providing free beds and food. Residents invited media from outside the city to report on this event, though none responded at this point. They also organized protests in front of the city government and sought help from environmental and legal aid nongovernmental organizations (NGOs) in order to sue the Wuxi government.

These developments toward a high-profile protest aggravated the city government and the central SOE, which then changed their strategy from appeasement to suppression. The Wuxi government hired “security guards” for the firm, who cleared the tents and dispersed the crowd. The city government also arrested two residents who had printed flyers. The suppression strategy aggravated the residents, who decided to organize a protest march from the incineration plant to the city government on May 27, 2011. Halfway through the march, the residents encountered local police and the People’s Armed Police waiting for them. Violence ensued with more than forty residents arrested, more than a hundred injured, and one paralyzed permanently from brain damage.Footnote ²⁴

The violent ending and the scale of this protest finally drew some media attention, and NGOs started to help residents to prepare for a lawsuit against the Wuxi government at the Jiangsu Provincial Court. Observing that this protest had now escalated into a high-profile one, and concerned that more protests and a lawsuit would negatively affect the city leaders, the Wuxi government announced it would temporarily suspend operation of the third incineration plant. This suspension lasted six years, during which Enfi continued to press the Jiangsu provincial government to relaunch the project in Wuxi city.

In 2016, the Wuxi government invited another central SOE, the China Everbright Group, to invest in the incineration plant and restarted its operation. Speaking of the decision to add one more central SOE, a local official simply said that “we invited the China Everbright Group in case there are more protests. One more [central SOE] is better. We told people that Enfi is no longer operating the plant, but they are still behind the scene.”Footnote ²⁵ Some residents resisted the reopening of the incineration plant by appealing to the National Public Complaints and Proposals Administration, but this office, commonly known as the national office of letters and visits, did not get involved and instead referred the issue back to the Wuxi city government, who simply responded that the reopening of the incineration plant was necessary.Footnote ²⁶ In the Wuxi case, even after high-profile protests, the city government and central SOEs successfully launched a highly controversial project, and no official was held responsible for fraud or for provoking high-profile protests.

An Illegal Launch of an Incineration Plant – Similar to Wuxi

Just as in Wuxi, the Qinhuangdao city government and the private firm, Weiming, colluded to illegally forge signatures from nearby residents to pass an EIA. In early 2009, before construction began, Qinhuangdao government and the private firm together forged 100 signatures, many of which were of deceased or incarcerated residents.Footnote ²⁷ The firm also claimed that it had hosted two environmental impact hearings for the residents as required in the EIA, and showed a list of attendees, which was later found to be forged as well.Footnote ²⁸ With these forged documents, the new incineration plant was approved by China’s Ministry of Ecology and Environment and contruction started in April 2009.

In August 2009, Beijing hosted the international conference Dioxin 2009.Footnote ²⁹ China’s national TV channel, CCTV, broadcast the conference, which educated the public on the health hazards of dioxins. This broadcast drew considerable attention from the residents in Qinhuangdao. Realizing that solid waste incineration can be a major source of dioxin pollution, more than 1,500 residents near the new incineration plant signed a petition demanding the government stop the plant’s construction. Residents also organized protests in front of the construction site. However, the city government ignored their complaints, and construction continued. Angry petitioners then started to send multiple complaints to the Hebei provincial Bureau of Public Complaints and Proposals about the firm and the city government.Footnote ³⁰

No longer able to overlook the complaints, the Qinhuangdao government responded first with appeasement strategies. In September 2009, they ordered the private firm to suspend construction and assured the residents that the government would always be on their side and would not allow dioxin emissions from the plant. Meanwhile, managers and executives of the private firm paid visits to the residents, offered them jobs, and bought them dinner and gifts. However, residents were not swayed and continued to resist the incineration plant. Six months later, the Qinhuangdao government lost patience, and invited the residents’ representatives to attend an unrelated meeting on local administrative affairs. During that meeting, the government told them that they would receive reimbursement for attending. The representatives were then asked to write their names on a blank piece of paper as documentation of the reimbursement. The government later attached these signatures to a document that falsely stated the public had agreed to stop resisting and now welcomed the incineration plant.Footnote ³¹

In May 2010, with this newly forged document showing the approval of residents, construction restarted. This development greatly upset local people, who gathered once again to block the entrance to the construction site, but their protest was suppressed by the police, though without casualties. The residents also petitioned to the Ministry of Ecology and Environment to revoke the approved EIA, only to be rejected.

Left with few other options, the residents sued the Hebei provincial Bureau of Environment for allowing a project to start based on forged documents. This action changed the outcome of the protest. Unlike in the Wuxi case, where the court did not hear the case, the Hebei provincial court decided to press ahead with it. Because lawsuits against a government department could negatively affect government officials’ career prospects, the Qinhuangdao city government did not want the case to proceed. Therefore, they offered to revoke the EIA approval and suspend the incineration plant if the residents would drop the lawsuit. The residents accepted this offer, and the city government indefinitely stopped the project.Footnote ³²

Different Political Capital of Firms, Different Outcomes of Projects

The Wuxi and Qinhuangdao cases serve as a most similar case comparison. They differ in their outcomes and they differ in the key variable of interests – political capital of the firms they use. But they are similar in other aspects. In both cities, protests started at the construction stage. The scale of protests in both cities was between 1,000 and 1,500 residents. Both protests took the form of peaceful marches and road blockades. Residents in both cities adopted the strategy of “rightful resistance” that does not challenge the regime (O’Brien and Li Reference O’Brien and Li2006), and in both cases they resorted to the legal system at some point. Both city governments first used appeasement and later suppression to manage protesters.

Nonetheless, the Wuxi incineration plant restarted six years later, and neither the Wuxi government nor the central SOE was held responsible for the protest. The Qinhuangdao incineration plant, on the other hand, never restarted, and the private firm received a warning from the provincial Bureau of Environment.Footnote ³³ What explains these different outcomes? I first explore two alternative explanations, and then explain the different outcomes in relation to the political capital of the firms used to launch the incineration plants.

An alternative explanation for different outcomes of high-profile protests is local variation in the rule of law. If the legal system in Hebei province or Qinhuangdao city was more responsive to the public than that in Jiangsu province or Wuxi city, it could explain why the Jiangsu provincial court did not hear the case from Wuxi residents, but the Hebei provincial court proceeded with it, which led to the Qinhuangdao government’s suspension of the project to avoid a lawsuit. While there is little information on the quality and strength of local legal systems in China, we can gain some insight from rankings by China’s national government. In 2015, the transparency and quality of the legal system for eighty-one provincial and city level courts was ranked. In this ranking, the Jiangsu provincial court was placed nineteenth, and Hebei’s only thirty-fifth.Footnote ³⁴ In another 2023 index of the rule of law commissioned by China’s central government and compiled from a survey of legal professionals in China, the Wuxi city government ranked tenth out of all Chinese cities, while the Qinhuangdao city government did not even get into the top fifty.Footnote ³⁵ If these government rankings reflect the local variation, then Qinhuangdao city and Hebei province actually have weaker legal systems than Wuxi city and Jiangsu province, and we should expect the opposite outcomes in the two cities. Therefore, the difference in rule of law does not explain the different outcomes in the two cities.

Another alternative explanation for the different outcomes is the difference in state capacity to suppress high-profile protests. While it is hard to believe there can be much variation in Chinese local governments’ ability to suppress protests, it is possible that Qinhuangdao city is less capable of doing so, and therefore caved in to the residents by never restarting the plant. If this were true, then we should see a consistent pattern of a weak local state in Qinhuangdao when encountering other environmental protests, but this is not the case. As the city whose Beidaihe district is the location of the annual two-month-long summer work retreat for China’s top leaders to escape the heat of Beijing and conduct so-called horse trading, Qinhuangdao city has a large presence of the People’s Armed Police, and it has had no trouble suppressing other similar protests. For example, in 2014, four years after the first protest against this incineration plant and under the same city leadership, Qinhuangdao city experienced another high-profile protest against the city’s other incineration plant, which was operated by a central SOE. For three days, residents blocked several streets leading to the incineration plant in protest against exhaust and odor emissions, causing tons of garbage to pile up on the streets and traffic congestion. Nonetheless, the city government managed to suppress the protest and the incineration plant suffered no consequences.Footnote ³⁶

Therefore, the different outcomes of the two incineration plants are not due to city level differences in state capacity or legal environment. Instead, the outcomes are directly related to the type of firms used for the incineration project. In Wuxi, the firm building and operating the incineration plant is a central SOE. Central SOEs receive support from the national government when their business faces public opposition. In 2012, not long after the protest happened, Enfi, the central SOE in Wuxi, managed to win several important awards in the industry, including the “Most Trustworthy Solid Waste Incineration Entity,” “Best Choice of Bidder,” and “Award of Excellent Contribution to Solid Waste Incineration” granted by Bidding in China, a website owned by the Chinese national government.Footnote ³⁷ Considering the Wuxi plant was Enfi’s first ever plant and it was not even in operation, and that Enfi admitted to a “lack of experience and therefore was not able to operate up to environmental standards” in the trial operations,Footnote ³⁸ it is surprising to see these awards amid a major scandal involving the company. Nonetheless, these awards provided the Wuxi city government with much-needed justification to suppress the protest and restart the plant later. The narrative was that a trustworthy central SOE could not have provided bad service; rather, it was that the “ignorant people just wanted to create trouble …and now they can see [the project is good].”Footnote ³⁹

Furthermore, as a central SOE with high levels of political capital, Enfi had political backing from the very top to push Wuxi city to resume the project. From 2012 to 2016, Enfi sent more than ten formal requests to the Wuxi city government to restart this incineration plant, because the firm was incurring losses from it.Footnote ⁴⁰ In 2014, the city had a leadership change, making revival of the plant seem even less likely. New leaders should have no incentive to revive a controversial project started by their predecessor, especially one that could induce more protests, because they cannot necessarily gain credit from the previous leader’s project but can definitely be blamed for protests. Residents in Wuxi certainly did not believe that the firm could convince the local government to revive the project. As one resident said, “We have a new party secretary now, it’s impossible for the plant to restart operation!”Footnote ⁴¹ However, the new city leaders could not resist the pressure from the central SOE, and the incineration plant resumed operation in late 2016, to everyone’s surprise. An official in the city said, “It [Enfi] is a central SOE, it’s backed by the State Council! What can we do?”Footnote ⁴² In December 2017, after the Wuxi incineration plant restarted operation, the then city party secretary attended the opening ceremony and expressed his faith in the highest quality of services provided by central SOEs.Footnote ⁴³

Compared with Enfi’s influence in Wuxi city, the private firm Weiming lacked the political capital to distance itself from the protests in Qinhuangdao. In 2010, Weiming was applying to have an initial public offering (IPO) right before the protest broke out. But because the protest exposed Weiming’s illegal activities in obtaining an EIA, the firm was inspected by China’s Securities Regulatory Commission, and eventually the IPO was not approved.Footnote ⁴⁴ As a private firm, Weiming had only weak political capital that did not bring in high-level government support when its interests clashed with the public. In city government officials’ eyes, it was not wise to align with a firm that cannot bring in political support in a public crisis, and it was better to distance itself from the private firm. Therefore, despite Weiming making multiple requests to the Qinhuangdao government to restart the incineration plant, these requests were not heeded, especially after Qinhuangdao city experienced a leadership change. The new leader had no incentive to continue a project initiated by the previous leadership. A central SOE manager indirectly summarized this dynamic: “If there are issues [social unrest], using a private firm, the officials cannot distance themselves from it. To keep their ‘official hat’ [their official position], it is best to choose a big SOE that will not bring trouble.”Footnote ⁴⁵

But why did the Qinhuangdao government use a private firm in the first place? For one thing, they did not foresee the high-profile protests. Additionally, private firms cover more monetary costs during the appeasement stage, as they are more likely to agree to shoulder extra-contract costs when local governments ask, given their lack of political capital. We can gain some insights from the different costs shouldered by Wuxi’s central SOE and by Qinhuangdao’s private firm when facing protests.

During the appeasement stage, it is much easier to have a private firm bear the costs incurred, and it is harder to get a central SOE to cover similar costs. For example, in Wuxi, the appeasement strategy was to take residents on “educational trips” to other cities, and it was the Wuxi city government that paid for these trips, not the central SOE. In Qinhuangdao, the appeasement strategy included meals, gifts, and job offers, but it was the private firm rather than the city government that paid for these inducements.

Once the incineration plant had to be suspended after protests escalated into high-profile status, again, in Wuxi, it was the city government rather than the central SOE that paid for all the costs incurred from suspension, including salaries for engineers and security guards staying at the suspended plant, and maintenance fees.Footnote ⁴⁶ But in Qinhuangdao, the private firm, rather than the city government, paid for all costs incurred from the suspension. As in the urban bus sector, private firms “are the most obedient,”Footnote ⁴⁷ and such obedience is valued by local governments, which prefer to use private firms when they are confident the appeasement strategy can prevent public opposition from escalating into high-profile protests.

Through the case studies comparing Wuxi and Qinhuangdao in this chapter, I show how firms carry out the political service of societal control for local governments in China. In the eyes of local governments, private firms are better scapegoats to appease the public and SOEs are better allies to suppress the public. While the type of firm used does not necessarily change the course or the outcome of protests themselves, firm ownership type plays an important role in the post-protest outcomes for the local government and for the projects in question.

Working with a firm that has high political capital, both the city government and the firm can avoid punishment for suppression of protesters, and the project has a higher chance of continuation or revival. Working with a firm that has low political capital, the firm will help the local government pay for appeasement strategies that could potentially prevent high-profile protests and serve as a scapegoat, but it does not bring political support for suppression, exposing local officials to risks of lawsuits, criticism, and even demotion for failing to maintain social order. Therefore, even though firms with low political capital are easier to control, the city government is more likely to use firms with high political capital when they expect high-profile protests. But because local governments can usually prevent protests from escalating, firms with low political capital are still widely preferred for their ease of control. As one government official described:

The political service of societal control in the waste treatment sector, unlike that in the urban bus sector, created a different kind of state–business relations. Facing a mutual threat of public opposition, the state and business in this sector often develop a reciprocal relationship around a controversial project, particularly between local governments and strong SOEs that bring in the much-needed political support for local leaders. Local officials therefore often tacitly consent to firms’ cost-saving measures and protect the firm’s interests. From interviews and news collections, I identify four specific forms of reciprocation for firms’ political services in the solid waste treatment sector.

First, local governments are more likely to actually give waste incineration plants subsidies. Unlike in the bus sector, where bus firms constantly complained about not getting the subsidies promised to them, in the solid waste sector, local governments are more willing to pay firms what they promised, even though payments are often delayed. Secondly, local governments go out of their way to make sure waste incineration plants get their income. In several cities, local governments coordinate among various departments to ensure waste treatment firms receive their fees from the public. This is done by including garbage treatment fees in personal income tax or by making the payment of these fees a prerequisite for obtaining business licenses. Thirdly, local governments often allow waste incineration plants to engage in cost-saving measures, many of which are illegal, such as the untreated disposal of fly and bottom ash, and allowing waste treatment firms to blend coal into solid waste to generate more electricity at a lower cost.Footnote ⁴⁹ And finally, local governments often go out of their way to shield investigation into incineration plants. For example, a city official told me that when one of the local incineration plants, run by a private company, received a sudden inspection and fine from a Ministry of Ecology and Environment inspection team, the city government stood up for the plant and assured the team that they would ensure the plant changed its practices. The local government later forged documents to show the inspection team that the plant had indeed improved its services, even though it had not.Footnote ⁵⁰

Ironically, such state–business collusion could further increase the risk of high-profile protests against incineration plants that are not operating up to standards. This, in turn, pushes local governments to rely more on SOEs, which in the eyes of local governments are better allies in high-profile protests, creating a vicious cycle of protests, state–business collusion, and more protests.

These dynamics around the firms’ second political services, societal control, is what makes the waste incineration sector less attractive to private firms over time, as shown in the trend of firms operating in this sector in Chapter 6. Unlike in the urban bus sector, private firms in this sector did not resist the political service of societal control and were not forced out of the sector. Their gradual exit from the waste incineration sector was more a result of the rising number of high-profile protests against incineration plants. With the Chinese public increasingly aware of environmental issues and the potential public health hazards of incineration, appeasement strategies to prevent public opposition from escalating lose their effectiveness slowly but gradually, and local Chinese governments increasingly have to resort to suppression, which skews their preference toward large SOEs. Private firms, which are better scapegoats and better at providing appeasement strategies, thus slowly lose their competitiveness in the eyes of local governments, and consequently are more likely to exit the sector or form joint ventures with large SOEs.