authority is still unclear. Supervising bureaucratic agencies have less control
over them than was the case before reforms began. With respect to our
questions on the implementation of biodiversity conservation policy, they
would seem to be an unpredictable agent, with their willingness to curb
environmentally damaging but economically profitable proposals dependent
on the nexus of bureaucratic politics in which they operate. In this context, the
salience of biodiversity conservation interests is a critical determinant. Several
cases discussed in this volume concern SOEs. For example, in the West-East
Pipeline Project, Sinopec initially sought to override environmental objections
to its proposed pipeline routing, but in negotiations changed its position. Also,
the Nujiang hydropower development controversy (discussed in Chapter 8) is
thought to have been brought to a head because of the breakup of the national
monopoly controlling electrical generation, and the resulting competition for
market share of regional state-owned energy giants.^8
The most dynamic parts of the economy, however, are the Township and
Village Enterprises (TVEs; xiangjen qiye) and private enterprises. In the initial
stages of economic reform, TVEs had an ambiguous legal status, as they were
owned collectively by all rural residents of the township or village in which
the enterprise was located (but increasingly managers of TVEs operated them
as if they, the managers, were the actual owners). In 1993, there were
approximately 1.3 million TVEs, and they then produced about 30 percent of
national industrial output (rising to 40 percent by 1996),^9 yet received less than
10 percent of state subsidies. Town and Village Enterpises, which are small
and generally productive, are considered part of China’s non-state economic
sector.
When the number of firms and employment in TVEs declined somewhat in
the 1990s, these local government-owned enterprises began to privatize. By
2000, more than a million such firms in rural China had privatized, a huge
number on both the Chinese and global scale. However, the pattern of
privatization differed from that in most other countries, as the firms were sold
to insiders, usually their managers, and not to outsiders. Upon privatization,
the firms increased their profitability.^10 Through this process, managers-
turned-owners attained autonomous decision-making powers and had a strong
incentive to increase profitability,^11 which would influence their treatment of
environmental issues. That is, they were inclined to emphasize the short-term
bottom line at the expense of preserving local ecosystem values. For example,
an environmental activist reported on the TVE he had observed in 2002, while
conducting environmental education activities in Inner Mongolia:
‘At one site, we saw a paper mill which was discharging waste water into nearby
fields, and this poisoned cattle. On our return to Beijing, I informed SEPA. The
agency sent out an inspector who verified what we had seen. But the result was not
what we had hoped for. SEPA said it had found sufficient evidence to close the136 Governance of biodiversity conservation in China and Taiwan