The Five-Year Plan and target allocation cycle of environmental pollution in China

Abstract

This paper establishes a theoretical connection between China’s Five-Year Plan (FYP) and environmental pollution. We propose a target allocation cycle theory to explain the periodic feature of environmental pollution, which advances political business theory in different institutional contexts. By analysing industrial SO2 and PM2.5 data as well as the political career data of officials in 277 Chinese cities from 2003 to 2019, we reveal a significant influence of China’s political business cycles, as dictated by the FYP, on the periodicity of environmental pollution. Specifically, the emissions of industrial SO2 and PM2.5 exhibit a U-shaped periodic trend, peaking during the initial 2 years of each FYP, followed by a gradual decline in subsequent years, only to peak again in the first year of the succeeding FYP. These findings suggest that local political leaders strategically allocate their efforts in managing environmental pollution. Initially, there is a relaxation of environmental regulation during the early stages of a FYP, which is then followed by a shift towards more stringent environmental governance after the midpoint of the FYP.