Using comparative case studies, process tracing, and in-depth interviews, this chapter builds on Chapter 6 to examine the mechanisms connecting protests, societal control strategies, and outcomes for firms in the solid waste treatment sector. Process tracing is first applied to Wuxi, a city with multiple incineration plants, to illustrate how escalating protests gradually shifted the city government’s strategy from appeasement to suppression. This shift in strategy made private firms less effective in providing societal control services, leading to the transfer of the city’s incineration plants into the hands of SOEs.

Next, a most-similar case study compares an incineration plant in Wuxi with another in Qinhuangdao, highlighting how differences in political capital, linked to firm ownership, influence the outcomes of societal control efforts. The weaker political capital of private firms means they are less equipped to assist local governments during protests, making them less favorable. This comparison sheds light on how Chinese local governments perceive protests and firms, explaining why SOEs increasingly dominate a sector as protests within it become more frequent and intense.

This chapter begins the empirical examination of the second political service provided by firms: societal control. I situate this political service within China’s solid waste treatment sector, where the development of waste incineration plants has consistently faced public opposition and protests. Drawing on original data from all 351 incineration plants built or under construction in Chinese cities between 1999 and 2016, as well as records of protests against these plants, I demonstrate a strong relationship between protests and firm ownership in this sector. During the bidding stage for waste treatment contracts, local governments factor in societal control when selecting firms to build and operate these plants. If local governments anticipate employing appeasement strategies toward protesters, private firms are more likely to thrive in a city. Conversely, if governments expect to rely on suppression strategies, state-owned enterprises tend to dominate.